The term “financial freedom” is not a new phrase. And if you listen enough, you can find plenty of references to it in the financial media as it resonates with so many families who get caught in the never-ending loop of long hours, stressful work environments, and the constant struggle with work/life balance.
To me and my colleagues at Solidarity Wealth, financial freedom is more than just a catchphrase; it potentially carries a deeper and different meaning for each client. What is “financial freedom”? We view financial freedom as the ability to pursue your personal and family priorities and engage in work only if it aligns with your passion and values. This means a greater priority in both time and attention toward family, friends, and those activities most important to you. And, most importantly, it means the ability to pay day-to-day bills is no longer contingent on a regular paycheck.
Where to Start: Setting the Foundation
In our experience, at a certain point of life and achievement, people look beyond their growing professional success to the personal values they cherish, their family and friends they want to spend more time with, and the deeper aspects of life and how they might focus more on those objectives—perhaps even what kind of legacy they will leave. And this is for good reason: for most, the road to professional success is littered with endless sacrifices and tradeoffs along the way.
For us, this is the starting point. For such successful clients, accumulating wealth is more than just numbers; it’s about cultivating the ability and the resources to enrich their lives with endeavors that ultimately provide a sense of life satisfaction. And eventually, those who achieve success begin to question the significant sacrifices they have made along the way with family, friends, health, and those activities they are most passionate about. Once they “have enough”, they consider reorienting their life to meaningful relationships and experiencing a purposeful life where their efforts and activities have made a difference to others (such as children, grandchildren, or charitable causes). We know all this can be unique and different for each client, which is why we take the time to gain a solid understanding of who the client is, what their values are, and what’s truly important to them.
What Does Freedom Truly Mean?
Once life goals and objectives are understood, the next step would be to identify the resources available and how those resources could be structured to both take care of present living expenses and future requirements, such as a rainy day fund and retirement. Often, this could include creating passive streams of income and cash flows that would cover current lifestyle expenses, even before such incomes are needed. This step is psychologically important because a large Balance Sheet does not pay the bills; rather, consistent and reliable cash flow allows that freedom to be achieved.
From there, the client might reach the point where “working” is a choice, not an obligation, and they have the flexibility to spend their time with family or other meaningful activities. Paying the bills is no longer contingent on having a paycheck. Or, alternatively, we have found that this also can reinvigorate clients in their current role because they have the confidence and knowledge that they can walk away any time.
One issue we often encounter is a client’s investment concentration in long-term growth investments where the sole objective is net worth appreciation over time. While certainly a core component of sound investment management, for clients looking to obtain financial freedom to pursue other life objectives, having cash flows (think investment income, dividends, etc.) to take care of the day-to-day expenses, while still balanced with longer-term growth investments, is a sound method to experiencing true financial freedom.
Launching and Testing the Program
A valuable aspect of sound wealth management is the ability to “test” the system ahead of time before stepping out into new territory. This may involve slowly allowing the structured investment accounts and resources to take the place of earned income to cover expenses so a comfortable income-versus-spending balance may be reached over time and stepping away from career-oriented work is possible. We find that people appreciate this type of slow-go approach to adapting to a different mentality with money and providing for one’s own needs. Doing so might also allow time to ensure that spending doesn’t exceed income over time and that certain “splurges” or excessive luxury spending don’t torpedo the long-term goals.
In time and with proper guidance, reflection, and analysis, a sense of confidence and assurance builds to the point where the focus can now shift to their personal goals and fulfilling activities, enjoying the rewards for previous work and sacrifice. I discuss this further in this article.
Attaining What’s Important to You: The Next Step
At Solidarity Wealth, we believe in living a purposeful life that is rich in close relationships and meaningful accomplishments. Our mission is to help our clients attain the means to create and sustain a fulfilling life now and in the future by aligning their financial goals with their deepest values.
If you’re looking to craft a mindful, effective strategy that aligns with your personal aspirations, let’s have a conversation. Connect with us and let us help you realize your life vision.
About Jeff
For over a dozen years, Jeff McClean has advised some of the country’s most successful families on all aspects of their wealth. With his background as a former tax and estate planning attorney at a prominent Houston, Texas, law firm, Jeff has advised clients through business sales, funding rounds, IPOs, complex tax and wealth planning transactions, private and public market investments, executive compensation packages, succession planning, and much more. In short, Jeff helps clients navigate the unique challenges that come with building wealth and helps them better predict their financial future.
In addition to co-founding Solidarity Wealth, Jeff advises single-family offices on a broad array of challenges. He also serves as the Managing Partner of Solidarity Capital, an income fund managed separately by the Solidarity partners.
Jeff is a sought-after thought leader on a wide range of tax, finance, and estate planning topics. Jeff has been quoted in Yahoo! Finance and Kiplinger’s, has published in diverse publications from Silicon Slopes magazine to the Taxation of Exempts journal by Thomson Reuters, and has spoken to audiences ranging from the Estate Planning Section of the Utah State Bar to the Nonprofit Organizations Institute to large company conferences.
Jeff holds a bachelor’s degree in accounting from Brigham Young University – Idaho and a Juris Doctor, with honors, from the University of Texas School of Law. Outside of work, Jeff is married and the father of three amazing children. He has also served as past president of the Salt Lake Estate Planning Council.
Solidarity Wealth is a registered investment adviser. This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Solidarity Wealth and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Solidarity Wealth unless a client service agreement is in place.
