What is Financial Freedom?

The pursuit to financial freedom is stressful as we all know. The idea of being financially free may seem overwhelming and unattainable, but fortunately there are 4 key steps that if completed will give you a clear path towards living life on your own terms. In this article we will provide you with an overview of each step and some free tools so that you can get started on your path today. 

Looking for answers on your own financial situation? Take our FREE Retirement Checkpoint quiz to find out where you stand. 

Financial Freedom definition

To begin, we must fully understand what it means to be financially free. Financial freedom can be interpreted differently depending on the person and their circumstance. 

For the sake of this article, we will be defining financial freedom as the state of having enough passive income to cover your living expenses without having to rely on credit, loans, or other forms of financial assistance. Financial freedom allows you to live life completely on your own terms, instead of being dependent on employment income or other forms of direct effort to financially support your lifestyle. 

Before we proceed, there are two components of true financial freedom that must be understood:

1. The income you receive is not reliant on employment income, it is generated through. 
   1. A system of strategically placed personal investments. 
   2. External guaranteed income streams (pensions, social security, etc.)
2. The income generated is enough to cover your lifestyle FOREVER.
   • This means the income is enough after taxes to pay for all expenses and has a strategy for 
     • market volatility
     • inflation
     • emergency liquidity needs (healthcare, home maintenance, etc.)

Financial freedom is not about being wealthy; it is about having control over your finances and your life. There is no single blueprint for financial freedom, but there are many paths that can lead you there. The most important step is to take action and start making a plan instead of trying to figure things out along the way. Here are 4 clear steps that you can take to get started on your journey. 

Step 1: Analyze your financial situation

The first step is getting a grasp on where you are in relation to your goal and what resources you have to plan with:

• Track down all statements (investments, savings, retirement savings account, debts, paystubs)
• Calculate your lifestyle cost
• Create a cash flow and net worth statement 
• Quantify your future lifestyle cost at retirement. 
• Analyze how your money is invested

Need help analyzing your current financial situation? Our Free Retirement Checkpoint quiz can assess your retirement timeline, tax planning & red flags in 4 minutes.  CLICK HERE TO USE THE TOOL FOR FREE

Step 2: Plan it out.

Once you know what retirement will cost, you can start building your financial freedom system. 

• Quantify the total amount you will need to have saved to recreate your future lifestyle 
• Quantify the returns needed to hit your target. 
• Utilize expert financial management to vet the investment marketplace to find a mixture on strategies that can help you hit your target consistently over your timeline
• Implement the investment strategies that align with your goals 

Step 3: Monitor your Investment Strategy

After you have implemented your investments, it is important to make sure they are operating as expected or if you need to make tactical adjustments. 

• Review account performance with financial management
• Analyze the risk associated with your targeted return
• Run a bear market test to understand potential loss exposure 
• Capture gains and add layers of downside protection 

Feeling overwhelmed about doing this on your own? Let us help! We offer 3 different tiers of service depending on your financial goals and level of planning.  CLICK HERE TO COMPARE PLANS

Step 4: Repeat steps 1 - 3 to reach Financial Freedom

As things change throughout your life, your plan will need to evolve. When it is time to re-evaluate, take time to analyze if there are any changes to your goals or resources. 

• Proactively schedule time in your calendar each year for an Analysis Review. 
• Throughout the year, have a process to download any important changes to income, expenses, assets, or liabilities.
•  Have someone hold you accountable to repeat the process

Financial freedom may seem challenging, but it's achievable. Key components include generating income beyond traditional work and ensuring it sustains your lifestyle. We've outlined four steps: analyze your current situation, generate a plan, monitor investments, and adapt as needed. 

There's no one-size-fits-all path, but by following these steps and using our Financial Wellness Toolkit, you can start your journey to financial independence today. 

This article is provided by McAdam LLC (“McAdam” or the “Firm”) for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. No portion of this article is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax, or legal advice. Certain information contained in this report is derived from sources that McAdam believes to be reliable; however, the Firm does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages. This article is the sole opinion of this individual and is not indicative of the firm’s belief.