Celebrating Financial Freedom
For years now my kids have spent the Fourth of July with their grandparents and dad. It’s a “kid-free” few days for me. I have the freedom to choose how I want to celebrate. My tradition is doing whatever I feel like doing each year! Whatever the plans, Independence Day is always the perfect time to reflect on and celebrate freedoms. It’s a great time for your financial freedom wellness quiz.
As a Personal Finance Coach and Educator, one of the most prominent freedoms that I give thought to and celebrate is financial freedom.
Financial Freedom Defined
There are many ways financial freedom is defined. For many, it means retirement from work. Personal Finance guru Dave Ramsey says, “Financial freedom means that you get to make life decisions without being overly stressed about the financial impact because you are prepared.” Entrepreneur, financial educator and author Robert Kiyosaki defines financial freedom as the point where your daily wants and needs are paid for with passive income. Meaning, you don’t trade your time for money. The assets you own generate cash flow to provide you income so that you can choose freely how to spend your time. There is no one definition of financial freedom. To me, it is a combination of both passive income in order to have more time freedom, but it is also a state of mind or wellness. When I am financially free, I am free from worry, doubt, and anxiety about money on a daily basis. Although this state can fluctuate from day to day, in general, I feel I am financially free when I can pursue what I am most passionate about and what brings me joy and fulfillment, without my means of creating income feeling like work or even being a necessity.
What does financial freedom mean to you?
Take a moment and answer the following questions.
- What does financial freedom mean to you?
- Do you live a financially free lifestyle now?
- How important is financial freedom to you?
- What are you doing today to be, or move towards being, financially free?
While perhaps over-used, the term, financial freedom, no doubt invokes a status, or level of ease with money, a lack of pressure. Financial freedom is a state of being with your financial life that we strive for. The antithesis being “in the rat race”, as Kiyosaki describes it. As money and finances can create much strife and stress, I‘ve put together Your Financial Freedom Wellness Quiz to help you assess how near you are to financial freedom. I’ve also included suggested next steps to attain it!
Your Financial Freedom Wellness Quiz
In each of the following questions, pick the answer which best describes you (most of the time). Keep track of your answers to reveal your results and suggested actions below.
- I feel empowered with my financial decisions.
a) Very rarely. b) On occasion. c) I do the best I can and feel empowered often, realizing no one is perfect. d) Most of the time.
- I worry about my finances and money:
a) Every day. It keeps me up at night. b) Often. c) Some days, but most of the time I feel good about where I am and where so am going. d) Hardly ever.
- I generally feel like I understand what I am doing with my money:
a) Nope. Never have and never will. b) I try and understand many concepts but never feel completely comfortable with managing my finances. c) For the most part, yes, but there is always more to learn. d) Yep, absolutely.
- I have a pro-active financial plan for both the short term (i.e. monthly budget) and long-term (i.e. retirement plan):
a) A what? b) I contribute to my retirement but never or rarely follow a budget. c) I try my best. I regularly revisit my budget, have clear action steps towards my future financial security. d) I’m OCD about it and regularly meet with my financial coach, CPA and financial planner to review.
- Feeling competent and confident with my personal finances:
a) is not a priority for me. b) is something I have not experienced often, but would like to. c) is important to me and something I strive for. d) Nailed it.
You’re halfway through Your Financial Freedom Wellness Quiz
- When I don’t fully understand a concept with my personal finances, I have resources I know and trust to reach out to for help.
a) Not really. b) I often think about doing this, but rarely follow through on recommendations from others c) Yes and I generally do reach out for help when I am struggling. d) I am the one people reach out to for advice.
- I have a fully-funded emergency savings account in place:
a) I live from day to day. b) I wish. I’ve tried but it always ends up getting drained. c) Almost and I am still working on it. d) Yes and some!
- I fully understand how credit works, and use it to my benefit.
a) I have poor to no credit or credit card debt. b) I struggle with credit at times, and do not know the best practices to getting and keeping A+ credit. c) I check my credit regularly and strategically use it to grow my net worth. d) Cash is king. I never use credit – I pay cash for everything.
- I have no worries that should an accident or emergency happen (i.e. an unexpected job loss, untimely death, automobile accident, long-term illness or disability diagnosis), I will be just fine because I have adequate insurance and legal documents in place:
a) Not at all. b) I have some insurance coverage but I am not confident that it would completely cover me in all circumstances. c) An insurance professional has reviewed my insurance needs and confirms I and adequately covered. d) My emergency plans are documented, backed up, communicated to loved ones and perform practice drills on a regular basis. I am 100% prepared in case of any emergency.
- I am interested in and engaged in my personal finances:
a) Rarely. b) Most of the time. c) Yes, but it ebbs and flows. d) Everyday.
- I understand money concepts and use those concepts to make strategic financial decisions:
a) This statement does not describe me. b) Some of the time. c) Most of the time and I seek answers if I do not. d) Yes and guide others to do so as well.
- I rarely regret financial decisions that I make (i.e. with spending, investing, giving):
a) I often regret financial decisions. b) 50 / 50 c) Everyone makes mistakes, but I learn from them and do better next time. d) 100% true for me.
Now it’s time to score your answers!
Clearly, you’re not comfortable with finances or money management, but you knew that before taking this quiz! If money worries keep you up at night, you could greatly benefit by focusing on your finances with support. Some of this support includes mindset work! Although not at all exciting for you, by having some basic systems in place and steps to follow on a regular basis, paired with support, you can quickly get healthy habits established. You may have a longer way to go to building a strong financial foundation, but it is never too late to start. Financial freedom is a choice, and a state of being that can benefit you in many ways. You’d be surprised at how empowering it feels to be smart with your money.
It’s ok to feel lost with your finances at times, and you’re not alone. Only 5 U.S. states currently require a course in financial education to graduate high school. We spend 13-17 years + preparing for a job or career and very little of it learning how to manage money we earn to reach lifestyle goals! I highly recommend seeking out a mentor or coach to help fill the gaps in your financial education and put some basic money systems in place. With guidance and specific steps to follow on a regular basis, your confidence and sense of financial security will soar quickly, and you will reach your goals faster.
Congratulations on having consistent and positive habits and behaviors with your money! You have perhaps the most balanced approach and consistent feelings of financial wellness of the four groups. You are also always open to learning, growing, and improving your health and wellness. By being pro-active with your wealth advisor team (CPA, Financial Advisor, Money Coach, Estate Attorney) you may not always feel on top of everything, but you are very well covered in most areas. An accountability partner or coach, and regular money dates with your self, spouse, and business partner are recommended to ensure you are regularly addressing your finances and following a strategic plan to reach financial freedom!
You’re a money maven. You have the epitome of financial wellness since you often feel confident and empowered with your money. You likely are the one friends and family members come to for guidance with their finances and may want to consider financial coaching as a hobby or professionally. Just be careful not to overemphasize finances or spend so much time on analyzing your spreadsheets that you are not enjoying leisure time, and other hobbies in your life.
How did you do on Your Financial Freedom Wellness Quiz?
Your financial decisions affect every part of your life. Read this article on the #1 Financial Decision for more information and guidance. Then, periodically take the quiz again and see how much you improve. What you focus on gets better!
Happy 4th of July!
May you celebrate and cherish the many freedoms you enjoy in your life. Cheers to financial freedom being one of them.
This article is not intended to be financial advice. As a Certified Financial Educator through the National Financial Educators Council, and MasterMind Member with Coach Connections, Michelle focuses on financial behaviors and helping her clients establish financial best practices. She does not sell financial products, nor give financial advice. This article is meant for educational and entertainment purposes only
Michelle Boss is a Personal Finance Coach and Certified Financial Education Instructor. She is certified through the NFEC. As a Professional Money Coach, Michelle helps successful women get smart with money so they can grow their wealth and finally feel financially secure. With Michelle’s Group and One-to-one Coaching Sessions, she helps take the Fear out of Finances.