The Voluntary Life: How To Get Financial Freedom

31 October 2011

How To Get Financial Freedom

Financial Freedom is an achievable goal. But what exactly is it and how does making financial freedom your goal differ from more traditional financial goals? A common approach to personal finance goes something like this:

MAINSTREAM ASSUMPTIONS ABOUT PERSONAL FINANCE

  • the goal of personal finance strategies is material wealth and comfort;
  • the method is getting a secure job;
  • the measure of how well you are doing is your salary;
  • debt should be used, with caution, to obtain consumption items (mortgage for a house, loans for a new car etc.);
  • provision for the future should be made through a pension.

A approach aimed at financial freedom is completely different in every way:

ASSUMPTIONS WITH FINANCIAL FREEDOM AS YOUR AIM

  • the goal of personal finance strategies is financial freedom (the level of wealth is optional);
  • the method is entrepreneurship;
  • the measure of how well you are doing is how long before you have to work again, where passive income - expenses > 0
  • debt should not be used for consumption items, but might optionally be used with caution to further entrepreneurship and value generation;
  • provision for the future is made through creating passive income streams.

Thoughts on how to adopt financial freedom as your goal are provided in the podcast. The views expressed are only my opinion about this subject and I am not any kind of financial advisor. Podcast Episode

5 comments:

  1. Thank you for this inspiring podcast! I'm 18 and in training to become a teacher in Montessori environments. I'm planning (rather loosely at the moment) to open my own school(s!) in the future. In these 15 minutes you told me what I already knew I wanted, perhaps in more coherent terms.

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  2. Thanks DTMoney! I am very happy if the podcast helped you be conscious about your existing goals. Very best wishes to you on your journey!

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  3. Wish I heard this 30 years ago. Jake I think the desire for status and the need to feel part of the herd make it difficult to resist conventional wisdom. How for example does one psychologically divorce themselves from the belief that renting is money down the drain? I'm glad I found your site.

    M

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    1. Thanks M, yes it's a tough one. I recommend the forum at the website "Early Retirement Extreme" to read lots of stories of other people who deliberately rent.

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  4. Oh thanks Jake for the link. What is your psychology blog?

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