Financial freedom is overrated. Financial well-being is underrated

And then there is the feeling of security, control, and confidence when your finances support your life instead of being a reason for stress–that’s financial well-being.

Also, there are financial planners and media outlets that emphasise that financial planning is the most important aspect of money management.

In this age of information overload, let’s understand these three terms and how they are different, connected and what should matter the most.

Financial planning — The roadmap

The money journey should ideally begin with financial planning. It’s about bringing order and purpose to your finances–expense budgeting, building an emergency fund, managing loans, insuring your family, investing for goals like education or house, planning for taxes & succession and also planning for the big goal–retirement or financial freedom.

A solid financial plan gives direction and discipline. It’s your financial map—you know where you are today, where you want to go and have a roadmap for future.

Yet, while planning offers control, it doesn’t always offer peace & joy. Many who have the perfect spreadsheets still feel anxious. Many find planning to be either a tedious or boring exercise as we are taking about a distant future which is hazy and unpredictable.

Because money management is not purely logical, it’s emotional. Planning is essential and the ideal starting point, but it’s not the journey or the summit in itself, it’s a roadmap to go from point A to point B.

Financial freedom — The big summit

The concept of financial freedom or what we traditionally call retirement, i.e. not having to work for money, sounds like the ultimate dream, specially in the age of job insecurity, burnout, and stressful work cultures.

Who wouldn’t want to live life entirely on their terms? Unfortunately, this dream has been turned into a marketing bait by social-media influencers, product manufacturers, and financial intermediaries.

In reality, the chase for financial freedom often becomes stressful. Ironically, it can rob people of the very joy they seek. They trade time, health, and relationships for an illusion of freedom - working harder, saving more, yet living anxiously.

And what happens after achieving financial freedom at 40 or 50? What will you do with your time? Will you have good health? Will you find a purpose that keeps you active? Will the relationships you neglected in pursuit of freedom still be there?

True freedom isn’t about quitting work or having crores of money - it’s about enjoying your work and life today and everyday.

In chasing freedom for tomorrow, we often end up chaining ourselves today. While financial freedom will always remain a worthy and big goal, it cannot take the centre stage of money management.

Financial well-being — The real journey

Financial well-being is a lot like physical well-being. You don’t achieve it by crash diets or one-time workouts - you build it through daily habits, awareness, and discipline.

Just as physical health isn’t about having six-pack abs or great appearance but feeling energetic, resilient, and fit, financial well-being isn’t about having crores in the bank or perfect plans. It’s about feeling secure, confident, joyful, and at peace with money.

The OECD and many governments define financial well-being as the ultimate goal of all financial education and planning efforts. According to the OECD, financial well-being means, “Having control over day-to-day finances, being able to absorb financial shocks, being on track to meet financial goals, and having the freedom to make choices that allow you to enjoy life."

You experience financial well-being when you:

• Wake up confident knowing you have enough to pay bills and handle emergencies.
• Live fully, using money to support good health, relationships, values and purpose.
• Sleep peacefully, knowing your future is secure and your goals are on track.

To cultivate and experience financial well-being, focus on organizing your finances, spending within your means, building emergency funds, planning for goals, avoiding debt traps, stopping lifestyle comparisons, avoiding the chase for returns, nurturing a healthy money mindset and becoming financially aware.

What is important?

Think of your financial journey like going on a mountain trek:

• Financial planning is your preparation and roadmap: which route to take, what to carry, where to camp, what pace and how to prepare for the climb.
• Financial freedom is reaching the summit peak: where to pause, breathe, feel accomplished and choose what to do and where to go next.
• Financial well-being is how you feel during the trek journey: safe, in control, feeling the fresh air, enjoying the views, having good time with fellow trekkers. And not panicking about getting hurt, feeling exhausted or getting lost.

To understand how experts view these three ideas, we conducted a quick poll among members of Network FP , India’s community of personal finance professionals such as CFPs, QPFPs, MFDs, RIAs and others.

Almost 76.9% of 320 members polled said financial well-being matters the most for families to live a good financial life. And just 7.5% voted for financial freedom. And 15.6% voted for financial planning as it’s the ideal process to achieve both.

So pause for a moment and reframe the real purpose of money management. Because the true measure of prosperity isn’t how early you retire, it’s how peacefully you live – every single day of your life.

Stop chasing financial freedom. Start experiencing financial well-being.

Sadique Neelgund, founder & CEO, Network FP.