Avoiding Money Mistakes That Steal Your Financial Freedom

Volunteer. Read more. Travel full-time in an RV. Start a hobby business. Golf every day. Finally stop caring about a paycheck. There’s a 99% chance you’ve mentioned one of these activities (or something similar) as part of the phrase, “When I retire, I’ll…”

Retirement is a (glorified) period that offers the financial freedom to slow down by no longer needing to work for income. But, when it comes to achieving financial freedom there is a mold cast by generations of traditional retirees and financial advisors alike that drives our quest for saving more before we pursue our dreams. What is holding us back from living the lives we want today?

For anyone who has tried to escape the 9 to 5 or retire before 65, it becomes obvious that the intention-action gap is real. Even when setting out with the right attitude and well-laid plans, the comfortable rhythm of daily routine overpowers bold ambitions. It’s a difficult leap to get from what you want to what you actually undertake. Most people have aspirations that remain eternally on a bucket list; it happens to the best of us.

Psychologists and behavioral economists have conducted endless scientific studies to propose ways to reduce the discrepancy between planned and pursued. But this isn’t academics! It’s time to stop dreaming and really start doing.

The first step to financial freedom is becoming strong by knowing what makes you weak. There are three critical money mistakes that are often behind the scenes secretly crushing your dreams of greater freedom and a balanced life—so it pays to acquaint yourself with these!

One Big Fat Retirement Goal

When it comes to saving money, most people only have a few financial goals in life: pay off school debt, support a happy family, and retirement. Even if we put aside some extra cash to make other big purchases along the way, it’s rarely tied to an actual financial freedom plan with goals that enrich our lives. So, the typical personal finance strategy involves (over)investing time to make enough money for today and fund sweeping financial goals that lack meaningful clarity.

Life as a 30-something and beyond mid-career becomes overwhelmed by climbing the corporate ladder, pressures of keeping up with the Joneses, and saving for the future. No wonder studies show that personal finances and jobs are leading causes of anxiety! The toll money-making takes on our emotional and mental health can also be seen in the strong inverse correlation between stress and feeling happy in life—both of which tend to hit their respective highs and lows around our middle-aged years. But, financial and work-related stress are interrelated problems that can be alleviated (or even eliminated), starting with setting better goals!

How many people do you know who retire at 65 feeling like they’re ready to take on the world? To the contrary, most people hit that “magic” net worth number feeling exhausted. Then, after a much needed period of doing nothing, they start to say things like, “I should have done this sooner.” The truth is that happy retirement is a fairytale too many of us believe in, and retirement as an end is the antagonist to a happy personal financial freedom story.

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Over-Complicating Simple Math

One powerful defense against financial anxiety is having a sense of control over your money. Yet, when it comes to budget tracking, the tendency is to fill up on the figures that lack nutritional value and skip the superfoods of financial freedom fitness.

The (only) value of personal financial data is in understanding the numbers and behaviors that have an appreciable impact on quality of life. Just like the tv talking heads that shout about the daily ups and downs of the stock market can lead to emotionally driven poor investment decisions, budget data overload can lead to the death of your decision making willpower. Even the best personal finance software won’t help if you’re focused on the wrong details and overwhelmed by small choices.

Chronic stress is exactly the feeling we are trying to escape. So, ditch the daily budget and systematize getting the big stuff right (mortgage, car, etc); and it’s no big deal if some of the little things get lost along the way.

Once you know the few numbers you’re trying to hit and the formulas that will get you there, your dreams of enjoying greater freedom and flexibility  to pursue greater purpose will become attainable goals.

Treating Money as the Goal

“If I had more money I would…” is the phrase most commonly muttered by friends and family alike. It’s also a key driver for feeling like we don’t have enough. When having more money is the ultimate goal, satisfaction from what we can afford gets pushed to the wayside.

The challenge we face is differentiating the impact of money on enabling fulfillment versus the the feeling that we always need more of it. Constantly running after the next dollar leads to sustained stress and is a drain on our time and energy. It’s no wonder so many of us experience the Sunday night blues.

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If we replace money with well-defined goals, we can quantify how much we really need to make them possible. We can understand how much time we are trading for achieving those goals, and make intentional decisions on the required trade-offs. Refocusing to view money as a financial freedom tool for how you spend your time instead of the goal enables greater attention to what keeps you motivate and feeling fulfilled.