Special to the Financial Independence Hub
For the majority of young adults, the most common New Year’s resolution is to earn financial freedom. Unfortunately most of them fail to achieve what they set up as a goal on New Year’s Day.
That’s because they have only a vague idea about what financial freedom is all about. For most of us, financial freedom means having enough money that we can us spend on whatever we want. While earning a lot of income and enjoying control over expenses are important financial objectives, this by itself cannot be a true definition of financial freedom.
A precise definition is not universal, as many pundits have different takes on the subject. Here ’s what I think about ‘Financial Freedom’:
A common and genuine fear is of not having an adequate amount of money to purchase groceries or pay everyday household bills. Going bankrupt is never fun and the same is true for those nearing the edge. Having a good flow of income, clearing debts or controlling expenses will do a lot to eliminate fear. But what you are robbed while carrying a good sum of money, or otherwise lose it? Having financial security will instill freedom into you.
Money is one of those elements causing stress, leading to both physical and mental problems. Now do you think an overflow of money will keep money-related stress away? According to research, the problem of depression is high in the richest countries of the world. Studies also claim that earning a $75,000 a year takes you to the point of happiness and beyond that, stress builds up.
I want to offer psychoanalysis of the findings. If you have more, you will demand more. Then you will suddenly realize you don’t need all these things you thought you needed but now believe you need something else. It will go on and on in a vicious circle, which can be depressing. Money cannot buy happiness, a proverb that always rings true.
Getting over Greed
Having plenty of money makes you greedy – isn’t that what you think? According to economists, people with low or middle incomes have a tendency to overspend when they first begin to earn a handsome figure. But a marginal propensity to consume is less in higher -income groups.
As far as consumption is concerned, earning more will help you get past greediness because you already enjoy so much in your life. You will discover yourself seeking opportunities for investment. However, you need to make efforts to overpower the greedy self hiding within. You can do so by contributing to social events, charitable activities and helping others who were not born with silver spoons in their mouths.
It is possible to enjoy freedom from greed, stress and fear at any point across your financial spectrum but then it also depends on your view about money and life. Now it is important to analyze your financial character. Do you fear going bankrupt? Are you feeling stressed out due to your pursuit of an improved financial condition? Do you find it hard to manage your desire for more that you currently cannot afford? Try to figure out the answers and you will come up with a customized definition of financial freedom.
Jack Crew is a finance advisor who has received his Ph.D. and Masters in Economics from the University of California at Los Angeles. He has extensive experience as provider of financial and investment services. You can find more about him at http://financeupdatestoday.com/.