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« Can You Take a Punch? | Main | Things I Wished I Had Said »
Saturday
Aug242013

Financial Independence

A recurring feature on some of the late night talk shows is their “man on the street” interviews.  I was amazed at the responses one of their reporters received recently when he questioned people about the meaning of the 4th of July.  His respondents gave a myriad of ridiculous, uneducated replies; some of the replies were so bizarre as to make me question if they may have been staged.  I suppose his video report was intended to be humorous, but I found it sad.  So I retreated to my financial realm to see if I could do any better at defining “financial independence” than some of our fellow citizens did when asked to explain the significance of July 4th, the day our nation celebrates its independence.

I soon discovered that the term “financial independence” can mean very different things to different people.  The definition people give it depends on factors like their age, their goals, their cultural background, or even their current income.

I had long assumed that financial independence meant one had reached the point where they could depend on the income generated by their financial holdings to cover their basic living expenses, but it can mean a variety of things.  Here are some of the various ways financial independence can be viewed.

1.  To some young adults it may simply mean that they are financially independent of their family.  This is proving to be a challenge for many young folks today.  For some it appears to be of low priority, but historically being independent of one's family has been one of the most important hallmarks of maturity.  Indeed, the first few steps one takes as an independent financial being sets the stage for how their financial life will evolve and eventually turn out.

2.  For some it may simply mean being debt free, and certainly freedom from debt affords a great deal of independence.  It gives one the opportunity to breathe a bit easier and redirect those debt payments toward other goals.  Being debt free is one of the first steps along the road to building real wealth, since wealth is measured by how much one keeps, not by how much one makes.

3.  To a married couple financial independence may mean being able to live on the salary on only one.  This may allow one of them to pursue their dream job.  It may mean the Mom gets to stay home with their child, or have another child.  Financial independence is about freedom, however that is defined.

4.  It may mean that you finally have "Johnny Paycheck" money.  Remember him?  In other words, it may mean that you no longer have to remain in that job that you hate.  You can financially afford to take that lower paying position that you feel passionate about.  It may meant that you can accept that job with the nonprofit where you can make a real difference in the lives of others.

5.  It can mean that you are financially able to pursue your dream, whether that is to travel, volunteer more, or pursue your second act with an early retirement from your first career.  Financial independence can be seen as the state of being free to choose from life's larger buffet of personal fulfillment options.

 For some of us financial independence may conjure up images of the ultra-wealthy where money is simply not a factor, but it can mean so much more than that.  However you may define it, it is a goal worthy of pursuit.  To reach that goal you will need a plan that helps guide you to your own definition; with that in hand you can go for it!  But remember as you are on your way, money is not the most important thing, but still, money matters!

 

Fly/Drive Safely

24 August 2013

 

 

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