Where Does Financial Freedom Begin?


Financial freedom is a pretty vague term.  It’s up there with words like success, nice, and good.  Words like these will get you in trouble, because they simply can’t be defined, measured, or achieved.  There are no benchmarks or tangible finish lines so they go on forever without being accomplished.

Everyone you ask will give you a definition of financial freedom that differs, but in a nutshell it’s the ability to live the life you want without financial constrain.

But is there a minimum that can be reached in regards to financial freedom?  Is there a bottom of the barrel definition that is the starting point for where financial freedom begins?  The basic necessities of life are all that’s really needed, so I believe that’s where financial freedom starts.

When someone can cover their basic necessities that’s where financial freedom begins, anything above that level is simply stuff and fluff that isn’t needed and serves only for the purposes of entertainment, greed, or ego.

So, my definition of financial freedom, is this:  The ability to pay my main living expenses, which have been chosen to fit my basic needs in a responsible, environmentally friendly, and non disruptive way.  These needs are not based on ego, greed, or material posession.

What are these basic needs then?  Shelter, water, clothing, and food.

These are my expenses for those items:

  • Shelter – $650
  • Utilities – $60
  • Food – $250
  • Clothing – $30
  • Total – $990

Focusing on each of those expenses I’ve realized that I can technically be financial free when I reach a passive cashflow level of approximately $1,000 per month.  If I reach $1,000 a month I can survive and have the ability to do whatever I feel like with my 168 hours each week.  This is where financial freedom begins for me.

It’s an interesting exercise to go through your monthly expenses and calculate only the things you need.  I did this about a year ago and it’s helped me by focusing my spending on things that matter, rather than things that don’t.  It’s also made me realize that financial freedom is very possible when you start to count only the things that matter.

So where does financial freedom begin for you?  If you could meet your minimum what would you do with your extra 168 hours a week?