This post is by our regular Wednesday contributor, Erin.
Do you dream about the day you’ll be able to leave your working days behind and enjoy life to its fullest without any worries?
Do you dream about having enough money to fund the life you want to live so you’re not chained down?
Do you dream about traveling the world, volunteering for an organization you love, or spending time with your family – time that’s not restrained by your job?
If so, chances are you’ve given some thought to financial independence – the point where you have enough money saved up to support yourself, you don’t need to work for a paycheck anymore.
Financial independence really isn’t that simple to define, though. Many of us have different views and expectations when it comes to being financially free.
Some personal finance bloggers are already living this lifestyle, and each do it differently. Let’s take a further look at what financial independence looks like.
Why Become Financially Independent?
First, we should cover why people want to become financially independent.
Unfortunately, a lot of people are skeptical of the idea because they don’t think the term “millionaire” could ever pertain to them.
It saddens me when people put that roadblock up immediately. They don’t stop to think about what being financially independent could mean for them. They’ve already resigned themselves to working for another 40+ years (usually in jobs they hate).
Well, those that value financial independence have different priorities.
Some want to stay at home and raise their children without the inconvenience of work getting in the way. Some want to be the master of their own journey – they don’t want to be dependent upon a paycheck or their boss.
Others want to travel around the world without a time limit imposed on them. Even more want to dedicate their lives to something that’s more meaningful than what they were doing before.
The bottom line is people don’t want to stay in the traditional workforce because of the tradeoffs they have to make. Limited vacation and sick time, working in a cubicle, or working to make someone else’s dreams come true – these things aren’t appealing. Financial independence gives you freedom.
Does Financial Independence Equal Retirement?
Many would say no, at least not in the traditional sense we’re familiar with, even though financial independence and early retirement go hand-in-hand.
Being financially independent doesn’t mean you have to leave the workforce forever. If you’ve been stuck in cubicle-land for 10-20 years, financial independence could be the perfect opportunity to find your true calling, despite what it might pay.
Early retirement certainly doesn’t have to equal playing endless rounds of golf, playing cards with friends, or sitting around relaxing all day. We need to stimulate our brains somehow, and thankfully, there are an unlimited amount of ways we can do so once we reach financial independence.
What Financial Independence Looks Like for Some People
I wouldn’t be familiar with the term financial independence had I not started blogging. I never considered the concept of early retirement because, well, it didn’t seem possible. No one in my family had done it.
I’m thankful there are people out there documenting their journey so others can be inspired by it. Just from the blogs I’ve read, here are a few paths people choose to take once they reach financial independence:
- Travel: Most people don’t get a very generous vacation package at work. Even if they do, they’re still limited. What happens when you want to travel for years at a time, stopping home only occasionally? Working remotely and traveling are very common for those who have reached financial independence.
- Homesteading: Some people are content to live a simpler life once they reach financial independence. They’ve had enough of the hustle and bustle of the city, the expenses that come with it, and the “rat race” mentality that seems pervasive in city/corporate culture. Homesteading might align perfectly with their values to live well on less and be self-sufficient.
- Business Owners: There are many people who choose to become business owners first to accelerate their path to becoming financially independent. Being able to control your salary is a nice perk. Having a side hustle can turn into a full-fledged business, and if you plan well enough, you can eventually turn it into a passive income stream.
- Stay-at-home-parent: If you start planning and saving early enough, you might be able to achieve financial independence before you have children. This gives you the freedom to raise your child and be there for them every step of the way.
- Education/Hobbies: You might decide you want to go back to being a student. If you’re just in it for the knowledge, you can devote your time to studying, and you don’t have to spend thousands on tuition. You can also choose to improve upon a hobby by developing new skills and learning all the tricks of the trade.
This isn’t an exhaustive list by any means, but it gives you a general idea of the opportunities you can take advantage of once you’re not working for someone else.
What I Want Financial Independence to Look Like
I often wonder what I want my life to look like once I’ve (hopefully) achieved financial independence.
I don’t believe I could follow the “traditional retirement” path and swear off work forever. I like to keep busy, and I enjoy the challenge of tackling different tasks. I need goals to work toward – I’m not satisfied with doing absolutely nothing.
Not having to worry about money, I would probably spend a lot of time volunteering. I enjoy helping people and knowing I’ve been able to make a difference somewhere.
If I could combine that with travel, learning new things, and having a little business on the side, I think I’d be happy.
Financial Independence is About Choice
I think it’s clear the end goal of being financially independent is to have choices. When you don’t need money, you have more opportunities.
After all, think about it – how much time do you spend working every week? What would you do with those 40+ hours if they were to suddenly open up?
As long as you calculate and plan carefully, you can afford to travel around the world. You can afford to volunteer for a good cause on a long term basis. You can afford to stay home and raise your kids without the interruption of work. You can afford to build a passion-fueled business.
You’re free to live life on your terms, and you’re free to experiment with what brings you the most happiness.
_______________________
At the end of the day, we only have so much time left here. Many of us have a burning desire to make a difference, to see the world, or spend as much time with our loved ones as possible.
Working 40+ hours a week for the rest of our lives robs us of those opportunities. Financial independence brings them back to us.
Are you working toward financial independence? What do you hope it looks like for you?
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Just started tracking my FI numbers recently. It’s all about giving yourself options and breaking the mindset of having to work for 30-40 years of your life for someone else.
We don’t want the traditional retirement idea either – there is just too much in life to do that. That said, we are working towards FI – that’s a huge part of the reason why we started our own business. We’d still likely work within the business to some capacity, but would use our time to pursue other interests and to give back.
Well, realistically not at the moment. I’m in survival mode, but I’m working on that. I think FI is not ever HAVING to work, but I’d still be working on all my passion projects.
DebtDiscipline How exciting, Brian! I definitely agree with that.
Our financial independence plans involve only working on projects that we enjoy and that bring us fulfillment. We’re looking forward to being on a homestead and focusing in on our work there. By leaving our traditional 9-5’s, we’ll have the time and energy to pursue the projects that we’ve always wanted to. I can’t wait!
FrugalRules Starting a business and then having other people work under you eventually is a great way to build an income stream for FI!
Beachbudget Yes! There are probably lots of hobbies and interests we all have that we can’t dedicate the time to right now. I like to think that’s what FI will look like for me, too.
Mrs. Frugalwoods I can’t wait for you, either! I love it when bloggers document their journey, showing how it’s possible for others. It’s even more exciting when they make the transition. =)
Right now I’m working from home while taking care of my daughter, but in coming years once we have an empty nest, I hope that financial independence involves being able to work on my business a bit while also doing a large amount of traveling with my husband. I cannot wait for that! :)
I’m definitely working toward financial independence. I’m one of those people that want to have the ability to travel whenever I want to. I got a taste of extended travel when I completed my cross country trip almost 2 yrs ago. I want to be able to experience that whenever I choose to.
Financial Independence is ABSOLUTELY about choice. It’s also something I believe you can have now, before retirement. People may have a different definition but I consider retirement to be when you mainly live off your retirement income and any income earned isn’t enough to cover yearly expenses. You do it out of enjoyment, to socialize, etc. Those who have financial independence aren’t drawing on their investment/retirement income but have the freedom to choose how they work and spend their money because they aren’t burdened by debt. I feel as though I have financial independence today, although both my husband and I work full-time. A few years ago I made some changes so I could dictate my day and have the flexibility I needed.
What I want FI to look like is very similar to what you described for yourself Erin (although I’d love to play a bit more golf too!). In reality, I can’t know for sure what ‘future me’ might want to do 10 or 15 years from now (but a good chance it’s NOT sitting in the office all day!), but FI creates an incredibly valuable option so you can do whatever is most important to you at the time.
We are working towards financial independence because we value the flexibility it ostensibly provides, but I’m also of the mindset that current contentment and the ability to seek alternative paths to the lifestyle you (and your spouse) really want is probably more important than formal financial independence.
If I had to use one word for financial independence, it would be choice. I really am not 100% sure what I’ll do when we hit that milestone, maybe the same as I’m doing now, but it will all be by choice and not necessity. I believe that will make all the difference in the world.
I’m working towards financial independence just for peace of mind and the freedom to use my money for whatever I choose. I likely won’t retire early, but may reevaluate the work I do. We’ll see…I already have my dream job, but I may discover other dreams in the future!
Christina@EmbracingSimple That sounds like a great plan to me! Travel is definitely a popular option.
Jason @ The Butler Journal Having that kind of flexibility is pretty awesome. I wish we had more time off in the US. Two weeks off a year isn’t enough!
ShannonRyan I definitely agree that there are different definitions and concepts that can apply to financial independence. Having a lot of flexibility while working full-time is so important. I think it enables you to enjoy your job and life a little more!
Jason@Islands of Investing Haha, golf isn’t a bad thing for those who enjoy it! It just amuses me to see so many golf carts (and courses) where my parents live. It’s true that we can’t say with 100% certainty what the future holds. My interests have already changed a lot in the last 5 years!
Hannah UnplannedFinance Agreed – having FI as a goal to work toward is great, but you can’t get so lost in planning for it that you forget to enjoy the present. It’s very much worth creating the life you want to live now rather than later.
Eyesonthedollar Having a choice really does make a difference, even if it’s just psychological. It’s nice not being able to feel tied down or stuck on one path.
SimplySave Hey, if you have your dream job, all the more power to you! It’s important to be happy with what you have now, and having that choice down the road is even better.
I am absolutely working toward financial independence. It doesn’t necessarily mean quitting work… but having the option to quit, or to just take short contracts, is definitely what I’m into :-)
moneypropeller I like the point about taking short contracts! Working on and off and being able to take extended breaks would be lovely.
I think my problem is I want all of those things you mentioned (traveling, homesteading, family, business owner). I think I need to narrow down what I really want the most first! Luckily, I’m on a path to repaying my (stupid) debt, and that plan is a 5 year+ plan. By the time I’m done paying debts, I hope I’ll have figured out what I want :)
sunburntsaver Haha, I can definitely relate to that! There are so many things to be saving for and so little time (and sometimes money). I do think our priorities tend to get clearer as we age. Mine have become increasingly clear in the last year or so, at least.
Erin @ Journey to Saving sunburntsaver Are you alluding to the wedding? ;) If not, that’s cool too haha. I hope I’ll figure it out as I go! :)
sunburntsaver Haha, no actually. I never thought I’d be working from home, let alone be self-employed, and I’ve also realized traveling IS possible – I just have to prioritize it. Before, I always thought it would be too expensive to bother with. I’m sure you’ll figure it out! After all, there’s no rush. =)
Great article Erin! I know it feels like I say this a lot, although the content of this one probably resonates with me more than most!
Definitely working toward financial independence and agree that this is really a subjective term i.e. while for some people that will be passive income of say 100K and others it’ll be 30 or 40K..
For me it’ll be the ability to travel 12 weeks per year, probably broken into 4 week blocks, being able to work for or build my own not for profit and spend a lot of time with friends, family and exercising..
Sure we’ll all get there :)
mycareercrusade I like how specific you are! Working for or building your own non profit organization sounds great. I’m sure volunteering is something we all wish we had more time for right now.
Like you said- it’s all about choice. I think I’m on my way now and it’s already liberating.
brokeandbeau That’s awesome, Stefanie! I think I’ll feel more on my way once I get my student loans out of the picture. Can’t wait!
I’ve been very interested in Financial Independence…earlier than normal that is. I’m on track for a very traditional retirement with a pension since I work in government, but sometimes I wonder if I really want to work another 20 years or so. I’m with you that I’d like to keep busy but only doing work that I enjoy and am passionate about…whether or not it makes money. I’d also be interested in volunteering since it really brings me joy when I feel like I’ve made a difference in someone else’s life.
Andrew LivingRichCheaply I’m with you on volunteering! I really like knowing I’ve been able to make an impact on someone, even if it’s small. It’s half the reason why I write. =)
I am on my journey to financial independence, I even started a page on my site for others to share what is their financial independence day as a way to set a goal and be held accountable along the way. So yes I’m on the FI path:)
FI said a few times but it’s really the opportunity to have choices to have not let debt have a say in anything I do. Visit my parents for a month, go hiking for a week, or volunteer in Nicaragua, it could be any one of those and I’m working hard today to find out what choices I have on FI Day!
Our goal is to reach semi-financial independence in approximately seven years, at the age of 40. We will still work, but on our own terms. Hopefully, Mr. Smith will spend time caring for our rental properties. I will continue to use my advanced degree to teach part-time and do some freelancing. Hopefully, I can generate some income with my blog/writing as well. The key is working on our own terms and schedule, so we have more free time to enjoy living our life.
You really need to look at individualized goals and plans when considering financial independence. Not only do we all have different priorities, but everyone needs to take stock of their unique capabilities.
Erin @ Journey to Saving It’s definitely not enough.
EvenStevenMoney That’s awesome you set up a page on your site for everyone to share their FI dates! I love the ideas you listed, too. With that attitude and determination you’ll be there in no time!
Harmony@CreatingMyKaleidoscope I love that! Semi-financial independence is a good term, and that sounds like a great way to utilize both your skills to continue bringing money in. I would love to still be freelancing 20 years from now, but we’ll see. =)
Yes and no. Like you, I doubt I ever want to fully retire. Especially because I get paid too well. But I definitely would like to be in a position to cut down to part-time in my 60s and on. I don’t know whether that’s actually feasible. We got a late start thanks to my being on disability in my 20s and my husband now being on it.
But it would be nice to be able to take an expensive vacation without worrying about where the money will come from. Or to buy my husband his dream car (a Challenger).
AbigailP Yep, traditional retirement is not for me – at least, not any time soon. Watching TV and “relaxing” all day just isn’t appealing! Transitioning to part-time work or flexible hours seems to be the popular route to go these days. That’s what my mom has done, and while there’s a few issues with it, she’s happy to stay busy and interact with people.
Ooh, don’t start on dream cars! The Challenger isn’t bad when compared to an Audi R8. =P My fiance and I talk about our dream cars a little too much.
Erin @ Journey to Saving mycareercrusade Yeah definitely! Love the community you’re helping to have here with DC Erin, perhaps I’ll have to check out your site sometime, although looking to keep my email subscriptions down
mycareercrusade Thanks! And no worries – you’re better off catching me here as I’ve (sadly) been neglecting my blog. I totally understand only having a limited amount of time to read!