A financial plan comprises multiple goals and targets, but they all come together in service of an overarching objective: achieving financial freedom.
Financial freedom can mean many things to different people. But it largely comes down to being able to live the lifestyle you desire and use your money as intended without facing financial stress or relying on earnings. It’s about being able to live on your own terms, whatever they may be.
In our next article, we will look at the specifics of creating your own personal roadmap, but the first step to achieving financial freedom is to understand what it means for you.
So, read on to find out what true financial freedom looks like.
Financial freedom doesn’t necessarily mean retiring
Achieving financial freedom doesn’t always mean leaving the workplace. Rather, it means being able to work on your own terms.
You may reach a certain age, whether that’s the current State Pension Age of 66 or younger, and be financially comfortable enough to retire. However, there may be many reasons why you want to stay in work.
For instance, you might still feel energetic and able to continue in your job and not want to leave the routine and structure of the workplace. Alternatively, you may have unfinished long-term projects or mentees you want to continue mentoring. Then, when you feel ready, you can choose to retire when it feels right, rather than at an arbitrary age.
Moreover, you might want to phase your retirement to ease yourself into the next chapter, instead of moving from full-time work one day to stopping entirely the next.
So, financial freedom is about having the choice to leave work or continue working at your own pace based on your commitment or love for the job, not because you need the income.
Defining your own terms is key to freedom
The definition of financial freedom – to be able to live life on your own terms without financial strain – is the same for everyone, but what those terms are is unique for you.
What does your life look like without any financial constraints?
It could mean being able to take the trip (or trips) of a lifetime, or exploring your passions, hobbies, and interests and seeing where they take you. It could also mean moving closer to your family, or simply continuing your life as it is, but without any financial concerns.
The key to achieving financial freedom is to define what living life on your own terms means for you. Having a financial plan in place can help you clarify your goals, and we can work with you to set the targets you’ll need to reach to enjoy your freedom with full confidence.
It’s important to consider external variables as well as your own goals
Beyond your unique vision of financial freedom and the personal goals that define it, there are other considerations to factor into the equation.
For instance, periods of high inflation can erode the real value of your wealth and can be especially detrimental if you’re already in retirement.
Market downturns can also affect the value of your investments, and while they typically recover over the long term, significant dips could have an impact on your wider plan.
Moreover, unexpected changes in your own life could mean your goals change over time, which might affect your vision of financial freedom. For example, if you or your partner face severe health issues or if you have more grandchildren or great-grandchildren than you expected.
It’s also important to consider the legacy you want to leave behind, as you might not want your financial freedom to limit what you’ll be able to pass on to younger generations when you die.
We can help ensure you account for these factors and more, as you define your vision of financial freedom. Then, we can use cash flow modelling to project how such variables could affect your lifestyle and ensure you have buffers and plans in place to keep your journey smooth when the unexpected comes along.
We can help you determine what’s “enough” for you to achieve financial freedom
Achieving true financial freedom comes down to being clear on your goals and ensuring you have enough wealth to achieve them without worry, while accounting for variables outside of your control.
In short, financial freedom requires you to determine what “enough” looks like for you. Ultimately, only you can know that, but we can help you clarify your version of enough and your vision of financial freedom, and then build a plan to get you there, which we will cover in next month’s article.
If you would like to talk to us about this further, reply to this email or call us on 0117 959 6499.
Risk warnings
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.
