What is financial freedom and how is it different from cashflow freedom?

I hope you’re having a great day. So today’s video, I want to talk about something that’s really, really important to me and a lot of the business owners I come across, and that is about what financial freedom is and its better alternative, cash flow freedom.

So financial freedom’s a term that’s used a lot, especially in business books. And financial freedom is about getting to a point where you don’t have to worry about money again. So the reason that people use the term freedom when talking about cash flow and financial freedom is because what it means is when you don’t have to worry about money because you’ve already set yourself up in a way where you’ve got enough money to cover your lifestyle, then you can actually start doing things in a different way.

I think a lot of business owners have been in a place in the past where they’ve had to take on a customer they didn’t really want to work with just because they had to pay the bills and they had to pay their team. And though those people and if that was you, you’d probably recognize that you know what? Sometimes having to make money can put you in positions you don’t necessarily want to be.

So the desire to get to a point where you can do things because you’re passionate about them, because they align to what you want to achieve in your life and the legacy you want to build and not have to worry about money, that is really desirable for a lot of people.

What I’d say is a lot of those things, you can make money as well as do all the things you really want, and I’ll get to that in a few minutes. So financial freedom typically is where you’ve got enough coming in, including a surplus, where you cover all your costs and your lifestyle.

So a lot of people think they can achieve financial freedom just by making a shit-load of money, and they are wrong. Some of the poorest people in the world are millionaires on paper. Some of them. Most of the really poor people in the world just have absolutely nothing. And that’s a different thing, which I won’t cover. But it is possible to be like a multimillionaire and be incredibly poor, and I’ll explain how.

If you’re a multimillionaire and … firstly, you could have done it just by building up loads and loads of assets but those assets aren’t really releasing money and you don’t have the ability to sell those assets. Maybe because they’re locked in because of big tax bills, maybe because they’re really long-term investments.

So you can end up having loads of assets on paper but not having access to that money or … And the other thing is you could end up having loads and loads of assets that do give you money but not enough to cover your lifestyle. And this is quite typical amongst lottery winners, for example. So people who win the lottery, they tend to end up broke a few years later anyway because they don’t … What happens is they don’t understand that to actually become wealthy, you have to control your lifestyle and your expenses.

So I’m not saying go to Aldi and buy their cheapest baked beans. But what I’m saying is if you’re a multimillionaire, if you keep on letting your lifestyle expand and expand and expand in terms of its financial requirements, what you could end up with is is a lifestyle, even though you’re a multimillionaire, that costs more than the revenue your assets generate.

So that’s why it’s possible to actually be poor, even though you’re a multimillionaire on paper with those assets. And then eventually what happens is your lifestyle, it keeps increasing and you get to a point where you have to start cannibalizing your assets, selling them off, and then essentially that’s how you lose your millions.

So this video is talking about how financial freedom works, which I think I just explained. It’s about making more money, but at the same time also controlling your costs. But not so you live a really frugal life, but in a way which means you’re generating the best value for the money you’re spending. And then I’m going to go on to the better alternative to cash flow freedom.

So cash flow freedom is a term that encompasses everything, all of your assets, all of your investments, everything going on in your financial life. So you could have a pretty average business but just because you’ve been setting enough money aside every year and you’ve used it to buy a rental property portfolio, you could have used it to invest in other things, stocks or shares, which are delivering a return, you can achieve financial freedom that way because you’re creating all this residual income that’s more than covering your lifestyle.

But cash flow freedom is actually about achieving it solely through your business. And I think this is the one that’s overlooked. Most people I talk to say that they want financial freedom and that’s why they keep taking money out of their businesses to then invest in properties and then to invest in shares and stocks and all that kind of stuff.

So cash flow freedom is about achieving financial freedom but in a way where you actually leave money in your business and then use that money to grow your business to a point it delivers a really, really healthy salary and dividends for you every year, and it also grows in value to a point where you could actually sell it.

So financial freedom is about achieving financial freedom through all of your means and investments. Cash flow freedom is about getting your business to a point where it gives you so much money that you can actually then just make decisions for the right reasons rather than having to just pay the bills. So two very different things. Depending on which route you go down, you’ll probably run your business in very different ways as well.

So as accountants, we specialize in cashflow and profitability growth for our clients. So come and talk to me about what cash freedom actually looks like. We’ve got our signature solution called Apex and it’s designed to help business owners go from earning 50k a year to half a mil, plus having a business that’s worth a million pounds in the space of three years.

So come and talk to me about that. We offer a free strategy session. If you want a million-pound business, if you want a healthy take-home pay, we can show you exactly how to do that. All right. Thanks for watching. Remember, if you liked this video, found it useful, remember to like, share and follow and I’ll see you at the next one.

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