The difficult thing about “financial freedom” as a concept is that many people define it in a vague way. Most people think of it as not having to worry about money and being able to have the things they want without having to scrimp and save for them. But there are all sorts of things that cause worry in regard to our money: mortgage payments, credit card debt, or how much money is in our retirement account. You might even be asking yourself a specific question like, “What if 1 million dollars isn’t even enough to retire on?”
The things that people want to buy without worrying about cost vary too. Some people just want to go for long walks in the woods, while others would prefer to travel and see the world. So, as you can see, financial freedom is something that is different for everyone, but it is often the goal of people as they move into retirement. They want to be able to stop working and stop worrying about money. So how do you do that?
Step 1: What do I want?
The first step is to define exactly what your financial goals are for retirement. How much do you want to spend on living expenses? How much do you want to spend on extra things like vacations and hobbies? Create a reasonably realistic budget for a sample month in your retirement, and that will help you to nail down how much money you will need for financial freedom.[1]
Step 2: Live below your means
If possible, consider reducing your costs for some things that you don’t need. People will sometimes spend every dollar that comes to them without saving enough for the future or for unexpected expenses. Try to cut back on expenses that aren’t completely necessary, and you’ll likely start to feel like you have a little more leeway when it comes to money.[2]
Step 3: Consider talking with a financial professional
Financial professionals are knowledgeable when it comes to financial planning. They talk with their clients daily about financial freedom, and they give their clients strategies and advice that may help them achieve that freedom. If you are curious about how to achieve your own version of financial freedom, reach out to our advisors today for a personalized review of your finances.
