Editor’s note: This is part two of a two-part series. Part onepublished in October, includes Lessons 1-2.
Welcome to the five lessons I learned about money and life in my 40s. Check out the first part if you missed it last month. Here are lessons three through five.
Lesson #3 – You Have the Power to Give Money a Big Idea
For thousands of years, societies have placed a cultural value on money. To the outside world, money conveys status, fame, power, intelligence, success and more the people who have it. If you are not careful, the society and the outside world around you will define the meaning of money in your life.
Subscribe to Kiplinger’s Personal Finance
Be a smarter and smarter investor.
Save up to 74%
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with Kiplinger’s best advice on investing, taxes, retirement, personal finance and more – straight to your inbox.
Profit and prosper with the best Kiplinger expert advice – straight to your inbox.
But there is a little secret here. There is a secondary and lesser-discussed meaning of money, which is completely personal and internal. This includes the psychology part (how you think and feel about it), the usability part (how you use it), and the subject part (personal preference). When money and how you use it aligns with your values, the person you want to be, and the life you want to live, it makes real sense in your life.
For the happiest people I know, money is not about fame, power, or status.
Freedom of money.
It is freedom from financial worries and stress. Freedom to choose how, where, and with whom you spend your time. Freedom to define the person you want to be and the life you want to live. Money, and more importantly, your plan for it, is the ability to control and shape your future with confidence.
The right plan for your money (opens in a new tab) is about giving you the freedom to live life your own way. Of course, money isn’t everything, but if used properly, it can give you the freedom to do almost anything.
But – and it’s a big one BUT — that freedom is not free.
Lesson #4 – You set the price of your financial freedom
Financial freedom is defined as having enough income and the wealth to generate that income to pay for the lifestyle I want to live. At that point, work becomes an option (trading time for money). And that freedom comes at a price.
Think about it this way. If you need $40,000 a year to live on, you’ll need about $1 million to achieve financial freedom. With an income of $80,000, you need $2 million, and with $120,000, you need $3 million. Your number is the price you put on financial freedom. As your living expenses increase, so do your costs.
Most people struggle to achieve financial freedom because they can’t stop the rising costs. Therefore, they continue to increase their living expenses, adding to the amount of wealth required to generate the income needed to pay the expenses. George Foreman summed it up well: “It’s not what age you want to drink. It’s in revenue. “
That doesn’t mean you shouldn’t buy a nice house, car, or lake house. It just means that you should be aware of how these decisions affect your freedom, how you spend your time, and the quality of your life. You set the price for financial freedom, and every decision you make either makes your freedom more or less affordable.
Lesson #5 – Miracles and Money Are Equal
At some point in my relationship with my clients, I ask them one question: “What is a miracle?” The most common answer is that a miracle is something we cannot explain or have never thought possible. I prefer to use Charles Eisenstein’s definition: “A miracle is something that is impossible in the current understanding of reality and truth, but becomes possible from a new understanding.”
Many of us, myself included, enter our adult lives with limiting beliefs or attitudes that come from lessons we learned as children. In fact, the unconscious thinking patterns that govern financial decisions are formed by age seven (opens in a new tab). These unspoken beliefs, values, and attitudes define each of our money stories—what we believe to be true and what can be done with it. Basically, your story defines what you think is a miracle (and you can’t influence you) and what you think is possible (and within your realm).
If we are open to looking at our money stories and taking action to change them, we can create a new narrative around what is possible. And I can honestly say that once you figure this part out, you’ll unlock the limitless potential for money to be a powerful tool to help you define, shape, and manifest the person you want to be and the life you want to live.
Your decisions are the only way you can influence your life, and the quality of those (financial) decisions will determine the quality of your life. As Ralph Waldo Emerson so eloquently said, “The only people you are meant to be are the people you decide to be.”
Your next decision could change your life. What’s that?
– Brent Weiss, CFP, CHFC (opens in a new tab)Founder, Facet Wealth (opens in a new tab)
Facet Wealth, Inc. is an SEC registered investment advisor headquartered in Baltimore, Maryland. This is not an offer to sell securities or a solicitation of an offer to buy securities. This is not investment, financial, legal or tax advice. Past performance is no guarantee of future performance.
This article was written by and represents the opinion of our contributing advisors, not the Kiplinger editorial staff. You can see the SEC rate in the chart if you are close to the selected date (opens in a new tab) or with FINRA (opens in a new tab).
