Recently, India completed 75 years of freedom! All of us would have celebrated the 76th Independence Day in our own ways but the common thread joining all would be a sense of relaxation, away from the daily hustle bustle of life, spending time with family and friends, cooking that special meal, etc. As is customary, advertising agencies were on an overdrive creating ads and campaigns linking the spirit or value associated with independence day to various products and services.
If there is one industry that scores over the rest in the usage of the words, freedom and independence, it would be the financial services industry through terms such as financial freedom and financial independence. Not for a moment am I suggesting that these associations are misplaced; rather I would like to say that it is quite an apt association because, in essence, the outcome of every financial plan is delivering financial freedom and financial independence to the individual and his/ her family.
However, I would like to present a slightly more nuanced view of the above and would like to ask if it is the ideal and ultimate outcome one should strive for. Shouldn’t we all endeavour and aspire to venture beyond this unidimensional and constricted notion of ‘freedom’ and ‘independence’ that ties it only to money?
Among the several definitions of freedom that google search returned, I found the following one on the Merriam-Webster website quite pertinent as it succinctly sums up the essence of ‘freedom’ as “the quality or state of being free: such as the absence of necessity, coercion, or constraint in choice or action.”
The following quotes by Morgan Housel from his book, The Psychology of Money, provide very valuable insights into the concept of freedom and independence from a financial perspective.
“Controlling your time is the highest dividend money pays.”
“Independence, to me, doesn’t mean you’ll stop working. It means you only do the work you like with people you like at the times you want for as long as you want.”
I firmly believe that unless the financial plan is centred around an individual’s life and their own personal interpretation of what ‘freedom’ and ‘independence’ means to them, true freedom and independence would continue to elude them.
If money was all there was to living a life of freedom, then I encourage you to consider the first of George Kinder’s famous Three Questions. I paraphrase it here:
“Imagine you have just won a lottery ticket for an amount which can ensure that you don’t need to work for another day in your life, you have more than enough to meet all your ‘financial goals’ and maintain the lifestyle you have created for yourself, how does that make you feel?”
I suspect that after the initial euphoria has passed, you might find yourself thinking about what this ‘financial freedom’ means to you and what to do with it. You might start questioning the beliefs you held onto for so long and wondering why the much-coveted happiness for which you craved still eludes you.
In my practice as a financial life planner, I conduct intensive discovery meetings with clients to co-create their financial plans aligned to their life’s vision and goals that hold the greatest sense of meaning and purpose for them; things they value and cherish closely and deeply.
And I have found that the most common outcomes beyond the obvious financial security are being able to spend more time with family and friends, and giving up their mundane jobs to engage in something that they are passionate about and making an impact. Hardly is it ever about getting a ‘x’ percentage return on their investment portfolio or the next hot investment.
So, before you start working on your financial plan, try answering the following question -
“What do freedom and independence mean to me?”
Your answer to this question is likely to be so profound that it will redefine the way you look at your financial plan and goals.
The above article is an edited version of the article titled, “What does financial freedom mean to you” which originally appeared on the Money and Meaning Blog. You can read the original article here
Rahul Agarwal is the Founder & Principal Adviser of Advent Financial, a boutique financial life planning & wealth management firm.