The Freedom Threshold: Redefining Time, Money, and Relationship Freedom – Episode 685

Transcript provided by the show’s production team.

[00:00] Spencer Shaw: Prosperity thinkers, welcome to the podcast. Today, Kim and I are going to be speaking about the freedom threshold. Kim, when I say that, what where does your mind go when I say that? Kim Butler: Well, I have always believed that there are a variety of things that we want freedom around, and they s- first of all split up into two categories: freedom from things, like things that we don’t wanna be doing anymore, thinking anymore, operating with anymore, so freedom from things, and then freedom to things. So we want the freedom to be able to, for example, have calendar control. We want the freedom to be able to, for example, choose the clients that we wanna work with, that type of thing. And then in the freedom to space, and I got this from Dan Sullivan, we wanna look at

[01:00] time freedom, money freedom, relationship freedom, and I’m thinking that he has a fourth one that’s currently escaping me. But just time, money, and relationships, right? Like, if we can have the freedom to have those three spaces in as much of a ideal standpoint… Now I need to bunny rabbit trail on this for a minute, ’cause ideal is what we shoot for, but it’s not always what we get. But a lot of times while we’re shooting for ideal, we get something pretty darn good, right? And we just need to be really careful to not measure ourselves between where we are and the ideal, but we measure ourselves backwards from the progress that we have been making. Nevertheless, if we don’t know what we want as it relates to time freedom, money freedom, and relationship freedom, then it’s a little difficult to seek it. And there’s so many people that know what they don’t want, but they’re

[02:00] not clear about what they want. So this is another element of freedom, right? That we need to take the time to get clear on what we want Spencer Shaw: It’s so true. You know, you mentioned the time freedom and money freedom, and like we’ve got these filters and for you, do you see that they take different stages in life? Because the people that are at retirement age, and I know I’m using that word as just a word, but if anything they’re like, “Sorry, I don’t care about all this money, I want time.” And the people that are young are like, “Hey, give me this money so that I can go do this.” have you seen that adjust? And at what are the age, if you gave ranges, do you see those tipping points adjust? Kim Butler: Yeah, it’s a really good question. It really depends on the person’s mindset. Like for example, I have a favorite story that I tell often, and it’s

[03:00] about a woman entrepreneur that was quite capable that ended up having a massive portion of her business just crater. And she was talking with her CPA and frustrated, and he said to her, “It’s just money. You can go earn more.” And it was so insightful for her because, of course, he was emotionally removed from her situation at the time, she was not. And so it was a good reminder to me, and I absolutely see this with typically your 20, 30, 40-year-olds, they just know that they need to earn money, and they ideally find work that they love in order to earn that money, and they just focus on earning. Then you get into the 40, 50, 60-year-olds, and they focus more on keeping, and that I think is a really important question. Okay, you’re earning all this money, how much are you keeping?

[04:00] And then, yes, of course, you’re right. Typically, in the 60, 70, 80-year-olds, this idea of retirement comes along. But I think more and more people are realizing that retirement is a social construct that was installed in the United States around the 1930s and just frankly is not helpful today because of how long people will live. And you can’t there’s some exceptions of course, but as a general rule, you can’t possibly earn enough money from, let’s say age 30 to age 60, you know, approximate 30-year period, to then live another 30 years, 60 to 90, and that’s with the knowledge that you’re probably gonna live to something more like 100, 110, maybe even 120 or more. Because as we know, the life insurance companies these days are using age 120 in their

[05:00] illustrations. So that is definitely some approximate age ranges, and yet, oh my gosh, do we as a human race need to revisit those ages, but it is hard. I cannot tell you how stuck our society is around this concept of age 65 and what’s supposed to happen around it and about it. And we know that 87 is the new 65, but people don’t… I mean, they just don’t think in those terms Spencer Shaw: No, they don’t. You know, just the other day I was speaking with this man who’s a friend of mine, so it’s a friend of a friend. He’s 90 years old, and what fascinated me is that he bought this old factory in town, and it’s a nice building. It’s on a bunch of land. He bought the factory so that he could create a bunch of different incubators ’cause he wants businesses creating things. And I thought, “This guy’s 90 and he acts like he’s 30.” Kim Butler: I love it Spencer Shaw: So one of the discussion points that I have right here, since we’re talking about the freedom threshold, is this: What’s the difference between financial independence and financial abundance? Kim Butler: So I think financial abundance is when you truly have enough to live the rest of your life the way that you want it, and that there’s enough to live your life and give and serve and have time freedom along with the money freedom. So now separating those out, money freedom can happen when you’re 22 years old and you’re just out of school, and you have an opportunity to earn income that is greater than what your life requires for you to

[07:00] sustain. And so as we grow, we add spouses, we add kids, you know, that number changes. We add the next house and then maybe a second home, et cetera. The amount of money necessary to live our life on a monthly basis changes, and as long as we are creating more value in the world, our income and our opportunities to earn income will rise also. So to me, that’s what financial freedom is. As long as you have confidence in your ability to earn an income, you have financial freedom because you know, as the CPA said to this woman entrepreneur, that you can always go earn more Spencer Shaw: Okay, so I’m gonna ask two follow-up questions. One of them I have written down, the other one is the precursor to the one written down. So which is this: what are the biggest

[08:00] mistakes low income earners make? And the second question is: What are the biggest mistakes high income Kim Butler: Lo- love it. Love it. So low income earner mistakes are putting money in retirement plans, 401s, 403s. You wanna get the match. Yes, I get that. But the fact is, because you don’t have a lot of extra money, you probably haven’t built any kind of an emergency fund. This is really inhi- inhibiting your ability to sleep at night, which is then inhibiting your ability to perform at your best during the day. And so it kills me when 22-year-old kids straight out of school get their first job, and the first thing everybody wants them to do is max out their 401. It is the worst advice, and yet it’s super, super common. And I have examples of people that have done that, and then two, three, four, 10 years later, they wanna go create another opportunity, and they can’t because all their money’s locked up

[09:00] in their 401or their 403. I’ve had other examples where they eschewed that typical financial advice maybe after time. I mean, they can always do it year two, year three, year four, whatever. But they eschewed the advice of max out 401or 403, and instead they built their emergency opportunity fund. And because of that, they were able to take advantage of opportunities, investment real estate, a business, an environment where maybe they weren’t gonna earn income for a while because it was being traded for stock or membership in a LLC or what have you, opportunity to buy a franchise. I mean, there’s just endless opportunities out there. And so that’s the mistake that the low income people make is maxing out 401s, 403s and not building that emergency opportunity fund On the upper income side, the mistake that they tend to make is to be uber focused on investments and not

[10:00] focused on that emergency opportunity fund. So in a way, it’s the same problem. The difference is the upper income, they’ve probably already got the emergency fund, but do they have an opportunity fund? And then the question is, well, how big do you want that opportunity fund to be? And my answer is, well, how high is up? Because first of all, you should define your emergency fund. So let’s say it’s 100 grand for your family. Great. So you’ve got that handled. Now, your next opportunity is maybe that accredited investment that you wanna buy ’cause you’re accredited because of income or maybe net worth, but you gotta have a quarter million minimum to get in. Or maybe it’s the next real estate deal that you wanna buy and the down payment is half a million dollars, right? So cash flow issues don’t go away, they just get bigger zeros on them, and opportunities

[11:00] present themselves to those who are ready to take advantage of them. Well, if all of your dollars are tied up in investments, and I know technically stock market investments are liquid, but are they really? Because guess what? If they’re up, you don’t wanna sell. And guess what? If they’re down, you don’t wanna sell. So having money that is supposedly liquid that’s in the stock market, and I’m not talking retirement plans, I’m talking like after tax, mutual funds, stocks, bonds, that kind of thing, traded, you know, E-E type funds, whatever they are, hedge funds, you name them. Are they really liquid? And the answer for most people is technically yes, but practically no Spencer Shaw: Interesting, because what you’ve described on both sides is something that has to get wired first, which is the emergency opportunity fund, and what you’ve

[12:00] described as well on the low income is that they might be not be sleeping well at night because of worry of something, and those that are too deep in their investments without the pieces in place, they’re not sleeping well at night because they are not clear on that. So for all of you listeners this episode about freedom and the freedom threshold is one that could be argued both ways. But one thing that does help is getting a clear check on where you are and where you wanna go. Email address for podcast listeners, hello@prosperitythinkers.com. You can ask those specific questions to Kim. She’ll answer you. Hello@prosperitythinkers.com. Thanks for joining us today.