Financial Security Vs. Financial Freedom: What’s The Difference?

Financial security is necessary for everyone, while financial freedom is personal and optional. Explore the difference in this blog by Curio Wealth.

 

Financial goals are highly personal. You may only wish to have your basic needs met and pay off your debts, or you might envision yourself buying a second property in a tropical destination where you’ll someday retire and spend your days poolside. Whatever you desire, financial security vs. financial freedom, you need a road map to help you reach your objectives.

In this blog post, we’ll explore financial security vs. financial freedom. We’ll answer the questions “What does financial security mean?” and “What is financial freedom?” we’ll also discuss how you can achieve financial freedom.

Financial Security Vs. Financial Freedom

What does financial security mean?

Having financial security is important for every American to feel a sense of safety and well-being. To be financially secure means you can meet all of your basic needs like food, shelter, and living expenses. It also means you’re prepared for milestones like sending your kids to college or entering retirement and that you’re financially equipped to handle a crisis or illness that comes your way.

There are several ways to achieve financial security. You might have a stable job with a good salary or fixed income stream like Social Security or a pension. You might also have an additional layer of protection, such as life, disability, or long-term care insurance to protect against the unknown. Whatever your personal situation, to be financially secure means you’ll still be able to pay your bills, even in the event of a major disruption to your life.

Building up a nest egg is a great way to strengthen your financial security. A cash reserve can be especially helpful if you lose your job unexpectedly or incur a large expense like a new car or home renovation. We recently saw how important it was to have a cash reserve on hand when the global pandemic hit. So, we recommend saving at least three to six months of your annual living expenses (or 12 months if you want to be more conservative) in a bank or savings account that is safe and easily accessible in the event of an emergency.

What is financial freedom?

Here’s a simple financial freedom meaning: It goes beyond having your basic needs met. Financial freedom doesn’t mean you can spend whatever you want whenever you want; it means you have the ability to make decisions about your life that won’t jeopardize your financial security. You are in control of your finances, and your finances do not control you.

If you’re working in a job you dislike, financial freedom means you can make the conscious decision to pursue your dream job, start a business, or take time off without worrying about making next month’s mortgage payment. One recent prospect described financial freedom as having the ability to switch careers to something more meaningful, support his mom during her retirement years, help a nephew go to college, and improve his home if he wished. Having financial freedom means this individual can make decisions based on his desires rather than his financial commitments.

It’s important to recognize that financial freedom doesn’t necessarily equate to being rich or having an unlimited amount of money. You may not have a lot of wealth, but you also may not have a lot of expenses. For example, you could have no debt but also not own a car or property and still be financially free. On the other hand, you could have a high salary that requires you to spend your time working, or a high mortgage payment that doesn’t provide you the freedom or ability to travel or do what you love in your spare time.

We like to think of financial freedom as near the top of Maslow’s Hierarchy of Needs. When your basic and psychological needs are met, you can pursue creative activities that enable you to fulfill your potential.

Your Road Map To Financial Freedom

You now know the difference between financial security vs. financial freedom. Achieving financial freedom means you’re in control of your finances. It starts with identifying what freedom means to you and setting goals upon which you can build a financial plan. Ask yourself whether financial freedom looks like leaving your job, traveling the globe, providing for your children, or caring for your grandchildren.

Anyone can achieve financial freedom. If you’ve done a great job saving your money in the right accounts, living within your means, designing an investment portfolio that fits your personal situation, and keeping your tax bill as low as possible, you can build enough wealth over time (or reduce your debt and expenses enough) to live the life you want.

Curio Wealth Can Help You Reach Your Goals

At Curio Wealth, we understand that every financial situation is unique. We’ll work with you to reach your unique financial objectives. We’ll craft a plan that enables you to accumulate the wealth and assets you need to first cover your basic needs, then work toward financial freedom. Schedule a call with us today to find out more about how we can help.

Important Disclosure: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Curio Wealth, LLC [“Curio Wealth”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Curio Wealth. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Curio Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Curio Wealth’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.curiowealth.com. Please Note: Curio Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Curio Wealth’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a Curio Wealth client, please contact Curio Wealth, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

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