Financial Freedom... Really?


As we celebrate our nation's 243rd Independence Day this month, I am thankful for all those who have given their lives for our freedom.

This holiday also reminds me of our financial freedom. What does this phrase mean? To me, true financial freedom is having savings, investments, and assets where there is no accumulation of debt. It is important to understand that the foundational principles of personal finance include all of the titles listed as well as financial goals and budgeting. In order to be able to save and invest, you must have goals that are measurable and attainable. While figuring your Needs and Wants Expenses during the budgeting process, at least 20% of your overall income should be set aside to help attain your goals. That money should be placed in one of the following accounts: savings, money markets, certificates of deposit, in addition to various other investment options.

The problem is everyone has a different definition of financial freedom. Many consider having a home mortgage as an investment but don't think of it as debt. However, it is still a loan. There are those that define debt as good or bad. There are still others who determine to first pay down loans that are unsecured and more costly. As a nation, we are trillions of dollars in debt. If you have any type of loan - mortgage, auto, credit card, student, or any type of unsecured loan - you are in debt.

Instead of looking for financial "freedom," we should strive for financial "health." Our lives should have a balance between savings, realistic goals, budgeting, and debt management. Our focus has to be more on savings and investments so we can pay for our goals. Beware - life gets in the way! Homes are too expensive, cars break down, and health fails. Debt can help us handle those life events - the unexpected and extraordinary. We need to develop a plan that helps us succeed in having more savings and less debt so we can live and be financially healthy.