I have come across many who often confuse wealth with financial freedom. To better illustrate this point, let me take the example of two men- Jack and John. Jack earns a six-figure salary and he lives in complete luxury. He has the best of clothes and cars and has all the comforts that money can buy. But Jack is also neck-deep in debt. He is constantly worried about losing all that he has. He did have the money but he spent a bit too recklessly and now is plagued by the thoughts of losing it all.
John, on the other hand, does not earn as much. But he has invested wisely. He lives in comfort, though maybe not in luxury. His needs are simple and the money he earns is enough for him. He has even got some money saved up for a rainy day. So, who do you think has the real financial freedom? Jack or John? It is pretty obvious that the answer is John. This just explains how being financially free is very different from being wealthy.
Financial freedom is not about making enough money to be satisfied. It is also about living within your means and being satisfied with what you have. A person in underdeveloped country would be satisfied with a roof over his head, a few clothes to wear and three meals a day. Ability to sustain this lifestyle without any worry would itself bring him freedom from financial worry. So, basically it is about realizing how much enough for you to lead a satisfied life is. Money is important; it can buy many things that bring happiness. But beyond a point it stops meeting your needs and just becomes a means of satiating your greed and then it stops bringing happiness.
Are you happy with the work you do? If not, do you have enough saved up to quit this job and look for something that really brings you joy? If you plan to quit, do you have enough saved up to tide you over till you get something new? Do you have money to meet unforeseen emergencies? Can look at the future without worrying that one little change could cripple your finances? These are the questions that are true indicators of financial freedom. If you can change your job or undergo a surgery or put your kids into college without having to make major lifestyle sacrifices, then you can truly feel free financially.
Financial freedom, therefore, could mean different things to different people. This is because needs differ from person to person. But to put it simply, it would mean knowing exactly how much you need to be content. It would mean drawing a line when you reach that point and then, not starving yourself of luxuries but starting to save side-by-side. It means having a plan and investing. Thus if there comes a point in life when you are unable to make money, you would still have enough to keep you satisfied for a period of time.