What is Financial Independence? This might be something that you are wondering. Different people have different meanings for this. For example, if you are younger, it might just mean financial independence from your parents, in which you start paying things on your own.
However, for me (and for most of the personal finance world), financial independence is the point where I can choose whether or not I want to work, and therefore be able to work on things that I enjoy. I don’t want to feel like I am stuck forever, and having the choice to do what I want to do is important.
The definition from Wikipedia for financial independence:
“the state of having sufficient personal wealth to live, without having to work actively for basic necessities.”
In order to be financially independent, it means that your assets must generate more income than your expenses. So, if you live a pretty frugal lifestyle of lets say $2,000 per month of expenses (food, housing, car, fun, insurance, etc.), then you would want to generate at least this or above in order to live off of passive income. However, if your monthly expenses are much higher and total maybe $7,000 a month, you will need personal finances of at least that in order to be considered financially independent. $7,000 per month would be much more harder to achieve than $2,000 per month.
One thing that will be different on this blog is that I never see myself not working. I always want to do something to take up my time, so I more just want the option to choose what I want to do in life. Maybe one day I will want to pick up and travel for years at a time. When we eventually have children, I would like to be able to spend lots of time with them. The list goes on and on.
Or maybe if I ever want to jump into something completely new that may not make me a whole bunch of money. I want to be diversified so that I can be ready for anything that life throws at me.
I want to be able to pursue work that I love in life, and not feel like I need to sit in an office all day and hate my life.
Financial independence to me is having the CHOICE to do what I want.
Is financial independence one of your goals? How are you diversified?