The majority of people think that financial freedom means no more work and just a holiday every day without worrying about money in any form. Retirement is often considered as true financial freedom.
Many often think that financial freedom is some sort of situation where they can buy anything they want, including all the luxury items, anytime they want with their own money, with no borrowing involved.
This ideal is difficult to achieve if they only have a mediocre job with a fixed, mediocre salary, combined with little knowledge about investing and have no time to do more with their investment.
Some other people think that financial freedom means a debt-free living. They often live from paycheck to paycheck, working excessively to have enough money so they have savings for holiday and emergency funds to avoid any potential debts.
Some think that financial freedom means having time to spend with their loved ones, no debts, with regular income. Many of them, despite having the time and no debts, often have regular income from the job they hate.
What Is Financial Freedom, Really?
Different people have different definitions of financial freedom.
My definition of financial freedom is:
A state where we can quit and start any job or activities without having to worry about money as we have multiple streams of regular income to cover both living expenses and unexpected emergencies.
So it’s not exactly a ‘retirement’ if it refers to a state where we cease to work and do nothing.
And it also means, we don’t have millions of dollars in the bank because all we need is just a regular income from multiple streams.
I don’t believe many of us are looking forward to doing nothing when we’re old.
I believe many of us will always want to do something no matter how old we get, instead of just sitting at the beach (or the couch) the whole day – every day, eating and drinking until some fat blocks one of our arteries and we’re forced to have heart surgery, or simply die because it’s too late to do anything to fix it.
Personally speaking, I will always be writing, composing music, and producing arts no matter how old I get, and will still exhibit whatever I make. This is the ideal state where expressing myself for the sake of expressing and helping other people interest me more than doing it for a living.
Roads to Financial Freedom
Generally speaking, there are two roads to achieve financial freedom: the safe road and the crazy road.
The Safe Road
There are numerous articles writing about how to get to financial freedom through the safe road. It means you work for someone else, receive a fixed, regular salary, budget your expenses, and set aside some amounts for savings and investments.
After a certain amount in your savings and investments is achieved, you can then retire, hopefully as early as possible, but it’s often not that early. Many people will usually spend 20-30 years of their life before they can actually enjoy their investment from their salary.
If you prefer the safe road, this article and this one explain well how to get to financial freedom, including how to optimally invest in Real Estate, in Roth 401K and Roth IRA, and in other good growth stock mutual funds.
The Crazy Road
The word ‘crazy’ here is just my own term because it literally is crazy, it’s high risk with unexpected twists (and tears). But it also has high rewards, if done ‘correctly’.
The word ‘correctly’ is, of course, challenging, because there is no exact formula for doing it as each individual has different efforts, skills, talents, mentality, circumstances, etc.
This road is not for the faint-hearted. It’s not for those who prefer certainty over opportunity.
There are plenty of ways to do ‘crazy’ things to achieve financial freedom:
Investing in the Stock Market
Buying and selling shares for a profit can get you to financial freedom, provided that you have solid knowledge and understanding about investing in the stock market. Otherwise, it would be the same as gambling.
To get a good understanding of the stock market, start by reading The Intelligent Investor by Benjamin Graham. This book has been recommended as one of the best because Warren Buffet, a business tycoon who started his empire from investing in the stock market, says that it’s the best book of investing that he has ever read.
Investing in Ourselves
Investing in ourselves such as being a freelancer, a private practitioner, a merchandiser, a corporate owner, may make us feel ‘better’ than investing in the stock market. It’s better in two ways:
One, because in the stock market, you basically hand in your money to someone else with the hope it can multiply in someone else’s hand.
Two, because it highly depends on different variables such as efforts, skills, talents, mentality, and circumstances, investing in ourselves can be more frightening but may feel more satisfying because we learn our successes and failures first-hand.
In other words, investing in ourselves can open more opportunities to reap more rewards.
Stories of billionaires who came from nothing are everywhere and easy to find. This one, for example, tells us how ‘crazy road’, built from little to nothing, leads to very high financial rewards, and the pattern is the same: they start with freelancing or doing their own business. They invested in themselves.
There are two books I’d recommend if you wish to take this crazy road:
Who Took My Money by Robert Kiyosaki – you can buy it here. This book helps you understand the fundamental importance of why you’re taking this road, by understanding the difference between employee, self-employed/small business owners, business owner, and investor.
The 4-Hour Workweek by Timothy Ferris – you can buy it here. This book helps you understand your time, the possibility to actually work 4 hours per week, covering how and what you can outsource, what not to do, the essential elements of what to sell, etc.
Conclusion
Different people have different concepts of what financial freedom is to them. The most important thing is that freedom exists: the freedom to choose, freedom to quit, without worrying about how we pay for our living expenses and unexpected emergencies.
The two roads to financial freedom that we choose, the safe road or the crazy one, determine how long or how fast, how little or how abundant we can reap the rewards. High-risk pursuit often offers high rewards, if done correctly.
Rewards depend on efforts, skills, talents, mentality, and circumstances within individuals so there’s no ‘exact’ formula on how to achieve financial freedom using the crazy road.
