Does “financial independence” mean complete freedom from debt? Does it mean the ability to stop being on a salaried job or switching jobs without creating financial panic in your household? Does it mean having enough money to survive on without worrying to make more money?
Well, there are all definitions of financial independence out there. However, I subscribe to the idea that financial independence means that you have enough money or resources to survive on even if you didn’t have your current salaried job or if your current business runs dry. It merely means that if you were to quit working or if your business nose-dived today, you would not lose any significant part of your way of life for a period long enough until you find your two feet again. Such financial independence is the ideal life expected of retirees. Ideally, when one reaches retirement age, they don’t have to work to maintain a basic lifestyle because they are expected to save or invest in passive investments (investments that earn you income without you being there) for their retirement so they can maintain their life styles. This is not easy for most people since the wage earned is largely used hand-to-mouth (if it reaches the mouth at all). But many middle-class workers retire on a good package, and only choose to work out of a desire to do something interesting and productive with their time, and also a desire to live a lifestyle beyond their idea of a basic lifestyle – traveling around, a nice home, and so forth.
Others might have different viewpoints. Financial independence might occur for them once they are outside of the burden of excessive debt. Others might feel independence when they can freely switch jobs, or when they have the ability to start their own business. They are very right too!
The important question, however, is not what financial independence means to me or what it means to some so called financial expert out there. What matters is what financial independence means to you. What does it mean to you?
On one level, this discussion really is about goal-setting. Many people look at financial independence as a state beyond what they currently have – and it’s something that has attributes that they want. Do you want the ability to easily switch jobs without panic? Do you want the ability to survive without having to work? Those are goals that all fall under the umbrella of financial independence.
The key part is to turn that idea of financial independence that you have in your head and in your heart into a long term goal, one that you are planning on reaching in the future. What can you do today to move towards that position of financial independence?
Wishing you well as you sit, cheek-in-hand to search deep and wide if you really are financially independent. I am with you in spirit as you set the goals to realising your financial independence. A blessed weekend to you and yours.