When financial freedom is mentioned, what comes into your mind?
You probably think of having plenty of material wealth and possessions, perhaps.
Well, that’s just not the whole story. I will let in on a secret that most people miss. Financial freedom is not just about attaining plenty of monetary possessions, it’s more than that.
Financial Freedom Secret
A majority of people make the mistake of tagging their value of financial freedom on some imaginary figure or a specific amount of money. They envision that, once they hit that target amount, then they will have attained financial freedom and will no longer have to work again.
Well, think about the likes of Bill Gates, Warren Buffet and other fellows who are wealthiest in the world. The money they have can sustain them for their entire life. But, they still work, however, their motivation is now different.
What drives and motivates them to do the things they do is something totally different from just the need for money. They still work to probably make the world a better place, to get recognition, to build a legacy among other forms of motivation. There are numerous quotes about financial freedom. Warren Buffet once said, “Someone is sitting in the shade today because someone planted a tree a long time ago”.
Investing for a long-term impact should be the driving force.
So, why is wealth only half the story? Let’s look at some basics of wealth.
The Basics of Wealth
Wealth and possessions are just one among many other means to financial freedom. Economically, wealth represents a person’s net worth and financial position. It is obtained using a personal financial ratio where the total liabilities are deducted from the total assets. Wealth is categorized into three categories which include personal property, monetary savings and capital wealth.
Personal property includes tangible items such as the automobiles, houses, the monetary savings include an accumulated past income and capital wealth includes the value of the income-producing assets.
Wealth can provide some form of safety net or protection against the unforeseen decline in the individuals’ living standards in the event that they lose their job or has another form of financial emergency. Wealth is a compilation of things that are limited in supply, are transferable and can be useful to meet certain human needs. Therefore, scarcity forms a key factor in wealth. Wealth is considered an accumulation of something that is scarce and a resource with net asset value.
When you have the abundance of these resources, you will not have to worry about the money you need to meet your physical needs. However, it is still possible to feel inadequate once you obtain the amount of money you’ve always figured. Wealth can help you meet various physical needs such as shelter, clothing, food, but does it really help meet all human needs?
Let’s see how you can achieve financial freedom in relation to diverse human needs:
Human Needs and Achieving Freedom
A person by the name Abraham Maslow came up with a theory that explains the logic behind motivation and what really drives human beings. He called it the Maslow’s Hierarchy of needs. It helps explain the different developmental stages to achieving satisfaction in life. He used the terms physiological, safety, belonging and love, esteem, self-actualization and self-transcendence to describe the pattern that human beings follow in life to be fully satisfied.
This theory is imperative if you want to understand what drives human beings. You will realize that it’s not just about acquiring wealth, it’s more than that. You may have all the wealth in the world but you aren’t free. You don’t enjoy life. This is because there is an area or a need in your life that is not met or free, something money cannot buy.
Maslow’s Hierarchy of needs is portrayed in a triangle and depicts the movement of human needs. The first four basic layers are what Maslow’s described as the deficiency needs. The top layer is self-actualization.
Wealth helps to reduce the anxiety and tension that a person may experience if they don’t have the resources to meets the various needs. Wealth may only offer financial security. But to be truly free, there is a need to look beyond what money can buy.
Find how you can satisfy other needs other than the financial needs like esteem needs, self-actualization needs, safety needs, emotional needs, spiritual needs or attaining a sense of belonging with things such as friendships, intimacy, family, etc.
When you have all these needs satisfied, then you will enjoy total freedom.
Financial Freedom and Basic Needs
The basic and first needs to satisfy according to Maslow’s are the physiological needs. They include all the physical requirements for human survival and if they aren’t met, the human body will not function properly. Wealth and riches can help meet a large part of the physiological needs.
You need to be able to achieve all the physiological needs to really attain financial freedom. If you cannot enjoy a nice sleep for example, then you aren’t free. It’s important to get all the physiological needs met to be free. Create an environment where you can acquire and enjoy all the basic needs to be able to also enjoy financial autonomy.
Financial Freedom and Safety and Security Needs
Safety needs come in second. In the absence of security, human beings tend to experience a certain level of tension and anxiety. Safety and security needs include financial security, personal security, health and well being etc and they play a huge role in financial freedom.
A person will be safe if they have job security or are certain that they will still get a steady source of income in the future. They will also enjoy freedom if the environment they operate in is safe from physical and natural calamities like war, fire, etc.
You will not be able to fully enjoy your wealth if there is any form of insecurity.
Financial Freedom and Sense of Belonging Needs
The third aspect is having a sense of social belonging. A person needs to feel they are a part of the social networks, clubs, communities, religious groups, etc. A person needs to feel they are a part of a family and society and can maintain significant relationships.
Without these, a person can become susceptible to loneliness, social anxiety, and clinical depression among other conditions which will limit them from enjoying financial freedom.
Financial Freedom and Esteem Needs
Another aspect is esteem and status needs. An individual can develop concern with getting recognition, importance, status, and respect from others.
To enjoy financial independence, you require having good self-esteem and self-respect.
Financial Freedom and Self-Actualization and Self-Transcendence Needs
Financial freedom is also achieved if the person has fulfilled the desire to accomplish everything one can want to become and achieve the most that they can do which are the self-actualization concept.
To get to this level of satisfaction, the person must not only achieve the previous needs but master them. The person can also find actualization by giving oneself to some higher outside goal or rather the desire to reach the infinite.
Transcendence involves getting to holistic levels of human consciousness, relating or behaving as an end to oneself, significant others, all human beings and to cosmos rather than a means to.
Balance Every Aspect of Life
To enjoy wealth and riches, you need to strike a balance in every area of life. This will help you achieve sustainable financial freedom. You need to have different motivation to drive you to pursue anything in life including work.
There is more to achieve in life than just money and riches. You can own all the possessions in the world and still feel empty. Ensure that all needs are well catered for to really enjoy life and financial freedom.
Wealth is only half the story…
You can call me Max…I’m a Gen-X executive planning to retire from the corporate grind by the age of 45. Although I’m already financially independent, I haven’t yet reached true financial freedom. Join me on my journey as we discuss everything from personal finance to travel and beyond.