Over the years, my definition of financial freedom has evolved. For the first ten years of my financial inactivity and stagnation, it was this:

• Being able to part ways with and invest $10,000 into the stock market

In retrospect, it all seems so trivial. Yet, for someone who’s never invested, lived in the lower middle class, and is financially uneducated, this was a big deal. I once asked a friend how he could donate $10,000 to a good cause, as that seemed like a lot of money.

His answer is that it’s all relative. To him, $10,000 is a drop in the bucket, kind of like someone in my shoes donating a hundred dollars. Chances are I wouldn’t miss the money and the impact not having that money in my life would be low.

My reluctance to invest just $10,000 caused me ten years of returns, as you can read about it here. Long story short, I didn’t have a money problem as much as I did a paradigm problem. My mindsets and beliefs were limiting me in what I thought I was able to do.

I’m still far from the place where I could just donate $10,000 but I would certainly like to reach that point. Overall, it is getting easier to make these kinds of investment decisions as long as I know the chances are good I’ll see a return on my investment.

Financial Freedom Changes…

Over those ten arduous years, I gradually started investing. It was a slow and painful journey. I had to first grow and overcome my own barriers to money, as many were imposed by my father. Several years after that, my definition of financial freedom changed:

• Build up a one-year Go to Hell fund.

The idea behind this fund is quite simple. I wanted one year’s worth of liquid cash in case I got fired or laid off from my job. My first year after giving up the security of government employment by going into the private industry, uprooting my life and moving out of the town I had called home for close to ten years, the new company went through a massive layoff. I don’t think I can disclose the number, least I end up joining them down the line. I can say that the period after the layoffs took place was one of the most stressful in my life.

During that year, I developed a tightness in my right shoulder that no amount of massages could loosen. It was also painful. The gradual onset of pain was so subtle that I hadn’t realized I had been in pain for three months. I saw a chiropractor and that helped. I also got massages to try to alleviate the problem. I didn’t know what was going on. I would find out later that all this was from stress. I was in a state of constant worry when the layoff axe would fall on me.

It wasn’t until I learned about the importance of having a Go to Hell Fund that I started to actively save. Thankfully, my job provides well for me. In addition to having saved money for the past few years, I soon had enough saved up in Go to Hell Fund to withstand a long drought in case of involuntary unemployment. I’ve found that the older I get the more I need to have saved up.

For young workers joining the workforce, you might be able to get away with 3 or 6 months’ worth of expenses. As you get older, the reality of age discrimination sets in, especially in the tech industry where I work. You have to start planning for long droughts of unemployment. Here in the Silicon Valley, during the worse of the Great Recession of 2008, one of my friends was still looking for a job after 1.5 years!

When I finally had enough saved up for a year’s worth of expenses, I didn’t know it. It took several more months to realize this was the case. Over time, the tension in my right shoulder lessened. It’s true what they say: We do carry a lot of metaphorical weight on our shoulders.

The other thing, too, my own self-worth increased. You see, I saw myself as not being very good at what I do and that I was just lucky to have a job. I didn’t see myself as providing value. Because of these limiting beliefs, I was terrified of being laid off because I believed it would take me a long time to find another job.

Every time my manager asked if I had a minute and wanted to speak with me in private, I would assume the worst. My heart would quicken. My palms got sweaty. I would start getting nervous, bracing myself for bad news. I was assuming I was about to get yelled for something I did. Or worse: I was getting laid off.

This script came from my daily interactions with my grandfather when I was a teen. He would yell at me almost every day, especially during dinner time, for basically no reason other than the fact that he got off from verbally berating me in front of other family members. As a result, I developed this fear that every time my managers wanted to speak with me that I had done something wrong.

My Current Evolution

Like anything else, my definition of financial independence continued to evolve as I grew, both as a person and spiritually. Soon, it became this:

• I want enough in retirement to be able to spend x dollars every month.

What that x-dollars is I’ll keep to myself. Your situation will vary, so there’s little point in you needing to know what my figure is. I do know this. I have a 65% chance at the present moment of reaching my financial goals.

This is according to Personal Capital’s Retirement Planner, which runs over 5000 simulations, providing you with the median of all 5000 simulations, along with the worse 10% of those simulations. I really like their online tools, especially their net worth aggregation dashboard. You simply provide all the accounts (banks, other investments, credit card account, and the like). Personal capital will go through to determine what’s an asset and what’s a liability, providing you with numbers for both. With so many accounts, it’s an excellent way for me to catch suspicious activity on all my accounts rather than having to log into each and every account.

In addition to the retirement planner, Personal Capital will also track your cashflow, expenses, and income on a monthly basis. I have to admit it’s rather fun to log in on a daily basis and watch those numbers, much like you would a video game.

Going back to my retirement figure…

For the longest time (over a year, in fact), I stayed stuck in this current iteration of my financial independence. Part of it was I had used other calculators, like those by BankRate and Empowered Retirement. Each had pegged my chances for reaching my x-dollar figure at over 100% chance of success. These were somewhat optimistic projections, assuming a 7% return.

Personal Capital, on the other hand, paints a more grim picture, assuming 6% return. A nice way of saying “grim” is more realistic or conservative. It also assumes that I’ll suffer a medical catastrophe at one point in my life.

According to my Edelman Financial adviser, who had managed my investments before I joined Personal Capital, chances are high that I would become disabled at one point in my life and need to call upon this money for assistance. That event could send me into financial ruin.

It’s always better to have more money than less. You’ll never complain about having too much money. What you will complain about is having too little money and wishing you had saved more.

I’m not out of the woods yet or even close to closing the gap in my goal to reach my x-dollar figure. My financial adviser threw me another curve ball a few days ago. He says I need to account for a high medical cost in retirement.

A nice, round number is $5000 a year. You may have a hard time fathoming the severity of a health condition which requires at least $5000. I can tell you from personal experience it’s is a very high number of visits to various specialists, including transportation and lodging. It’s not a good place to be.

Having already experienced something similar for a year in my life, it scares me that this is a regular occurrence in retirement. Assisted living in 2019 numbers can run up to $6000 a month. I can tell you I would rather start saving up for this expense than to be without the money.

Ultimately, Financial Freedom Is…

The ultimate definition of financial freedom to which I strive is

• Making decisions where money is no longer the primary, secondary, or even tertiary concern

In the future, I’ll definitely write another article dedicated to this idea of being able to make decisions where money is not a part of the process.

As you can see, what financial freedom means changes as you grow. Ultimately, financial freedom has little to do with money. Paradoxically, we can only say this once our basic needs are satisfied, which money is able to provide.