What Financial Independence Means to Me

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what financial independence means to me

Happy 4th of July eve everyone! When my blogging pal Pauline asked some of us to write a post on financial independence in light of the Holiday upcoming I jumped at the chance. Before I get started on my thoughts regarding financial independence, Pauline will be hosting a carnival tomorrow highlighting other posts like mine.

That said, financial independence is a popular topic, especially if you’re a reader of many personal finance blogs. We all have our own views on being financially independent and what it might mean. You have some that might view it as early retirement and others who plan on taking the traditional retirement path and still more who view it as having no debt at all whatsoever.

I do not really consider myself on one extreme or another, but financial independence is a topic that is on my mind fairly regularly.

Financial Independence Defined


Most definitions of financial independence would almost certainly include the idea of not having to work to cover your basic needs. This means that you have been able to amass an investment portfolio that will produce income and dividends that will take care of you and what you need on a day to day basis.

Think of that for a second…not having  to work, not having to sit in that cubicle day in day out. I know, it sounds pretty enviable, right? I know that many might think of this as the traditional retirement model where someone simply stops working and enjoys their sunset years.

I, on the other hand, view being financially independent and traditional retirement as two separate ideals. Those that are financially independent, in general, are still looking for ways to be productive members of society while continuing to grow their holdings while the traditional retirement model will generally stop working.

I think the key is seeing the freedom that can come with being financially independent and taking advantage of that versus feeling almost bound to the idea of not working at all because you’re retired.

What Being Financially Independent Means to Me


Speaking personally (which is the beauty of personal finance, because it’s personal) I view financial independence as living a debt free life and being free from the burden of debt. That means to be free of consumer debt and being free of a mortgage.

It essentially means that we can make the decisions we want and not have to think about whether or not we have the funds for it (generally speaking, of course). I know this may sound a little like pie in the sky thinking, but I do believe that something like this is possible.

One of the keys to making this financial independence possible, I find, is changing your view of money. Are you making your money work for you and using it to make more money for you, or are you enslaved to your money and allowing it to run you?

It sounds simple on one hand, but difficult on the other as it’s so contradictory to what our society preaches. Ultimately, I do not think it’s that difficult; it just requires hard work, commitment and the willingness to strive for it if that is a goal of yours.

Time and Diversification – the Two Needed Ingredients


You might be thinking now that it’s great that some people may be able to achieve financial independence and that you just can’t do it. I’ll let you in on a little secret that those who’re financially independent will likely tell you…it really comes down to two things most often – time and thinking outside the box.

Time is often the most overlooked aspect of investing, whether you’re investing in stocks or investing in real estate – time will do wonders for your investments. That means that if being financially independent is important to you, you’re not allowing excuses to hold you back and you start as soon as you can with whatever you can.

Some start saving as early as high school or college and are able to make great headway as they continue. They make that headway because they develop that investing discipline which helps them as they start to earn more money.

Beyond time, they’re always looking for unique ways to diversify themselves. I am not merely talking about diversifying their stock portfolio, while that is certainly important, but it means they’re thinking outside the box with their investment dollars. They are investing in things like real estate, cattle, owning companies, owning buildings and the like. They are looking for ways to constantly broaden their investments so they’re less likely to be impacted if a downturn is felt in one area.

While time and diversification are important to reaching financial independence, they must also be matched with a workable plan. Becoming financially independent, as a goal, is great, but if you do not have a solid plan to reach financial independence (much like anything else in life) you’re less likely to reach it as a plan can and will guide you along the way.


How do you define financial independence? Are you working to reach financial independence some day?


Photo courtesy of: Photo courtesy of: Josef Grunig

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.


  • I would define financial independence as having the ability to do what you want with your life without money being a consideration. That doesn’t have to mean being debt-free, and it also doesn’t mean you can go out and buy 50 Ferraris. But you have the financial security to make the choices that you truly value.

  • My definition takes it a bit further: not having to work another day in my life unless I want to! This obviously would require quite a few assets, but I think this would be a truly “independent” life.

    • John says:

      That was basically my point DC. Not having to work, but only doing so if I/we want to. I would still choose to, on some level, as I could not stand just sitting around doing nothing.

  • Well said. You need to have a plan. Without one, you are just going to keep “jumping ship” to the next hot stock and end up missing the boat. Have a plan and stick to it over the long-term and be diversified.

  • To me it’s all about not having to work again unless I want to. My plan for FI is to use a lot more of my time giving back to my community whether through volunteering or possibly teaching. Another is the freedom to be able to move wherever I see fit. While I’d prefer to be able to settle down in an area if I wanted to pick up and move half way across the country, being financially independent allows for that.

    Diversifying one’s assets has definitely been a common theme. I think it’s FreedomThirtyFive that bought farm land and leases it out. Most have diversified into real estate or even got their start with rentals. I really wish I had jumped on that earlier but it’s not much of an option right now unless I can find a small group that wants to go in on some rentals.

    • John says:

      I feel very similar JC. I want to be able to give back once in that spot through either charitable work or using our business to give back.

      I agree that being truly and fully diversified is a major one. Yes, is was Freedom Thirty Five that did that. You look at him or Pauline and see how well diversified they are – it’s obvious they have a very good view of being fully diversified.

  • For us, financial independence means much the same thing that it means to you. It means being debt free and not having to worry about making decisions based on what we can afford. Like you, it means not having to work. We are already feeling more independent since we felt comfortable enough to leave our stable jobs. It is a great feeling.

  • Right on the mark, John. To me, financial independence means you can make your decisions on what matters most, regardless of the cost. So many though, as you pointed out, aren’t willing to put in the time. It often takes years of sacrifice in order to get to the point where you’re financially independent. But being that the time is going to pass either way, I’d say it’s worth it. πŸ™‚

    • John says:

      That’s a great point Laurie! It does generally take a lot of time and hard work. However, it is still possible to achieve it as long as you do not allow that to hold you back.

  • Michelle says:

    Loooove this post. We’re definitely working on financial independence. To me, it is the point where I can work on what I want, when I want.

  • pauline says:

    Thank you for participating John! Have a great 4th of July!

  • “I view financial independence as living a debt free life and being free from the burden of debt.” I agree John. Independence means we are free from the constraints of others. I don’t know how someone can say they are financially independent if they owe a bank or another loan institution money. Sure they may built up the net worth to cover the loan obligation but they are not free from it. In reality, the bank still exercises control in that portion of their life until the debt is paid off.

    • John says:

      That’s a great point Brian!I know some may disagree, though I would tend to avoid that debt and be completely free to make the decisions that fit our needs best.

  • My take on financial independence is much like Matts. I don’t think that I necessarily have to be debt free, but I don’t want money to make my decisions for me. I want to have enough money to make decisions based on what I want to do with my life, not what I have to do with my life to make ends meet.

  • For me, financial independence is the capability of a man to do anything he want without worrying too much about his money. And I hope I can be that kind of man one day.

    • John says:

      I agree Mark, I want that as well. I want to be able to not have to worry about money, but have freedom to do what I want – when I want.

  • Well I’ll have my definition on my blog tomorrow. lol! The main takeaway for me is to now feel stress or worry over money, and to be taken care of in retirement…and enjoy life of course. πŸ™‚

  • Alexa says:

    I am working to reach financial independence some day. Although, I am realistic and know that for me this will be many, many years down the road. I think I will feel financially free when I can support myself by doing work that I enjoy and adds value to my life. I couldn’t imagine doing nothing at all.

    • John says:

      It will likely be years for us as well Alexa, though we’re putting pieces in place to reach that as soon as we can. I agree, I could not imagine just doing nothing – life would get boring awfully quickly.

  • You nailed it, being able to do all you want without counting pennies!

  • “Are you making your money work for you and using it to make more money for you, or are you enslaved to your money and allowing it to run you? ” I couldn’t have said it better. Sadly so many people are enslaved to their money and don’t even know it!! For me, financial independence is being able to chose how I spend on my time without concern about money. To have choices and the freedom to chose whatever I want. I do feel that I have financial independence to a degree – we still need to work but we are conscious spenders, so our money is going to things we care about and to help us do the things we want – even if it’s not immediate.

    • John says:

      I agree Shannon – many do not know they’re enslaved and never realize it. I think so much of it does come down to having the ability to make choices and freedom to be selective. This, of course, all done with a long term view in place.

  • Great post John. I had to think for a few minutes before I typed out my comment, but I guess for me true financial independence means never having to worry about money. Like you said, that means being free of any kind of debt. It’s almost sad to admit but I can’t imagine my life debt-free…one day…

    • John says:

      Thanks GMD! I agree that a lot of it does come down to not having to deal with that worry about money. In regards to being debt-free, you’ll get there and at the rate you’re going it’ll be sooner than you think. πŸ™‚

  • I view financial freedom as being able to go wherever I want ,when I want, and however I want. Great post John! I hope you have a great Independence day!

  • krantcents says:

    I achieved financial independence when I was in my late thirties! My definition was amassing enough assets and ultimately income to support me in a style I am comfortable with so I no longer have to work. Everything changed after that because I could take on assignments, jobs etc that I enjoyed regardless of income. I decided to become a teacher about 12 years ago. I enjoy teaching about 95% of the time and the time off is great too.

    • John says:

      That’s awesome KC! That is what were striving for ourselves – being able to do what we want for work and not having to do things we do not want to do.

  • Sicorra says:

    To me it means no debt and enough money to cover expenses plus do what ever I want to do. And by that I mean that I could travel anytime, live where ever, and even rent a private jet at $2400 an hour if I wanted to πŸ™‚

  • Our great minds think alike. πŸ˜‰ I agree with everything you said!

  • E.M. says:

    I agree with the general consensus – being financially independent means that I am free to do whatever I want, when I want, without having to worry about money. It means I don’t have to work, unless I want to, because I have enough built up to last me many, many years. Ideally I’d like to be debt free when that happens so that I’m not tied down to anything. I aspire to be financially independent, but you are right that it takes a lot of time, effort and planning to get there! However, I think the feeling of ultimate freedom is well worth it, as being financially independent gives you a lot of choices and the ability to say no when you want to.

    • John says:

      I agree E.M. , I think the hard work would be well worth the sense of freedom – once accomplished. I love the idea of only working if you want to – it opens up so many possibilities.

  • Like so many others have said, I view independence as having the freedom to do what you want without the debt shackles. I would feel pretty independent even with a mortgage, etc. as long as I was bringing in way more than I could possibly spend.

    • John says:

      I think I could as well Cat, though I ideally would like to have that thing paid off. But, if you’re making crazy money then who would care? πŸ˜‰

  • Liquid says:

    Financial independence is often on my mind as well. I don’t mind having a little bit of debt when I’m financially free, as long as I have the passive income necessary to still live the life I want which is pretty much how I’m living now πŸ˜€ My own home, a car, good food, and some extra spending money. I find that the more money we make the easier it is to have that money work for us and generate even more financial success. Usually as people age their wealth accumulates, but at the same time their body grows older, so along with my financial focus I also have a goal of living a healthy lifestyle so that I can enjoy myself and make the most of out of my financial independence. Happy 4th of July! We just had our Canada Day celebrations earlier this week πŸ™‚

    • John says:

      You bring up a great point and one that I think many struggle with. You’re certainly on to something and I think debt can be used as leverage to further oneself. That said, I think many are not savvy enough to be able to accomplish that.

  • You can read my plan tomorrow, but making one is the part most people don’t do. I didn’t for years and assumed I would work and owe forever. I used to think FI wasn’t possible for most, but it is for anyone, even if you are in a hole. I think most people go through life and never get a grasp on their money or honestly give it much thought until the end of the month when it’s gone and you need something. Taking control is the most empowering thing you can do with your life.

    • John says:

      That’s a great point Kim, taking control is very empowering. I too struggled with seeing that in years past but now see that it is possible…assuming you’re willing to put in the time and effort.

  • I guess I’d look at it like the typical definition; not having to work to cover expenses. Not having to care about money because I have enough. Never worrying about it!

  • Financial independence to me is having that “shove it” money to where I could tell my boss off and quit if I wanted to. This isn’t to say I wouldn’t have to work, but I wouldn’t have to worry about taking a much lower paying job that I actually like. Once I reach this point I will be a very happy man. Still a long way to go on that.

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