Do You Have A Freedom Fund?

What is your freedom worth to you? Is it worth giving up nights out at fancy restaurants? Not upgrading your car when the one you have still runs just fine? Is it worth eating ramen noodles for months? The answer to this question is different for everyone. To your average American employee, most people would not be willing to give up much. These are very real trade offs that many will not make in order to save money to ensure their freedom.

A “freedom fund” is much different than an emergency fund. The freedom fund is set up so you can be proactive while an emergency fund is set up so you are able to be reactive. An emergency fund is more of a need, it allows you to keep food on the table, a roof over your head, and other livelihood necessities if worst comes to worst and you are out of a job.  The freedom fund I think is a conscious choice that is not necessary at all stages in life or for everyone.

What Is A Freedom Fund?

Let’s define what makes up a “freedom fund”. A freedom fund is cash held in a savings account that you can easily access if another opportunity arises. These funds allow you to maneuver in situations that require you to have a lapse in income. If someone you knew from college had the funding from a big venture capital firm to start a project you were passionate about but you wouldn’t get a salary for the first year could you swing it? These are the sort of situations that can be life-changing, but if you don’t have a freedom fund, it may be a lot harder to follow your dreams while still being able to afford your day to day costs.

There comes a time in everyone’s life that an opportunity arises and they feel it in their gut that they need to make a change. Most people will play it safe and keep the paycheck and lifestyle they have grown accustomed to…often referred to as the “golden handcuffs”. Instead, if you are proactive and commit to having the freedom fund you will know if you should take the chance or not. It becomes clear that if you have the money to take the risk but you still don’t go for it that the opportunity is not for you. That is the power in choices and the power that a freedom fund can give you.

While you are younger you need to stay flexible for work. Your first position in this day and age will most likely not be your last. By having cash saved up you can feel confident to make a move to another city or start in a commission oriented career path that will take time to build your book of business. However, if you make the choice to not be prepared you run the risk of not being ready to act when opportunities arise.

Ways to Use a Freedom Fund

  • Use fund to live off of while you start an entrepreneurial endeavor.
  • Use fund to live off of while you relocate to a city with better jobs for your qualifications.
  • Get out of a bad work situation that you cannot take any more.
  • Supplement your income while you get started in a commission based industry.
  • Simply have peace of mind that you do not need your current job and the day to day frustrations you previously felt at work will not bother you as much.

Who Needs A Freedom Fund?

Those who I see benefit the most from having a freedom fund are those who are seeking to increase their income or find a role they are passionate about. Of course there are outliers, but in general, I see those who are young needing this fund more than others. If you are relatively new to a career, you don’t know if you will stay in a certain role, with a particular company, or even in a specific industry forever. The flexibility a freedom fund brings can be massive for career growth. If you feel like you can’t take a risk while you are young because you aren’t fiscally responsible most likely things will not get better down the road.

Take the time now to picture leaving your current situation in a leap of faith into something you are passionate about with higher earnings potential. This is a different visualization for everyone. Do you see yourself getting a plane ticket to New York? Maybe you see yourself packing flip-flops and heading to Silicon Valley to pursue a start up? Whatever it may be it is important that you leave yourself options. Having the choice to move towards what you want in life is a huge advantage. You will end up doing things that are more meaningful, rewarding and fulfilling.

Opportunities don’t come over night but as you grow in your personal and career path’s you are bound to find some if you continue to look for them. Make sure you are ready to make a move and then do it with confidence with your freedom fund; investing in a new opportunity for yourself could be the best return you ever see in the long run!

What Are Your Thoughts?

  • Do you have money set aside for your “freedom fund”?
  • Have you wanted to leave a position but feel trapped by your obligations?
  • Has having cash helped you transition into doing something you are passionate about?

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