Financial Freedom is being in control of one’s finances & life choices. It is not a one-size-fits-all outcome for every investor but could mean something different to every investor. Financial intelligence is no doubt, a primary condition for wealth creation because desperate choices (lifestyle that cannot be afforded) or imprudent ones (investment designed to erode wealth), lead straight to financial burden – an imprisonment of circumstantial kind. Even so, financial freedom is as much about generating wealth as it is about understanding one’s motivation for seeking such wealth (not-needing-to-work / ability to pursue a passion / owning house & car / living a debt-free-life-of-leisure / ability to fund charities etc.).
The motivation provides purpose to the strategizing & calculations, while pursuing this ultimate goal. However, achieving financial freedom & zeroing in on purpose of this freedom, is easier said than done.
- Firstly, wealth creation is extremely difficult goal to achieve despite being conceptually very easy. It needs regular savings over long period of time, besides good investment practices. Most people tend to get lost in the process itself.
- Secondly, our consumeristic-culture encourages material gratification as a marker of success & happiness. Placing limits on one’s gratification &/or postponing it (so as to invest), is a huge behavioral challenge.
Wealth is a powerful incentive but undefined nature of pursuit of wealth is only a whimsical endeavor. It does not tell you when to stop or that it is indeed possible to stop. Success gets defined by more & more, no matter if such ‘more’ loses all meaning along the way. Mr. Bogle, the founder of Vanguard, illustrates this phenomenon in his book “At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel ‘Catch-22’ over its whole history. “Heller responds, ‘Yes, but I have something that he will never have … enough.’”
A 2021 study by Matthew Kllingsworth for the National Academy of Sciences has found that happiness & money aren’t as closely linked as we assume. “If income is below $75,000, more money allows for more happiness in that it allows greater access to basic necessities, improving overall quality of life. But any increase above that $75,000 doesn’t really affect happiness in a concrete way.”
If financial freedom is to be defined & achieved, then it cannot happen without knowing what is contentment all about. Contentment embodies freedom to be who you are, enjoy who you are, & live the life you were destined to live. It also reduces stress level, improves one’s outlook, relaxes the body & makes life enjoyable. Breaking the cycle of wanting more & being satisfied with one’s current possessions, status & life, is key intentional effort to becoming content. The simple discipline is to be grateful for good things one has, instead of focusing on what is missing.
Have you ever wondered why discontentment returns soon after upgrading or buying a new product? It is because material possessions can never fully satisfy the desires of heart. Solution to discontentment is not in acquiring that missing thing but lies within one’s personality – in knowing why is the missing thing at all causing unhappiness? Also, it helps to become a content person if one does not compare oneself with others because we always compare the worst of ourselves to the best assumptions we make about others. Nobody’s life is perfect & everybody is unique in one’s own way. The proactive way to contentment is in helping others, sharing your talents, time & money as that gives finer appreciation of what one owns & what all can one offer to others.
If you don’t move the goal posts – don’t need a bigger house, a nicer car or a more elaborate vacation or gets tempted by every new shiny material thing that comes along – then you could claim the ultimate prize of financial freedom by accumulating wealth sufficient to support a lifestyle, reflective of one’s core self over the lifespan & ensuring that investments are so managed that they stay ahead of inflation.
There can be no financial freedom without contentment because ‘targeted financial corpus’ is a goal post that will move further away with every new desire. Contentment may be a personality trait for some but for others, is definitely achievable with intentional effort.