What is Financial Freedom? Robert Kiyosaki, Financial Freedom Vs Financial Stability, 7 Steps of Financial Freedom Tony Robbins, Financial Freedom Vs Financial Security.
Financial Freedom may be a new term for many readers and it is important to understand it as some may derive the wrong meaning.
Financial freedom means that you have enough savings, financial investments, and cash on your hand so that if you wish to get the desired life for yourself and your family then you can easily afford it. Financial freedom means that your money is doing great work for you rather than any other thing around.
You may wonder how you can become financially free? Becoming a financially free individual requires some intelligence and hard work as you must pay off your consumer debts, create enough passive income through investing in different businesses to pay for your current and expected life, and lastly you must be able to build a safety net.
Those who are burdened with increasing debt, excessive consumer spending, monetary business, and other problems remain at a distance from being financially free. They have faced several challenges but following some habits such as keeping abundant assets, gaining independent income, saving money, paying dues and debts, investing, bargaining, monitoring credits, living below the means, staying healthy, getting advice from an expert, and others can put you on the ideal path to financial wellness.
Moreover, you can set your life objectives, both large and small, and can create plans for their accomplishments. You need to budget your funds so that you can effectively cover all your needs and try to keep as little debt as possible and keep an eye on your credit.
Once you have made up your mind to become financially free and independent then you should look for a financial consultant and start investing as per his consultation. Try to live a simple life and don’t be afraid to ask for better offers or to negotiate.
According to Robert Kiyosaki, financial freedom means never having to work again. In his book, Rich Dad he expressed his views that everyone should look to transcend job security and try to achieve financial freedom. Moreover, Kiyosaki mentions that no one is ever ready to take the risk and sacrifices the path to financial freedom.
Robert Kiyosaki has much to say about financial freedom and here is what he has to say.
In his view, the ultimate purpose of wealth is spending time with freedom in whatever way you want. But it is not only the one type of freedom that wealth provides you and he further defines that the absolute purpose of building wealth is financial freedom. In his eyes, the ultimate goal of an individual life should be financial freedom.
Kiyosaki has focused altogether on how to achieve capitalist-level financial freedom where time is in your hands and nothing is out of your hands and the principles that he had put forward are equally helpful for reaching financial security.
He further adds that at least you should strive for a life where the concern about money doesn’t bother you nor does it dictate the way you live.
Ultimately, the purpose of Kiyosaki is to motivate you to excel in job security so that you can define your life by the dollar amount mentioned on your paycheck and the day-to-day parameters of work. For Kiyosaki, the concept can be defined with a simplicity that if you have job security then you have job independence.
Financial Freedom Vs Financial Stability
Financial freedom and financial stability are two different terms but they are often used interchangeably but their meanings differentiate them from each other.
The first plan that you should plan for is financial stability as it initially enters our lives when we step into the workforce and make a new start of our life as a responsible individual paying our bills, paying daily living expenses even when we get married, and buying a house on our own. The fundamental idea of getting financial stability is that we don’t have to get worried about money at any point. There are different aspects to this idea.
The first idea is related to being able to pay recurring monthly expenses such as electricity and water bills, internet and phone bills, clothes, food, groceries, transportation, car loan, allowance, home loan even spending on different indulgences such as going to a movie, buying clothes and electronic gadgets, eating at a nice restaurant.
The second part is also equally important as it requires us to accumulate an emergency saving six-to-nine-month buffer for unexpected expenses and saving for a long-term future such as your children’s university education.
Financial stability is a reflection of the financial system which in turn is very important as it reinforces trust in the system and prevents actions such as running on the bank so the economy remains stable. Financial stability is measured as the individual institutions through a z-score.
Explicitly the z-score compares buffers and risk for measuring a bank’s solvency risk. Different factors such as inadequate economic policy, insufficient accounting, and audit, weak supervision, and rapid liberation of the financial sector affect financial stability to a great extent.
Moreover, if you ask for financial stability in a family then it can be defined as that a family has free access to safe housing, healthy foods, and other necessities to be fully engaged in their communities and make better plans for the future.
7 Steps of Financial Freedom Tony Robbins
Tony Robbins is a well-known motivational speaker who is popular for his ability to inspire people and help them to reach their dreams. Along with being a motivational speaker, he is a personal finance instructor, author, and life coach as well. Tony Robbins has a recognizable face and different inspiring success stories to share.
The book Money Master the Game: 7 Steps to Financial Freedom authored by Marc Benioff defines this point. This book is a great treasure as it brings out the wisdom of Tony Robbins and 50 great financial minds in the world to help people create an extraordinary life.
Reading Money Master the Game will open your mind and it will be a great step for you to step into an extraordinary life whose meaning is greater than earning money.
Tony Robbins has outlined seven actions that are necessary to adapt to enjoy a financially secure and comfortable life personally as well as professionally. These 7 steps points are given below:
- You must make the most important financial decision of your entire existence.
- Get trained, Become an expert from this moment: learn the rules and their consequences before entering the game
- Make the game winnable
- Dare to Make the most important investment decision of your life, right now.
- Create a lifetime income plan
- Invest like the .001%
- Just do it, enjoy it, share it.
By adopting these simple tests, both financial success and personal peace can be enjoyed at the same point. At over 600 pages, Money Master the game is a worthy book to read and the knowledge you gain will be invaluable. I highly recommend this book to millions of average people for leading a great life in success.
Financial Freedom Vs Financial Security
Financial freedom is one step higher than financial independence. Financially free individuals can use their passive income to fund their luxuries, travel expenses, and whatever they want to do in their life. Financial freedom means that you are free to make choices such as flying free class, upgrading the ocean-view suite, and hanging out with friends without worrying about where the money is coming from.
Whereas, financial security is a simpler concept to understand. It can be defined as if your salary disappears due to some reasons but you still have enough money coming from other sources such as passive income to cover the basic living expenses. Financial security ensures that you have an emergency fund available at all times if finding new employment is taking longer than expected.
Financial Freedom Vs Independence
Have you ever wondered about the difference between financial independence and financial freedom? In the case of passive income, these two terms are interchangeably used but they are used separately. Financial independence is a wonderful thing that once you get to understand it you will praise it all time and you will be proud to achieve the milestone.
Financial independence means that you are enjoying the status of a free bird without any worry about the future as back in the years you have remained successful in gathering enough income or wealth and now you do not need to be employed or dependent on others.
With financial freedom, you feel more or less locked in your current standard of living, and you may be happy with this way of living but you don’t want to take any chances.
When you have financial freedom, you are free to experience things that you have not realized while moving on the path of financial independence. For example, without any regret you can order your favorite item rather than the best value, spend a year in western Europe, stay on the beach, paying overpriced internet bills for continuing the rest of the game.
Understanding all these concepts will be great guidance for you.
Read also: What is Financial Freedom?
External resource: Moneyfit