2. Financial Freedom

What does Financial Freedom mean to you?

For many people there will be a moment where they can live their chosen lifestyle, maybe with some minor adjustments, without the need to earn an income any more.

This is called ‘financial freedom’ (free from the need to work for an income).

Of course one is then still free to continue to work – paid or unpaid, there is just no necessity financially any more to earn any income.

Some will stop to earn an income when they have the choice to do so.

Others will continue to work, with the relaxed feeling that they can stop whever they want.

Financial Freedom can be defined in many ways.

I would like to keep it real simple: If you don’t need to earn an income any more for financial reasons, you are financially free.

The recipe for nearly everybody to become financially free one day sounds very easy: Spend less than you earn and save/invest regularly in a wise way.

The exact plan and its execution may be somewhat more complex, however the underlying recipe is really just that.

Even if you have an employer provided pension arrangement, it may be smart to check upfront whether this pension alone, combined with the AOW, will in due time indeed make you financially free. Many will discover that the pension is less than they anticipated. As a result, adjustments to the lifestyle may be needed when starting the pension and/or you may need to continue to work part-time next to your pension. If your plan was to become financially free from your pension date, validating that assumption early may be wise, in case you need to take additional action now.