Why You Should Care About Financial Freedom
“Money may not be the most important thing in life, but it affects everything that is.”
Robert Kiyosaki (author of Rich Dad Poor Dad)
What is Financial Freedom?
Simply put, financial freedom is when the income (or cash flow) from your investments is greater than your expenses. Once you achieve financial freedom, work becomes optional because your investments would finance your lifestyle, indefinitely. In a world where financial constraints can determine the trajectory of our dreams, the pursuit of financial freedom becomes increasingly vital. How differently would you live your life if you no longer had to trade your time for money?
Financial freedom is liberation from the rat race. The monotonous 9-5 would have no power over us. Financial freedom is peace of mind knowing that we can weather turbulent economic times. Financial freedom is being able to prioritize what truly matters in life, recognizing that quality time with loved ones far outweighs the time spent confined to a workplace. Financial freedom is the key to unleashing your full potential. It empowers you to take more risks, embrace new challenges, and discover your unique purpose. Financial freedom allows us to build a lasting legacy, ensuring that future generations have a head start in their own pursuit of happiness. Financial freedom encompasses all of these aspects and extends even further, offering a multitude of possibilities for a fulfilling and abundant life.
So what is holding us back?
Financial Freedom is easier said than done.
Dreaming about financial freedom, however, is very different than actively pursuing it. Turning dreams into reality involves making informed financial decisions, setting clear objectives, and taking calculated risks.
The vast majority of people can’t break the vicious cycle of living paycheck to paycheck, spending instead of investing, and focusing on short term benefits at the expense of their future financial well-being. Here are some sobering statistics:
The average American has just $65,000 in retirement savings (Federal Reserve), although most Americans think they need ~$1.3 million to retire comfortably.
60% of Americans are unsure if they are on track to retire. (Federal Reserve)
Social Security is forecasted to run out of money by 2033 (NPR), with people of color depending disproportionately on it for their retirement income.
As a first-generation American, I deeply understand the uphill financial battle that so many in this country face. My parents immigrated here from the Philippines without a dollar to their name. Through sheer grit and determination, they were able to find success and provide an amazing life for me and my sister, but it wasn’t without hardship.
As I got older, I began to have more open conversations with my parents about money, and they were quick to admit that they made a lot of mistakes because they lacked a proper financial education. Their struggle, however, ingrained in me a sense of urgency to become financially literate.
This is why we need to care about financial freedom, to flip the script on the grim financial statistics and to honor the sacrifice of our parents. With the right education and mindset, lasting generational wealth can start with us.
Financial Freedom, the journey of a thousand miles
Financial freedom is not easy. It will be a long and perilous journey, but it will be worth it.
Here are a few recommendations on how to jumpstart your financial education:
Buy a copy of “Rich Dad Poor Dad” by Robert Kiyosaki and read it cover to cover. This book emphasizes the importance of purchasing assets (that put money in our pocket) instead of liabilities (that take money out of our pocket).
Get educated on investing. If you want to get started in the stock market, I recommend reading “A Simple Path to Wealth” by JL Collins. If you want to jump into real estate, I recommend “The Book on Rental Property Investing” by Brandon Turner. Both of these books will give you more tactical advice on how you can achieve financial freedom with different investment vehicles.
The formula for achieving financial freedom is simple - spend less money than you earn, and invest the difference. The sooner you implement this formula, the better. Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understand it, earns it; he who doesn’t, pays it.” If you didn’t understand that quote, research compound interest until you do.
Wrap Up
We should all care about financial freedom. While it may seem elusive for many, it doesn't have to remain out of reach. By practicing disciplined spending, understanding the principles of investing, and allowing the power of time to grow your wealth, you can embark on the path towards financial independence.
Stay committed to the journey, my friend. Your future self will thank you.
