According to Wikipedia, financial independence is defined as a term generally used to describe the state of having sufficient personal wealth to live indefinitely without having to work actively for basic necessities. In the case of many individuals whose financial circumstances fit this description, their assets generate income that is greater than their expenses. To illustrate, a person’s quarterly expenses may total $10,000. They receive dividends from stocks totaling $12,000 quarterly, while also possessing other assets. Under such circumstances, a person is considered to be financially independent.
Obtaining financial independence is different for everyone depending upon the lifestyle they lead. If a person is accustomed to spartan or minimalist existence, obtaining independence will be well within reach and most likely at an early age. If someone prefers the typical American dream – large home, two cars, latest gadgets – then most likely it will take decades for the average person to obtain a level of financial independence. It is about personal preference and there is no right or wrong approach.
Regardless of our lifestyle, I think we can all agree that we would like to obtain financial independence sooner rather than later. Whether we want to admit it or not, there is a freedom that comes with financial independence that allows us to live a life on our terms because we would no longer be dependent upon others for our livelihoods. It puts a person in a position to dream of an existence more aligned to their values and purpose, rather than feeling enslaved to their employer and debts.
The challenge for most of us is to determine the magic formula to obtain a level of financial independence. Fortunately, there are many paths to financial independence. Rather than regurgitate the principals of obtaining financial independence, here are a few web sites I’ve come across that have some great tips.