Financial Freedom

I remember the first time I tasted financial freedom. I was a year or so into my first full-time job and I had finally gotten the hang of budgeting and covering all of my needs. I had a plan to repay my student loans and build my emergency fund, so I could finally save toward something I wanted with what was left over. That was the moment when money became not just frugal but fun to me. Because all of my bases were covered, I had the freedom to choose and pursue my next goal. 

Since then, I’ve gotten many glimpses of financial freedom. My husband and I diligently saved for my dream trip to Paris for almost two years so we could enjoy the best of what France had to offer without incurring any debt. Then there was the time that my husband and I both received raises from our employers but decided to keep our lifestyle the same so we were truly living below our means. Having extra cash in the bank gave us an extra feeling of security and gave me the freedom to not have to check in on our bank account every day.

Recently, my husband and I decided to consider a new vision of financial freedom: selling our home and moving to an apartment downtown. I can hear some of you saying: “But Grace, isn’t owning a home a true vision of financial freedom — the realization of the American Dream?”  Yes, homeownership can certainly be freeing: freedom from paying rent (and annual rent increases); freedom to design, create, and decorate the home you want; and, best of all, freedom to build equity. But it can also be enslaving, with repairs, responsibilities, and the ever-relentless mortgage payment. We’re excited to try on a new lifestyle and see if it fits before we lock ourselves in to our next property. I think the most freeing thing is that we have the freedom to be flexible. After talking to the experts at LSS Financial Counseling, we know we are in a good financial place whether we stay or go.

What does financial freedom look like to you? Is it the ability to spend money on something you want, not just something you need? Is it freedom from credit card or student loan debt? Is it the freedom to quit your job and start something new? Whatever your vision of financial freedom, here are some steps to help you get there:

·      Give Thanks: As we approach Independence Day, it’s important to step back and give thanks for the freedom we already have before stepping forward and pursuing more. There’s nothing wrong with setting and pursuing new goals, but finding joy and gratitude at the stage you are in is important, too. What financial freedom do you already have? Although my husband and I may not be free of our student loan debt, we are free of credit card debt, we’re free to spend on our wants, not just our needs, and we have the freedom of breathing space in our budget knowing that if an emergency comes our way we’ve got the means to handle it.

Tip: Don’t skip this step! It’s easy to think, “If I only had X, than I would be happy financially.” But that “X” will continue to change as you meet your goals and find others. Even if you are in a tough financial spot, take a moment to list out a few things that you can be grateful for right now, like freedom to live in a home without fear for safety, freedom to put food on the table for you and your family without resorting to ramen, and freedom to go out with friends every once in a while.

·      Set Your Vision: What does financial freedom look like to you? For us, it’s having our student loan debt paid off and a fully funded emergency fund. For you, it might be having all of your credit card debt repaid, buying your first home, retiring early, or something else entirely. Get as clear as possible on what this vision looks like. Ask yourself, “What will my life look like when I’m debt free? What will I be able to do then that I can’t do now?”

Tip: Once your vision begins to come to life, find an image that exemplifies that vision. Put that image in an important place so it’s always before you — tape it on your bathroom mirror, make it the screen saver on your computer, put a pocket-sized version in your wallet. This image will help you stay motivated even when times get tough.

·      Chart the Course: Begin by naming the 3-5 big steps you’ll need to take to make your vision a reality. Then break down each step into small, manageable tasks. While the course may seem to get longer and longer, having small steps will simplify this big goal into bite-sized pieces. Then schedule out each of these little tasks so you can get the ball rolling right away.

Tip: Really big financial goals, like building up your emergency fund or saving for a down payment on a house, may take a while to achieve. If that’s the case, give yourself milestones to meet along the way. For example, if you are trying to save $10,000, make each $1,000 saved a milestone met. Establish a small reward for each milestone, like dessert or drinks from your favorite restaurant. Be sure to build any rewards into your goal amount so you don’t bust your budget along the way to pay for them.

·      Name the Non-Negotiables: What are the things in your life that you aren’t willing to give up to make this goal happen? For us, we refuse to give up travel and the occasional night out to the theater or orchestra. What about you? Keep your list short and clear.

Tip: Now that you’ve got your non-negotiables on the table, the rest is negotiable. Looking for ways to put more toward your goal? Track your spending for 30 days and see what you learn about yourself. Renegotiate your bills to see how much you can save. And bringing extra money in, with a raise or a side hustle, is a great way to get closer to the finish line.

I leave you with one important reminder: You can always change your mind. If you find yourself having doubts, give yourself a few weeks to sit with them before you rush to make a change. Don’t brush them off because “you’ve come this far.” Your goals will grow and change over time — that’s part of being human. But staying true to your dreams and values will always keep you on the path to independence.

Due to the Fourth of July holiday, I’ll be skipping my Live this week. Have a wonderful time with family and friends relaxing and celebrating, and I’ll see you next week!