Would You Rather Be Rich, Financially Free or Wealthy?
Aug 31, 2017 04:31AM
These financial states may all sound the same, but they are really quite different. For financial peace of mind, it’s important to understand the differences between them.
Many people will remember the comic book character Richy Rich. He had a big mansion, glamorous cars and piles of gold coins in his basement vault. He was rich and never talked about debts or expenses, even though he had butlers and lots of “Rich” toys and expensive things. In real life, people that have all those rich toys and live the life of wild abundance have problems if their cash flow suddenly changes, decreases or just stops. Almost overnight, people can go from appearing rich and having lots of toys to being in the poorhouse.
One compelling definition of financial freedom is this: How many days, months or years can one live their current lifestyle without working. The best part of this definition is that people don’t have to be rich in terms of having millions of dollars and be on Forbes magazine’s list of richest people.
Being financially free requires an awareness of the kind of lifestyle desired (meaning expenses), and how much ongoing cash flow is required to maintain those expenses. Once this is understood, anybody can create a financially free lifestyle.
To be truly wealthy, it’s important to understand how much is the difference between cash income and expenses, with the critical distinction of having enough money left over that it can be used to create more income. The wealthy have businesses, investments and partnerships to let them generate income without daily management. That’s the key—not having to be there and not trading time (personal labor) for money. There is some time needed to manage assets, of course, but in a wealthy scenario, team members manage the day-to-day work.
Many people have some fairy tale in their minds about being rich, and this can lead to financial disaster or depression. A healthier approach is to look at the reality of how to be financially free.
- Visualize what a financially free life would look like
- Understand the current financial reality
- Learn more about money-management techniques
- Start planning and making changes to achieve a financially free life
To learn how to achieve financial freedom, attend a free 90-minute webinar by Kat Mierswa, Your Money Wellness: How to have a Healthy Perspective on Earning, Saving and Spending Your Money!
Kat Mierswa spent more than 25 years working in banks across the U.S., settling in Hawai’i, where she was an international banker for nine years. After 10 years as a financial adviser, she currently trades options and futures and manages her online business as well as a nonprofit for kids.
For more information, call 808-375-3605 or email [email protected].