Why financial freedom is out of reach without a secure base

Trying to chase financial freedom before you have security can be risky. Getty Images

Imagine two people in the same role earning the same amount of money. One is all about stability, making sure bills get paid and that a surprise expense doesn’t catch them off-guard. The other wants more flexibility by working fewer days or not at all, spending more time with their family, and maybe even starting a business.

One is talking about financial security and the other is talking about financial freedom, let's explore what these terms mean.

Financial security is the bedrock. It means you’ve got the basics covered. Rent, repairs and school fees are all sorted. There’s a little cushion in case something goes wrong. Debt doesn’t get out of hand, and you’re not living paycheque to paycheque. It’s not about being lavish, but turning what could be a big problem into something you can handle.

Financial freedom comes after. It doesn’t mean endless luxury; it’s about having real options. For many, freedom means working because they want to, not because they have to.

Trying to chase freedom before you have security can be risky because high fixed costs and investments can unravel fast when life throws a curveball.

That’s why a simple plan is so important, and it keeps you steady. A good yearly forecast lays everything out: what you earn, what you spend, what you own, what you owe and how rising costs might affect you.

Take a family that expects rent to stay flat, but then it jumps by 10 per cent. Their forecast lets them see the ripple effect right away and work out whether they need to cut back elsewhere or save more. It’s a tool for facing real-life questions. What if school fees go up? What if medical bills rise? What if you have to travel more to see family?

A solid plan sets spending limits, savings goals and investment rules. Both security and freedom rest on this. Without a plan, you’re just hoping for the best.

Living in the UAE introduces additional considerations for your financial plan. Expatriates are not eligible for a state pension, so retirement funding must be sourced from personal savings, employer schemes (such as gratuity) and any entitlements from other countries. Healthcare costs tend to rise with age, making it sensible to plan accordingly if you are paying for your own or your dependents’ health cover. Regular travel to visit family is not discretionary as it is a recurring expense that should be incorporated into your budget.

Here’s how that looks in real life. One family, before renting or buying anything, sets a cap on what they’ll spend each month. They keep some savings for emergencies and stay clear of expensive loans. They invest regularly, picking a risk that matches when they’ll need the money and in the right currencies. By holding some savings in the same currency as their future expenses, they don’t worry as much about exchange rates. Once a year, they go over their plan and tweak it if needed. Step by step, their security holds steady and their path to freedom grows.

Compare that to another family who, right after moving in, signs up for a big villa, a couple of cars and lots of club memberships. Whatever’s left gets saved, if anything. When bills or rent go up, they feel the pinch. They might invest, but have to pull money out at bad times when cash runs low. They only sit down with the budget after trouble hits. Without security, freedom is always out of reach.

You see real progress when security and freedom work together. Security means life ticks along smoothly and bills are paid, repairs get done and your plans survive a few bumps. Freedom, built on that base, means you can make big choices (like cutting down work hours or taking a long trip) without blowing up your finances.

A good plan stress-tests your future: can it withstand a market dip, higher prices or a surprise event? If so, you’re solid. If not, then focus on the basics. Check your fixed costs, set aside enough cash for emergencies, pay down expensive debts and what’s left, you can invest.

Over time, small, steady steps make you both safer and freer. That’s what separates solid financial plans from the ones that fall apart. Real financial health comes from working on both security and freedom, not just one or the other.

Alex Salter is head of commercial development and senior financial planner at Metis, a DIFC-based wealth adviser