As the Fourth of July has come and gone this month, a lot of people in the personal finance community talked about the power of ‘financial freedom’. They took a deep look at financial freedom and what it will take. Conversations about financial freedom relate to the concept of FIRE, which stands for Financially Independent, Retire Early.
People who pursue FIRE aggressively save and invest and retire years and sometimes decades before traditional retirement age. While these stories can be inspiring, they can also be discouraging at times for people who feel like they can’t save 50% or more of their income or are just getting out of debt or ditching the paycheck-to-paycheck cycle.
The good news is that so much about money is your money mindset, which drives your behavior and affects your outlook on life. Financial freedom doesn’t just have to be about the numbers but how you feel about money and your relationship to money. If you want to feel financially free, here are 5 different ways to look at financial freedom.
1. Knowing Your Net Worth is NOT Your Self-Worth
When I was paying off $81,000 in student loan debt, I was depressed and felt so low. I saw my negative balance and felt like a loser. I did conflate my self-worth with my net worth, which was a mistake.
Whether you have money or not, are in debt or not, you are still a worthy person. Simply being alive means you’re worthy of existence. If you made a mistake or several mistakes along the way, acknowledge that but know that your net worth is not your self-worth.
To feel financially free, completely divorce these two ideas from each other. Find freedom and peace that whether you’re rich or broke, you are worthy.
2. Shifting Your Money Story
We all grow up with specific money stories that can negatively impact our life, choices, and finances. Our money story is influenced by our family, cultural upbringing, friends, schooling, job, and relationships.
You can shift your money story by recognizing the money beliefs that are holding you back. When I was paying off my debt, I used to think “everyone had debt” and “rich people are greedy’.
When I examined those thoughts, I realized they weren’t my own and they certainly weren’t helping. I shifted my money story by realizing money is a tool to live a life I want and doesn’t have to be ‘good’ or ‘bad’.
Write down what money story or money beliefs you want to have. I now have a money story that I will always have enough, I can always earn more, and I help money work for me. Changing your money story can unlock a new level of financial freedom and make you feel secure.
3. Be Grateful for What you Currently Have
Gratitude is a powerful tool to help you get out of the compare and despair trap and get you into an abundance mindset. When we work so hard or want to change our financial lives, we may think we haven’t “made it” until we have a million dollars or we pay off our debt or move. Insert whatever milestone here.
If you outsource your happiness until these big moments, you miss so much of life. Learning how to be grateful for what you currently have will shift your money mindset so much and get you feeling of financial freedom.
Why? Because if you have a roof over your head, food to eat, clean water to drink and shower/bath, and have WiFi, you are wealthier than most of the world. If you have your health, especially after this past year with a pandemic, you are incredibly wealthy. Health is wealth.
Being grateful now and enjoying what you have can make you feel so rich, regardless of what’s in your bank account. Because you start to see things in new ways and realize how much you do have and how lucky you are.
4. Spending on Your Values
Another way to look at financial freedom is to spend on your values. I have recently started to give my money a money mission statement.
Basically, it gives my money a purpose. As a business owner, I want to support other women business owners and marginalized communities. I want my money to help others with their money.
Giving my money a purpose helps me spend on my values, which makes me feel financially free. Because when you can use your money to support others and lead a chain reaction of financial activities, you can see just how powerful your money is and what it can do.
Start to write down what your values are. Which type of people or businesses do you want to support? What issues are important to you? If you could have all the money in the world, what would you do and how would you help others?
Spending on your values is a key step to reaching financial freedom. It’s not all about hoarding money but spreading wealth to others as well.
5. Ditch the Scarcity Mindset
So many people have a scarcity mindset that makes them feel that resources will run out. They think they’ll never be enough. Some of this can come from a real place of trauma and shouldn’t be ignored.
But as you start to build stability and wealth, look at the facts. Have you been able to take care of yourself up to now? Have you always been provided for?
Start to track your abundance to help shift out of your scarcity mindset. Did you get coupon savings? Look at that abundance! Get a free gift from a friend. More abundance.
If you can successfully ditch the scarcity mindset, you will feel abundance and attract abundance because you’re open to it and looking for it. What we focus on grows. What we believe, happens. So getting rid of this money mindset that doesn’t serve you is revolutionary.
Don’t fall into the trap that financial freedom just has to mean you reached FIRE or a certain number in your bank account. These 5 options are different ways to look at financial freedom and can shift your life and finances for the better.