WHAT THE HECK IS FINANCIAL FREEDOM?

If you are someone like me, coming from a middle class background and grew up hearing things like "Money is not everything" or "Love for money is root of all evil", then this article is for you.

It took me three decades to understand that money, by itself, is neither good nor bad. Money tends to take on the qualities of the person holding it. If it is in the hands of a person like Bill Gates or Azim Premji, money gets used for the upliftment of the society or to support a larger cause. If it is in the wrong hands, it is usually not good news!

You could be someone wanting to support a large cause or to help people or just to accumulate wealth to be recognised as someone significant in the society. One of the things that will help you in your mission, is to understand the term Financial Freedom.

Before we try to understand what Financial Freedom is, it is important to have a few things clarified. And a little info on how I learnt about it might help as well.

I come from a simple, middle class family. My dad was a teacher in a government school, in a town in Tamil Nadu. The biggest success formula that I got was "Study well. Get a good job. Settle down in life." :)

The biggest asset that my parents left behind for me are the values and principles of life. Among many learnings that have been guiding my life, statements like "Money is not everything", "Love of money is the root of all evil", etc, had been deeply ingrained my DNA.

So, when I sarted my career, my goal was clear: Succeed in my career as much as possible, save money for a peaceful retired life, after providing to my family. While most people will not see anything wrong with the above goal, if you have even the slightest idea of goal setting or what a SMART goal is, you will notice the huge gaps.

Among multiple incidents that shaped my life, there are two events that are important to be mentioned in this context. The first one was how I lost my job when the division I was working was closed down during a recession. The fact that I was awarded as the best employee of the previous two quarters did not help during the next few months, when I was literally pushed to the streets. Just as I was stumbling back to normalcy, a near-fatal accident (the autorickshaw I was in, was hit by a speeding cab) brought me another news: I was likely to be in bed for the next one year.

While these two incidents revealed how life can throw surprise punches at you, I am thankful that these two incidents taught me couple of important lessons:

• Never take things for granted
• Dig your well before you are thirsty
• Even the best job will not provide financial security
• I have to learn about managing personal finances

As I progressed in my life, I realised that my bare minimum expectations of a good house, a car, good education for my children, traveling on family vacation, running an orphanage for the needy children, supporting my parents with a good life and health care, everything required money. Not just some money, a good amount of money.

As "realities of life" start to show up, the definitions began to change:

• A good house changes from an independent house to a 2 or 3-BHK apartment
• A decent car changes from a sedan (usually starts in the category of a Mercedes Benz or a BMW) to a hatch back
• Family vacations get limited to the Coorg, Goa, Nainital, while Swiss, Australia and Paris were mere desktop wallpapers

Honestly, I did not care much for the above mentioned 'dreams'. But, the ones mentioned below hit me hard:

• I wanted to provide financial stability to my family: my parents, my wife and two children.
• Not having enough time for my parents. I realized my parents did not want a mercedes benz or a vacation to europe, but were hoping that I am able to spend time with them, without thinking about work or what's playing on the television.
• As my children started growing, they needed time from me to play. They needed a patient father who will listen to their silly stories, rather than someone who was sooooo busy making money so that he can buy a hitech toy.
• I wanted to be beside my dad, mom, wife or child when they were not keeping well or recovering, rather than spending hours in some meaningless office meetings.
• I did not want to stop at giving some 100 or 500 rupees once in a while and think of that as charity. I truly believe that the people or cause that you want to help requires more of your time than just a few hundred rupees donation from a stranger.

When I looked around, I saw everyone around me living a life more or less similar to what I was. But, for most people, it did not seem to matter! They seemed to be fine living a life without asking any questions to change the status quo. They seemed to believe that they existed to work in a job!

Don't get me wrong. Coming from a middle class family, I needed my job to meet all my commitments. I was not ready to give up my job. But, the more I thought about the so called 'reality of life", one thing became very clear to me:

I wanted a job to support my life. I did not want to live my entire life only to do a job!

It was a big realization that I needed both time and money to achieve what I really wanted in my life. And, like most people, my view of life was like this picture. I used to believe one cannot have time and money, while still having the energy to enjoy both! What a sad picture of life, that most people carry in their mind!

It was at this time of my life, I heard the term "Financial Freedom" for the first time. From the first instance that I understood the significance of the term, I have dedicated more than a decade not only learning about it, but working towards achieving it.

Financial Freedom has become a term which is losing its meaning, not because it does not exist, but because there is not enough clarity about what it means.

So, what does Financial Freedom really mean? Let me take the next couple of minutes to help you understand the way I see it.

In a very generic sense, Financial Freedom means:

• You are able to choose a career you love, without worrying about the income part of it.
• You have the time and money to pursue your passion/interest.
• You are able to afford things that interest you, without straining your budget.
• You are able to financially support any cause or help other people, those that appeal to you.
• You are able to retire from active work, when you choose to retire, not when you are forced to.

All these are personal to each individual. What might mean Financial Freedom to someone, might not mean the same for another.

However, this is NOT a subjective term and you can have it as a clearly defined goal.

I am sharing a guideline, which I learnt about 15 years back, from someone who currently runs a retail empire, with global annual revenues of over a billion dollars, whom I have the privilege of learning from.

On a scale of 1 to 10, 10 representing Financial Freedom, my mentor defined Level 5 using these three criteria:

1. You should have savings equal or greater than 3 times of your annual income or your annual expenses, whichever is higher.
2. You should have your house, car(s) completely paid off. You should be completely debt free.
3. You should have an asset based income which is higher than all your current expenses.

Since I had just moved to California around that time, with a lot of na?ve optimism, he also warned me that 95% of the people in the US don't even reach Level 5. And, unless I have a clear game plan to achieve this goal, I would easily slip into being part of the 95%.

He also went on to share that the toughest journey for most people is to start from where they are till they reach Level 5. And since I had grown up in an environment that is below Level 5, he highly recommended that I find someone who is at Level 5 or higher as my mentor.

That is how I started my learning journey about money management. From my personal learning journey, I'm sharing an approach which may help you in your journey towards Financial Freedom as well.

And if you are interested to know how to find the right mentor for your learning journey, maybe this will help you: https://www.dhirubhai.net/feed/update/urn:li:activity:6524882360687779840

I have come to believe that if you have a worthwhile dream, achieving Financial Freedom will propel you to achieve that dream faster. In fact, achieving Financial Freedom will help you to make your dream bigger, to include more people's wellbeing.

I sincerely wish you mega success in your learning journey. And if I can help you, even in a very small way, in your mission through this article or in person, it will be an honour.

A man is truly free, only when he is economically free.