When it comes to matters of money, most of us recall “The love of money is the root of all evil”. At the same time, we know we cannot survive without the currency to sustain ourselves with food and water since we cannot survive with air only. But come to think of it, the statement is very but true but highly misinterpreted. It says “The Love”, not “Money” in itself is evil. This misinterpretation has caused many to live lives of deliberate of poverty when they could have made money to help others. This leads to two paths people can pursue in their finances; financial freedom and financial security. For most people, this is probably the first time learning of these terms but for those into finance, these are not new terms.
For starters, financial security is basically following the old rules and thought about making money. Thus, going to school, getting a job and getting married and some kids. These guys are financially secured. They have their social security for retirement, some money in savings and perhaps some insurance packages signed. Getting paid by job, buying insurance, social security, savings etc.
Pursuing financial Security as a life plan is conservative, survival minded and focuses only on emergencies and now. Struggle later in life, old age.
Financial independence or freedom is more of a long term life achievement of making money to the extent that you don’t need to work while you are alive anymore. So Bill Gates, Donald Trump, Robert Kiyosaki etc. are all financially free and can decide to retire today without worrying about their finances abandoning them in the future.
What is the difference?
The bottom line is that pursuing a job alone as a financial plan amounts to seeking financial security while finding ways like becoming a business person and becoming an investor like Warren Buffet to make money that you won’t have to work for money while you are still alive.
What matters is the thinking underlying both pursuits
People pursuing financial security are still obeying the old rules of Go to school, get good grades and get a good paying job and the government will take care of you when you are old. This kind of thinking was good but now isn’t. If the government could take care of us better, we wouldn’t have lack of social amenities and other problems. The government is doing its part but cannot take care of you. The financial security mentality limits us to only a job while we have awesome dreams we could pursue in entrepreneurship etc. The financial security thinking also leads to Small thinking and dream shrinking instead of working hard to realize dreams. Financial security could be considered as a comfort zone were we bother about nothing but tomorrow because the government or social security will help us in the future.
Independence is more daring and ambitious, doesn’t make you feel trapped because you know your financial future is sorted out. Break free. Struggle now and have the rest of your life sorted out so that you wouldn’t have to depend on anyone at all for financial aid once you are alive and perhaps for the rest of your generations to come, much like a legacy of income generating assets for your family.
What mostly keeps us from pursuing the goal of financial independence and freedom is Fear and ignorance. Fear that we will get hurt when we leave our comfort zones so we shrink our dreams to stay in our comfort zones.
I leave you with this thought from a man I’ve come to learn a lot from and will continue to.
The people who have the most security are people in prison. Prisoners have the least freedom and the highest security. – Robert Kiyosaki