Financial independence is a state where an individual or household has accumulated sufficient financial resources to cover its living expenses without having to depend on active employment or work to earn money in order to maintain its current lifestyle. These financial resources can be in the form of investment or personal use assets, passive income, income generated from side hustles, inheritance, pension and retirement income sources, and varied other sources.
The concept of financial independence goes beyond just having enough money or wealth. Achieving financial independence gives freedom to make the best use of time to pursue life's goals, dreams, or help the citizens of the community to lead a life with purpose. It's a state where one has come to terms with the fact of having accumulated enough, and have freed themselves from the shackles of debt and tendency to make poor financial decisions, and have transformed their relationship with money to make healthy financial choices. Gaining financial independence should not be confused with not having to work at all. Rather, financial independence gives the freedom to make choices at will, enabling individuals to achieve what matters the most while not having to worry about earning money.Researchers posit that childhood experiences with money play a pivotal role in shaping values, attitudes, and financial behavior. Financial independence is a subjective concept and can be interpreted differently by different individuals. Some people practice frugal living, save and invest a large percentage of income to achieve financial independence early in their career, as evidenced by people following the "financial independence retire early (FIRE)" movement, while others are in pursuit of traditional retirement. Some people may feel financially independent after accumulating enough assets to lead a modest lifestyle, while others may strive for a higher level of financial independence to afford luxuries, increased consumption, and higher standard of living. Having a financial plan and budget, can provide a clear view of current incomes and expenses, to help identify and choose appropriate strategies to achieve financial independence.
