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Leer más →Financial freedom: what it means for someone who runs a company
Financial freedom isn't stopping work. It's being able to choose what you work on, who with and when to say no. And it's built with boring decisions.
Search for "financial freedom" and you'll see beaches, laptops and people saying they don't work any more.
That's not the financial freedom I'm interested in.
The one I'm interested in is smaller. And far more useful.
What is financial freedom?
The classic definition: having enough income, without depending on your daily work, to cover the way you live.
That's fine as a goal. But there's an intermediate version that arrives much sooner and changes much more:
Financial freedom is being able to say no.
To a client who doesn't fit. To a project that distracts you. To money that costs too much.
Financial freedom when you run a company
When you have a company, your freedom depends on three things:
- The company not depending on a single client. If one leaves and you sink, you're not free.
- Your costs being lower than your income, with room to spare. The less you need, the more you choose.
- Your life not depending entirely on the company. Savings, simple investments, something kept separate.
Money you don't need is money you can wait with.
How it's built
No tricks. Boring decisions repeated over years:
- Recurring revenue. What's paid every month gives you a base you don't have to win again.
- Low fixed costs. In the company and at home.
- Save before you spend. Not what's left over: first.
- Invest in what you understand. Nothing you can't explain in two sentences.
- Patience. What builds slowly, lasts.
What it isn't
It isn't stopping work. Lots of people with financial freedom keep working. The difference is they choose what on.
It isn't luxury. Sometimes it's the opposite: living below what you could so your money works for you.
It isn't fast. Anyone promising you financial freedom in a year is selling you something.
The calculator that matters
There are financial freedom calculators everywhere. The most useful one is simple:
How many months could you live without earning anything?
Three, and you have a little freedom. Twelve, and you have a lot. Twenty-four, and you can make decisions others can't.
You don't need to reach "never again". Every month you add is a little more freedom.
P.S. I told this from another angle in money I don't need is money I can wait with.