How To Know if You’re Finally Financially Free

It’s a lot like knowing you’re in love — except you sleep well

Assuming you employ conventional personal finance methods, taking an alternative approach — such as the one I’m about to outline — can change your life.

It did mine.

I used to freak out because I realized there was no way I was ever gonna save $1 million.

In fact, you could give me two lifetimes, bi-weekly cryotherapy, and daily transfusions from a blonde hair/blue eye, ripped blood boy (remember Silicon Valley on HBO?), and I’d still never make it to a million.

I’m cut out to save and invest. Just not at the level to make it to a million.

A — I don’t make enough money.

B — I like doing stuff.

B bears some responsibility for A.

Then, it hit me. I realized something. You don’t need a million dollars to retire. And why in the world would I want to do something so year 2000 as retire?

I love my job.

I write about money, love, cities, and any other random thing I want to write about. My life is my work, in only the best, most personable way. When you work your passion for money, you eliminate the word “retire,” in all its forms, from your vocabulary. Or at least you put yourself in the position to do so.

In this article, we discuss the notion of financial freedom (though I prefer flexibility) and how you might be there or might be much closer to being there than you think. We outline how you might know where you stand.

The proudly (I assume) Canadian mastermind behind Making of a Millionaire, Ben Le Fort, brings nuance to the personal finance conversation:

…the only thing that really matters is the impact of $5 on your financial situation.

Ben’s not a fan of the latte effect. The tired idea that you should be ashamed to spend $5 a day on coffee. However, the truly great thing about Ben’s take is that he presents a sophisticated analysis.

It’s pretty crazy that Ben could make so much sense, yet I have not come across anybody before him who says what he says, the way he says it, in relation to the latte effect.

If you can’t put food on your table, you probably shouldn’t spend that $5 everyday.

If you’re doing okay or better, that $5 probably isn’t going to hurt your near- or long-term financial well-being. In fact, it might help improve it.

Straightforward, yet so curiously elusive.

I prefer financial flexibility over freedom because the latter indicates you have enough money to never work again. For many of us, this isn’t realistic, particularly at such a young age. Financial flexibility simply means you have the psychological, strategic, utilitarian, and actionable ingredients in place to live how you want to live right now — within reason.

That looks something like this:

• Small purchases have zero impact on your finances:

When you spend money, does your checking account even notice?

I do this with small, mostly everyday purchases such as coffee. My checking account has no clue. It’s like I was sleeping beside it and, as I slowly slid my arm out from underneath its body, it’s breathing never changed. So I comfortably “throw money away” each day at local coffee shops.

• Have you or are you scaling up to do this with larger purchases:

I do this with bigger, less frequent purchases. Like the other day, I decided I needed new sneakers. Partially guapa-inspired, I bought a $130 pair of shoes.

Do I need them? Yes and no. Do I want them? Absolutely. Will I get something out of the purchase? Pretty sure I will. Did my checking account flinch? Nope.

• Do you have consistent cash flow, preferably from multiple sources?
• Do you have a plan B if one or more of those cash flow sources dries up? (Or do you own your own business that isn’t going anywhere? A freelance writer’s life tends to be less certain than the person who runs point on a plumbing company.)
• Do you feel like you’re living how you want to live right now?
• Can you see — on the realistic horizon — that you have the logistical and financial capacity to live not only how you want to live right now, but how you want to live over the next year, five years, ten years, and so on?

Getting the sense you’re on the path to financial flexibility — or that you’re sort of, kind of, if not already there — really is a lot like realizing you’re in love.

It’s a feeling, but things happen. Super specific things. The big difference — you have fewer nights with poor sleep and very little anxiety.

For me, being in love messes with my sleep. Oddly, I still feel refreshed most of the day long. Often, I want a nap. Having your love next to you for a nap — this is having it all. I also experience a healthy form of productive anxiety that fuels a measured euphoria alongside creativity and optimism for the future.

Sensing or realizing financial flexibility produces a feeling of ease. Of relative calm. You sleep better — even well. And, yep, you feel refreshed. You crush your work, which can lead to even more income. You feel good about the future.

That future takes shape over time.

You don’t look at your checking account balance when you buy coffee in the morning. You’re more than confident in paying for your friend’s coffee on occasion.

Then maybe the next step — when you book travel, you don’t have to move money to book the Airbnb. There’s an ample cushion in your checking account. It feels pretty awesome to not touch the travel fund you’ve been building — or to touch it less when it’s time to pay for the elements of a future trip.

It’s a personal financial dance you do with yourself — and maybe with your partner. You’re not using a joint checking account or similar recipes for money-induced relationship destruction. However, you are — to a sane and logical degree — combining financial forces.

Want to take a road trip? Great, let’s go.

Want to travel domestically? Sure, we can leave in two weeks.

Want to go big and leave the country? Yep, let’s plan that trip now and head out in a month or so.

If you freelance, maybe you can take your work on the road.

Or you have the type of work you can load up on, then leave for a week or two, or more. A bit like how you eat very little — and what you do eat is healthy — in the weeks leading up to a trip where you’re going to taste everything this fine city has to offer.

I position myself to get/be there like this:

• I’m a freelance content writer.

I can work from anywhere. All else equal, I can pretty much make at least a little money every single day. And, often, more than a little.

I can work like crazy ahead of time off, then work less on respite or vacation (or not at all, but when I don’t write, I miss it. It’s part of my routine, no matter where I am or what I’m doing.)

• I focus on allocating cash flow. I take what I make as I make it and split it between various pots of money (checking account, emergency fund, rainy day fund, travel fund, daughter’s accounts, investment account).
• I take on the mindset that I’m going to work — in some fashion — forever.

See above. I love what I do, so why would I not want to keep doing it, especially if the alternative is working nonstop in a job I hate so I can live how I want to live tomorrow rather than today.

You might situate yourself differently. This is cool. Your circumstances and mindset dictate the path you choose to take.

For example, you might keep an out-sized amount of cash in your checking account and mentally note how you’ll spread it around for your various obligations and desires. Other than one bank account, maybe you only have an investment account, and that’s it. It might be easier for you to organize yourself this way.

You might work in a high-power job with a salary deep into six figures. You save a majority of what you make and intend to retire at, say, 35. To each their own.

As with so much in personal finance, it begins and ends with mindset. Strategy and such exists somewhere in the middle.

We can place mindset under a broad umbrella. As in, we’re all striving for the same or similar goal — to have a great life where you can blow off (or semi-blow off) a day, days, weeks, months(!).

For me, I want to do it now. You might decide to put it off for a while.

Within the broad sits the specific.

This is where you adapt and tweak the general to live how you want to live now and into a future of limitless possibility.

This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.