Everyone is trying to accumulate more of it. However, there are two types of chasers – one who knows when to stop, and another, who keeps amassing wealth for their next life.
Money acts as a medium of exchange for our coveted dreams and aspirations. With money, one can afford more freedom and often, it is the means to have rich, colourful and diverse life experiences. As the great American philosopher Henry David Thoreau puts it, “Wealth is the ability to fully experience life.”
We all wish to have a perfect life configured to our liking and where everything from finances to health and leisure to relationships is in its best shape.
Money forms the backbone to support such an ambitious form of existence, and financial freedom ensures that this skeleton stays intact forever. However, what makes financial freedom one of the most worthy goals to strive for is that it gives you complete control of time so that it is utilized in activities that generate the greatest pleasure and satisfaction.
Before we move ahead, let’s first understand what financial freedom is.
In simple words, financial freedom is that stage of life where you have amassed sufficient wealth so that money has no power over your life. You live your ideal life, follow your passions and indulge in joyful engagements while your money keeps toiling to facilitate all your needs, wants and aspirations.In this article, I have brought to light this subject with a practical scale to determine your position in the journey to financial freedom.
Financial freedom is not a night’s journey. Depending on your current financial situation, it requires dedication, discipline, and a definite action plan to accomplish it.
To reach any destination, you need to have two essential coordinates – your current position and what should be your desired position. Therefore, understanding where you currently stand in this journey will guard you well.
The nine stages of financial freedom are presented here (see the picture below).
The stages are divided into three blocks, each containing three stages.
The three blocks are labelled as Red, Yellow, and Green zones.
The Red is the ‘Concern’ Zone, the Yellow is ‘Stability’, and the Green is where you start to ‘Thrive’ in a worry-free setup.
The defining characteristics of each of the nine stages are mentioned in the picture to help you decide which stage you belong to.
So, where do you find yourself on the given spectrum of financial freedom?
Once determined, no matter wherever you stand, you can chart a voyage to the highest of stages. However, if you are already at the zenith, Congratulations.
Start with analyzing your current status, involve yourself in purpose and passion-finding exercises, take a bolder vision of life and then execute that vision by transforming it into bite-sized, achievable goals.
Next, run some calculations to find the amount you need to make it to the financial freedom stage. A ballpark figure would be around 30 times your current or desired annual expenses; this amount will be your guiding lighthouse, under which you take immediate steps to move a stage upward and gradually climb the ladder.
The break-out step is to instantaneously begin your excursion towards financial freedom by cutting back on discretionary spending and ploughing that money into growth assets.
Brainstorm about increasing your income and reducing expenses; if required, look for alternative sources of income, side hustles or entrepreneurial opportunities. Invest wisely, and take the help of a qualified financial advisor to get your economic life simplified and optimized.
The supreme goal should be to create structures of passive income that are plentiful for your ideal life.
With devotion, iron will and hard work, you will surely break the resistance and move to the next level. No matter where you belong on this ladder, there are ways within your reach to climb a notch higher and incrementally scale the summit.
Financial freedom is not only about amassing monetary wealth but, more importantly, it’s about freeing the scarcest resource – Time. You can always make more money but you can’t make more time.
It provides the perfect platform to live the best life you always aspired for, explore and expand your potential and empowers you to contribute confidently for the greater good of society.
Views are personal: The author -: Vikas Sharma is the CEO & Co-founder of Goalchi Capital Services LLP
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