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Defining financial independence

Defining financial independence

I’ve been working on setting intentions recently (and having a hard time with it to boot.) I think part of the problem is that I’m still not sure how an intention differs from a goal.

Anyway one of the things I initially came up with as something I wanted was “financial independence”. But then I got to thinking, what IS financial independence? How do you define it?

At first I thought it would be mean having our house paid off, plenty of money in the bank, a reliable income, and excellent insurance, but is that really “all” it takes?

That can’t be all, because I’d probably be pretty unhappy if I had our house paid off, plenty of money in the bank, a reliable income, and excellent insurance, and I had to work 80 hours a week at a job I hated to maintain that status.

I just don’t know how to define it clearly.

And if I don’t know, how can I get there?

Maybe I’m over thinking this. How do YOU define financial independence?




View Comments (8)
  • I always defined financial independence as you work because you want to and not because you have to. The problem with that is when do you decided enough is enough and you no longer have to work. I wrote about how I came up with mine on my site.

  • For me financial independence is having the financial ability to do what you want when you want (within reason – buying an NFL team doesn’t really qualify). Essentially as MFD said the ability to decide if you want to work and not because you need to while maintaining a comfortable lifestyle.

  • For me financial independence is living on my own with my own dime. It’s a good feeling, but have to live more paycheck to paycheck and don’t have the luxury of savings.

  • I was reading your article and it makes perfect sense. I want to be financially independent, but how? what does that mean? your so right. I do ntwant to live pay check by paycheck, so I was thinking about private investing. That would help me be financially independent dont you think? If I saved up enough money I wouldnt even need to work as hard and i’d have everything I want

  • Some would feel financially independent if they owned a business or worked at job that they loved, was secure and paid enough to maintain a comfortable lifestyle. Others would feel financially independent if they could live without working indefinitely and at least survive until they were able to find something to do that they really enjoyed to suppliment their income. Most I think expect to be able to quit their job and live comfortably without working. Still some are dreaming of an extravagant lifestyle as millionaires. For a few a simple lifestyle doing the things they love to do and enjoying time with friends and family would be all that is needed to satisfy the requirement for financial independence.

  • I’ve had various definitions.

    My first was not having to rely on others (parents, student loans, etc.). So it meant having a job, having my own place, and having some savings so that if something went wrong, I could deal with it myself.

    Now it means having enough savings that if I really wanted to, I could live like a student instead of having to work. I have a really good pension, but I don’t qualify for six more years. I want to make sure that even if the rules change between now and then, I can still retire in six years. So that means I plan to have my house paid off by then, I’m maxing out my IRA, and I’m now adding some to a 403b.

    I can imagine one day changing that definition so that I could live in the manner to which I’ve become accustomed (sort of like a student, but with more traveling, more movies and plays, and more lessons).

    And I’ve heard of people who really don’t want to depend on others at all. They want to grow their own food, have their own well, make their own energy (such as by having solar panels and reducing their needs), etc.

    One other note: I don’t take high-stress jobs if I can help it. At first that happened by accident, but now I do it on purpose. This means I get paid about half as much as most of my friends. If I could take a high-stress 80-hour but fun job for just a couple of years and then have enough money to quit, though, I’d probably do it.

  • Financial independence is how many days you can survive without needing a job.
    It’s also the ability to tell your boss to shove it! :)

  • To me financial independence is having enough financial income to meet the basic human needs…today I choose to change that.

    Financial Independence to me means having all the money that your heart truly desires without having to work for someone else in order to obtain it, without having to ask for (it just comes to you freely because you are open to receiving financial abundance and truly believe that you are worthy of it and deserve it. I am worthy.

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