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Difference between financial freedom and financial confidence
FINANCIAL FREEDOM: According to Wikipedia Financial independence is the status of having enough income or wealth sufficient to pay one’s living expenses for the rest of one’s life without having to be employed or dependent on others. Income earned without having to work a job is commonly referred to as passive income.
Simply put, it means having the financial cushion (savings, investments, and cash) to afford a certain lifestyle for life.
Now the major flaw with Financial freedom is that the ultimate goal is that one day you would stop improving ones self and watch his/her investments pay for the rest of their lives. This is flawed because it’s based on the assumption that your investment would exist forever. Before we go further let’s know what financial confidence is.
There is a robust and growing body of evidence which shows a strong relationship between financial confidence and financial wellbeing. In the 2018 UK Financial Capability survey, financial confidence was strongly correlated with current financial wellbeing, and there were similar findings from national surveys in Norway and Canada. However, the exact nature of the relationship between financial confidence, behaviour, knowledge and skills remains unclear.
Based on thousands of hours of research and interviews with women and men, financial confidence helps you take control of your financial situation and gives you a much stronger chance of fulfilling the goals that matter to you.
The 3 key concepts to consider:
- Self-efficacy: Whether people believe they can make effective financial decisions;
- Self-assurance: Whether people believe in themselves, to act and follow through on those decisions;
- Self-determination: Whether people have the intention and willpower to take control of their finances.
Financial freedom promotes learning enough to earn enough but financial confidence promotes improving ones self to be able to earn whenever they wanted.
I hope you see the difference now ??