How to Scale Your Financial Freedom

Shawn Best, M.S., CFP®

Jan 20, 2023

When we envision our perfect retirement, we tend to think about travel, time with the grandkids and the passion projects we’ll finally tackle. Yet upon retirement, many of us find ourselves experiencing the same financial stressors we did during our working years, worrying about debt or how to afford that long-awaited trip to Greece.

You didn’t work your whole life to stress once work ends, but this is the reality when we think more about what we’ll do during retirement than how we get there.

Having lots of money upon retirement is never a bad thing, but it also won’t assure a carefree retirement if the money doesn’t have a purpose. Rather than a goal of simply accumulating wealth, investors should set themselves up for a future of financial freedom.

What is Financial Freedom?

Financial freedom means being able to choose where and how you want to spend your money and time, rather than being compelled. In essence, financial freedom is being free to decide the path of your life instead of letting money worries dictate your decisions.

While it means different things to everyone, the heart of financial freedom is fulfilling your goals via a comfortable level of spending within the framework of your retirement plan.

How to Achieve Financial Freedom

Now that we understand its importance, let’s discuss how we can achieve and maintain financial freedom. You might be surprised to hear that behavioral issues can be one of the largest obstacles.

Behavior is habit-based and many of us unknowingly develop unfortunate habits throughout our financial lives that detract from our long-term goals. While there’s no magic investment strategy to achieve financial freedom, there are a number of behavioral changes you can incorporate into your everyday life to make achieving financial freedom easier.

Stop Putting Off Your Problems

Let’s say one morning you wake with back pain. Weeks later, the pain has gotten worse and you still have no idea what caused it. You can either keep doing nothing and hope the pain goes away or you can see a doctor. Which would you choose?

In this case, it’s obvious that you should see a doctor. Yet, when we’re faced with unexpected financial issues, many of us would rather forget about them than deal with the problems. Money can be a difficult topic to talk about, as it comes wrapped in emotions, often rooted in fear. Regardless, ignore major financial issues at your own peril, as the problem will eventually catch up and divert you from your path to financial freedom.

Keep Your Emotions in Check

There are usually reasons why people come and talk to us. There are good reasons such as selling a business, getting promoted at work or receiving an inheritance. (I recognize there is room for debate as to whether that last reason qualifies as good.) Nevertheless, people also seek financial advice because of not-so-good reasons too, including death, job loss or divorce. No matter what your reason is for seeking advice, it’s probably due to a life event.

These events can understandably be emotional, as any life change is bound to be, but emotions should stay far away from financial decisions. Whether you’re experiencing joy and jubilation or fear and anxiety, you have to keep your emotions in check. At TCI we’re focused on long-term results. We don’t want to overreact to what’s happening now and have it impact us further down the line.

Of course, emotions will always be present, and no financial plan is ever set in stone. We work with clients to keep a level head and stay focused on their goals understanding that a lot may be going on in your life. The advice we provide is personalized and objective. We like to say that our clients exist somewhere between hope and fear, and it’s our job to put them on the path of hope. A financial freedom plan can be the difference between running from fear and towards hope.

Determine Your Likelihood of Achieving Financial Freedom

It’s not enough to know how much you need to retire, as Advisors our goal is to help you understand your financial situation and showcase different options that can help you achieve your goals. At TCI, we use retirement cash flow software capable of producing a range of future portfolio outcomes based on a variety of practical assumptions about your financial assets, market returns, your spending, longevity and other factors to express, in percentage terms, a “probability of success.”

Utilizing financial modeling is one of the most important parts of developing a path towards financial freedom because it puts the numbers in front of you. A financial advisor can tell you to save more and spend less until they’re blue in the face, but when people see a percentage indicating how likely they are to achieve their goals, the point tends to stick.

Important side note: The role of an Advisor is not to constantly tell you “no.” Our goal is to make sure your finances are in order, so you know what is (generally) an automatic “yes.” This tends to happen after everything is in order and there is a surplus of assets that are not earmarked for clear usage. When that happens buy those tickets and bring your buddies to the game, get the bigger RV so you can invite more people camping, plan those home renovations to accommodate a growing family or make charitable contributions. I never encourage clients to spend money just because they have it, we want it to be used to create more memories.

Understand Your Specific Needs

Due to the comprehensive wealth management services TCI provides, we get clients from a variety of backgrounds, all with their own versions of what financial freedom means to them. Some have lofty financial goals, while others are happy living a frugal life. Before establishing your financial freedom plan, you’ll want to figure out both your current financial needs and those goals you hope to achieve upon retirement.

The number one question I get is: “Will I outlive my money?” While this question holds a lot of weight, finding the answer is simple: What is your desired lifestyle, what are your goals and how much will it cost? When we answer these questions, we set the baseline for what we need, and we begin to envision an outcome from which we can work backwards. Remember, it’s your financial plan; we’re not building toward or comparing to someone else’s benchmark. It’s all about what matters to you and fulfilling those aspirations.

Pay Off High Interest Debt

No matter how much you’ve saved or how smart your investments, it’s difficult to find a path to financial freedom when bogged down with high-interest debt, such as credit cards. If you’re someone living on a fixed income, it’s even harder to dig yourself out of debt.

A study by the U.S. Government Accountability Office found “Older Americans held nearly half of the total debt in 2020—debt that may affect their retirement security.” Perhaps more troubling, Fed data shows that households led by someone aged 65 to 74 increased their credit card debt load from 27% in 1989 to 41% in 2019.

These are some alarming statistics. If you’re nearing financial freedom, I recommend putting away those credit cards and practice living on a fixed income. You should try this for a couple months as you approach this life event. The mindset shift from accumulating assets to decumulating assets is a struggle for many clients. Credit cards can create a false sense of security, by practicing what it’s like to live on a fixed income you can prepare for what’s ahead while maintaining a sense of security. Set yourself for success and develop a plan to pay the debt you owe.

Creating a Financial Freedom Plan

The goal of a financial freedom plan isn’t simply to accumulate wealth. Financial freedom goes deeper, allowing you to choose how you want to spend your money, time and your life, by removing the stressors that come with financial unknowns.

Achieving financial freedom is not easy and is rarely accomplished alone. Having an expert Advisor by your side throughout the process ensures that your investments will serve the mission to achieve financial freedom.

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