What’s in your financial future? Security, Freedom or Independence
I can’t wait until I’m grown!
Have you ever said that before? Come on, you can tell me.
Have you ever heard it from your children or maybe someone else’s children?
Let’s face it, being grown sucks at times. Plus, we spend way more time being grown than being a kid. So it can suck for a long time!
Almost every kid wants to be grown because they’re looking forward to being free of their parents (maybe you) and free of rules.
What we don’t realize when we are young people is that all we do is trade one type of freedom for another when we become adults.
I have asked “What is your ultimate financial goal” many times to people. A very common answer is “I want Financial Freedom”.
When I hear that answer it makes me think of the “I can’t wait until I’m grown” phrase.
Do we really know what we’re even asking for?
Allow me to break down 3 common ideas:
Financial Security vs. Financial Independence vs. Financial Freedom
Let’s start with some facts. The Webster dictionary defines:
Security: freedom from fear or anxiety; freedom from danger; something given or pledged to make certain the fulfillment of an obligation.
Independent: not dependent; not subject to control; not requiring or relying on something else.
Freedom: the absence of necessity, coercion or constraint in choice or action; liberation from restraint of power or another; freedom from care.
Financial Freedom and Financial Independence are often used interchangeably, but they are not the same thing.
But before we start singing Independent Women by Destiny’s Child, we should probably start with “Security” by Otis Redding.
You’ve probably never heard of the song, but the first line in the song is “I want security, yeah.”
It just seems so appropriate.
Many of us are seeking Financial Security but are saying “Financial Freedom”
Security is a basic need. Maslow said so.
Financial security is just as basic because I said so. ☺
You want to make sure that you are comfortable enough to handle whatever crazy things life throws at you that can impact your finances.
If you’re looking for financial stability, first you have to get rid of the obstacles in your way.
How do you get obstacles out of your way? You become financially engaged.
Most people are just financially literate.
Being financially engaged is an action that comes with an incredible feeling. It’s like being as confident as Cher and Tina Turner when they go out on stage!
In the back of their minds, they may be hoping and praying that nothing goes wrong but deep down they know they have enough experience and a strong foundation to weather any storm.
Here’s an example of what I mean:
Some households can’t afford to miss one paycheck. Many definitely can’t afford to miss two.
When you are financially secure you have confidence in knowing that if you were to miss a paycheck, you would be just fine.
According to AAA, most families can’t cover the expense of a major vehicle repair. I’m sure the same can be said for a major household repair.
However, when you are financially secure, you know you have access to liquid cash or available credit that can easily be repaid to cover the repair.
When you are financially secure it doesn’t mean that you are super rich.
It also doesn’t mean that you don’t incur financial mishaps. It DOES mean that you have your financial ducks in a row.
You are free of anxiety about being able to pay your bills and meet financial obligations.
You have the proper insurance coverage and estate documents in place to protect you and your family’s financial security.
You still may worry about things going wrong and it’s a “no refund kind of guaranteed” they will. But, those worries won’t keep you up at night.
It’s important to get on the path to financial security early so that you are fully prepared for any financial surprises and progress towards financial freedom, if that’s what you truly want.
What impacts your ability to have financial security? Throwing the covers over your head and ignoring your financial challenges or opportunities.
Many of these items you’ve heard before and haven’t tackled with the ferociousness necessary.
I’ll repeat them as a friendly reminder.
-Not being cash flow positive
-Not having an emergency fund established
-Not having access to credit or enough available credit
-Not having the proper insurance protections
-Living outside of your means
-Not understanding your spending triggers or focusing on physical possessions
You have to understand your complete financial picture (which includes the items listed) before you can gain financial security. Often we look at our finances in parts. You have to review THE WHOLE PIE!
Notice I didn’t mention how much money you earn above.
Think about it how many broke people you know that earn a lot of money.
Financial security is about being stable, responsible and feeling secure in your financial position.
That security looks and feels a little different to everyone, but the foundation is essentially the same. Not being wealthy is not a reason not to go after it.
Financial security is the step that can’t be skipped regardless of whether you’re looking to achieve financial independence or financial freedom. It’s the first step to having options!
Tina Turner was Anna Mae Bullock first! She weathered the storms and earned the right to be Tina Turner.
Can you stop at financial security? Heck yea! Anna Mae could have just stopped at singing in nightclubs and been fine.
Maybe you’re already financially secure.
Cool! Virtual high-five.
Maybe you’re just curious about your other options.
Either way – you’re in the driver’s seat to control your financial destiny.
You’re also in control of how much you read of this blog series.
I’ve given you enough to mull over for now.
Remember the goal is to help you with your progress on your financial journey. There are no expectations to be perfect.
Take your financial life to the next step by reading Part 2: Financial Freedom, Security or Independence: What’s In the Future for You?
Founder & Managing Director
Nikki is a 16-year financial services professional and the founder & primary personal financial strategist for The FIIRM Approach. She helps female breadwinners avoid common financial mistakes during a divorce or after a recent uncoupling. She is keenly focused on helping women confidently maintain their financial security with proven strategies for living with a budget, managing debt, and improving their credit score. TAKE ACTION & LEARN about the tools that can help make your new money life easier. Grab your FREE 2019 Ultimate Resource Guide HERE.