What is financial freedom to YOU?
Rule No. 1: Don’t lose money. Rule No. 2: Don’t forget rule No. 1-Warren Buffett.
Financial freedom means different things to different people
As you think about financial freedom, what is the first thought that comes to mind? Quickly write it down.
Perhaps you remember a few weeks ago, I asked the question, “What is financial freedom?” I then proceeded to describe it in very general terms. I said that financial freedom was a milestone you reached like it was your birthday or wedding day. I went a little bit further to state that when you reached what I call “YOUR Number,” you would find yourself at that magical moment of financial freedom. I even went on to define it:
Reaching YOUR Number is that point in life where you are confident that you are financially prepared to live the rest of your life, in the style you desire, and not have to worry about money, regardless of what happens.
“Well, Dave,” you say, “that’s pretty broad, but what does financial freedom mean to ME?” I think this is an excellent question, and we will spend the rest of our time today discussing this very important topic.
Common examples of financial freedom
At the beginning of this post, I asked you to write down what comes to mind when you think of financial freedom. If we were in class together, on the screen, you would see the words “Financial Freedom” in large letters in the middle of the page in a circle, and several terms in smaller circles or in orbit around the term Financial Freedom. Financial freedom to you may mean any of these items:
The ability to travel
Manage my money better
Eliminate debt
Generate passive income (that is, income you generate with no ongoing effort)
Increase cash flow and/or investments
Reduce expenses, save more
Develop a financial plan
Leave a legacy, support a worthy cause
Thinking differently
Except for the last item, most of these items are just intangible desires. Maybe they are the things we use to describe someone rich. Oh, now there’s a word: rich. What does that even mean? For me, I want all these things, just like you do, and I’m not discounting a desire to obtain them.
I’d like you to think of a different word: Wealthy. My desire in developing the Afterburner Success Partners course is to help you become wealthy. Not rich, wealthy. When I think of being wealthy, I think of having a richness of life, prosperity, success (however you define success), security, and a lack of anxiety. When you become wealthy, you will be able to enjoy all the things in life you desire, and you will also be able to leave a legacy after you are gone. You see, financial freedom gives you a choice of how you decide to live your life. Financial freedom means you will not have to be anxious about money or live from paycheck to paycheck. It means you can accumulate wealth to not only meet but also exceed your basic needs. Getting to this point is the sweet spot in your life, and what we will discuss next.
Let me mention something first. Recently, I had lunch with an old friend. He is a pastor and therapist, and he told me the biggest issue he works with in his clients is anxiety. Many things can cause anxiety, and life events are a common cause of anxiety (Note 1). These include:
Stress at work
Stress from school
Stress in a personal relationship, such as marriage
Financial stress
Stress from global occurrences or political issues
Stress from unpredictable or uncertain world events, like a pandemic
Stress from an emotional trauma, such as the death of a loved one
Stress from a serious medical illness
Dave’s bonus: Stress from social media and our digital devices
Further, because I am the author of the concept of “The World According to Dave”, I happen to know that the three leading causes of marital strife and divorce are:
Financial issues
Children issues
Family issues outside of the marriage
Now, if you were to conduct your own research on these marital issues I just listed, you could find other answers and perhaps even prove that the esteemed publication, The World According to Dave, is incorrect. Because I’ve “been around the block,” I’ll stand by them as leading causes of marital problems. Of course, you could add poor communication, individual habits, and a few other things to the pile, but I will contend that if we are struggling financially, our children are causing problems, and/or there are outside family stresses, it can all come to a head pretty quickly whereas if we did not have to contend with these three, we could better cope with other issues in our marriage.
Financial anxiety can even cause health problems. There is a lot of research out there regarding financial anxiety, what causes it, and what can be done about it. For one such helpful article, click on the link in Note 2.
Where the heck are you going with this?
I developed the Afterburner Success Partners course to help you achieve financial freedom and reduce one of the leading causes of stress and anxiety in your life. We will spend a considerable amount of time in the future developing your financial goals. As unique as the Afterburner Success Partners financial template is, just sketching it out on paper does not provide everything you need to know to complete it in a manner that will reduce your anxiety and stress and help you achieve “YOUR Number.” As a starting point, I want to give you something to think about as we begin learning about what you need to learn to lay out YOUR financial plan.
Dave’s Rules for Lifetime Financial Freedom
You keep hearing the term, “The World According to Dave.” That means this is my view, and my view alone, and it may not be shared by everyone. In the “World According to Dave”, here are a few of my thoughts for lifetime financial freedom:
Remember the power of AND. Not I can do this or that, but I can do this AND that
Start with the end in mind. Start today
Know “YOUR Number”. Seek a three (or four!) legged financial stool; that is, multiple income streams
Educate yourself on investments AND other financial issues. For me, this has been a lifelong journey
Understand acceptable AND unacceptable risk
If it’s too good to be true, it probably is
Compound interest is your friend
Be like the tortoise, not the hare. Get-rich themes seldom work and often have the opposite result
Be mindful of taxes today AND tomorrow. Taxes in retirement are a huge issue, and you can mitigate them by working smart today
Use wealth for good
Know when to say, “Enough is enough”
Stop AND smell the roses…Enjoy the journey
Wills AND Trusts protect YOU AND your family. If you don’t have these today, get them
When in doubt, seek professional assistance
When things get hard, remember to be committed, not just interested
And here is a bonus rule that’s not on the slide I show in class: Plan for the worst, hope for the best. Because, frankly, some things are just out of your control. The remainder of our discussions on financial freedom will be on those things that are in your control.
And, oh, don’t forget that quote from the top of the page from one of the wealthiest men in the world. Notice that I did not say ‘richest,’ even though that is also true. Click on the link in Note 3 to understand why.
That’s all for this week!
What’s in it for Me
I can think of few things people want more in today’s modern world than financial freedom.
Call to Action
Start thinking about how you want to define your own financial freedom. We’ll get into it more in the coming weeks.
Recommended Resources
Buy and read Bob Burg's The Go Giver. This is an excellent, short, and easy story about the power of giving that ties directly into our discussion about leaving a legacy. Click on the link in Note 4 to purchase.
Up Next
How much do I need to retire? Or, what’s my number, part 1.
Notes
Please note that as an Amazon Affiliate, I may earn a small commission on the sale of any of these recommended resources.
Anxiety Causes and Prevention, WebMD: https://www.webmd.com/anxiety-panic/causes-anxiety
Money Anxiety Is Common, But You Don’t Have to Handle It Alone, healthline.com: https://www.healthline.com/health/anxiety/money-anxiety#signs
Givingpledge.org: https://givingpledge.org/pledger?pledgerId=177
The Go Giver by Bob Burg: https://amzn.to/4iPYv2R