It seems like with each passing year, information is rushing at us at an alarmingly faster pace. Combine that with our ever-increasing need for instant gratification, and more people are becoming less inclined to want to take the traditional, “tried and true” path to financial success. Despite the growing number of books and financial guru websites dedicated to helping the public find freedom in their finances, every year I meet more and more people who are dissatisfied with their current level of financial success…despite their larger incomes, increasing business, or if they are fortunate, growing portfolios.

So, what the heck is “financial freedom” anyway? Where do you “find” it? How do you know when you have “gotten” or “achieved” it? Or better yet, would you even know it if it walked up to you and kissed you on the lips? (after all, there is never a shortage of stories on NY Post’s Page Six about those who have “married” it—or “divorced” it and received even more of “it” in the ensuing settlement.)

Perhaps the challenge lies in the definition of financial freedom—that standard against which we are measuring our success. If you Google the phrase “financial freedom”, there are 8,520,000 results, of which many of the most popular are related to debt and debt reduction. While that may be a key factor in many cases, getting out of debt is not the totality of financial freedom. That would be like plugging a hole in the bottom of your sailboat, but failing to notice that it isn’t an especially windy day. If you haven’t fitted your boat with an outboard motor, or if you neglected to fill it up with gas, you aren’t getting very far…even if you don’t sink.

Wikipedia, my favorite online source for all things subjective, defines financial freedom as “a well-planned lifestyle where one no longer is required to work for income to cover their expenses.” This sounds hopeful, as many people love the idea of not being required to work at some point in time. However, the article takes it a step further by adding that it can be attained in one or two ways: “1. Enough passive investment income to cover one’s expenses. 2. A large enough “nest egg” that can be liquidated over time to cover one’s expenses.” Sounds kind of like retirement, doesn’t it? Yet how many “retired” people do you know would call themselves “financially free”?

While this sounds appealing, the question remains “How much are your expenses?” Or perhaps more relevant is “How much are your expenses increasing each year?” Even if in the unlikely event your expenses are not increasing over time, the value of a dollar is decreasing every year, even when the currency markets are working in its favor. According to an inflation calculator at the Bureau of Labor Statistics (www.bls.gov/cpi), part of the US Dept of Labor, $100 in 2008 has the same buying power of $74.71 in 1997, the year my daughter was born. Conversely, it would take $134 today in order to maintain the spending power of $100 in 1997. Yikes! That means if I were “financially free” at that time by this definition, my passive income would have to increase by 34% just to keep up with how much my existing lifestyle costs….not taking into consideration that there may be “new things” I would want for her now that she is older.

What if we took a view of financial freedom that didn’t just consider the condition of your balance sheet and income statement, but also the condition of your wealth perspective? In other words, what if the definition of “financial freedom” included a state of mind as well as a state of finance? There is no doubt that financial success requires some key factors, both practically speaking as well as from a mental mindset. First, you have to have resources. In other words, you cannot go from being 100% “people at work” (people earning income) to 100% “money at work” (assets earning income) without allocating some of those working dollars to assets. In many cases, lifestyles are established prior to any kind of planning or budgeting. This puts a tremendous amount of pressure on the ability to allocate dollars to being “money at work” dollars. I call this “reverse cash flow”. And if cash is in reverse when gross income comes from “people at work”, it is risky business once cash is flowing solely from “assets at work”. The shift in mental mindset is making Financial Freedom a priority over “keeping up with the Joneses.”

Second, you have to plug the holes. This is harder than it sounds, mostly because most people are unaware of where they are hemorrhaging cash, debt service notwithstanding. This is mainly due to the “microeconomic approach” we are traditionally taught. In other words, we are currently so worried about having the “best product” in each area—the highest interest rate on our savings account, the lowest interest rate on our mortgages, the hottest mutual fund in our retirement plan (and the list goes on) that we lose sight of how these products are interacting on the larger screen of our plan. This is where strategy comes into play, and taking a “macroeconomic approach” instead. On the mental side, it means widening your view and being ok with “trying on” non-traditional ideas.

Third, you have to have a coordinated plan. This means the left hand must know what the right hand is doing. Most advisors look at growing assets (i.e. retirement plans or college funding) or at reducing liabilities (i.e. debt consolidation and mortgage refinancing)…but a plan can fail miserably if your life’s work is not adequately protected and fueled by the proper cash flow sequence. Most successful people already have an inventory of financial instruments. The mental mind shift here is to be open to harmonizing what you have, rather than chasing the next “quick fix” product.

Nancy Ogilvie is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 990 Stewart Avenue, Suite 200. Garden City, NY 11530. Securities products/services and advisory services are offered through PAS, a registered broker/dealer and investment advisor. Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. National Financial Network LLC is not an affiliate or subsidiary of PAS or Guardian.

PAS is a member FINRA, SIPC