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What is the Definition of Financial Independence?

Last updated by on February 15, 2016

Financial independence, or the interchangeable “financial freedom”, is a powerful concept.

We all recognize it as a good thing. Something to strive for. Something to admire in others who have achieved it.

The 20somethingfinance tagline and mission even alludes to it: “Get a head start on freedom.”

But if you ask five people what financial independence is, you might get five different answers:

financial independence“Never having to work again.”

“Being free from debt.”


“Doing what I want for a living.”

“Not relying on others for money.”

Wikipedia describes financial independence 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”

All of the above are legitimate definitions.

My personal view of financial independence could best be described as:

“Living comfortably and doing what I want with my time without concern about how much income I earn.”

The “without concern” part is key. If you are concerned about income, are you truly “free” or independent?

The Problem with Qualitative Definitions of Financial Independence

Each of the above definitions have one thing in common: they are qualitative.

In part, “financial independence” is rarely achieved. The qualitative aspect of financial independence is important because it motivates or fuels you to set out to achieve your goal.

However, if you don’t have a clear idea of what financial independence is from a quantitative standpoint, how can you set goals to get there? And when will you know when you’ve actually reached your destination? The dream becomes just that – a dream. And it stays a dream.

I do have a quantitative definition of financial independence that I subscribe to which I will share in an upcoming post. First, let me describe why the concept is so important to me…

My Motivation is Financial Independence

Personal finance personalities have different motivations that fuel them to do the work they do:

  • getting out of debt by holding themselves accountable publicly
  • building career opportunities – speaking engagements, book authorship, etc.
  • making a quick buck or building passive income
  • helping others

My motivation is to become financially independent and share my journey with you (hopefully inspiring a few of you along the way to jump on board). It’s what motivates me, gets me excited, and keeps me going on this site and in my career.

I truly believe that this world would proportionately be a better place by the number of people who were financially independent.

When our actions, careers, and pursuits are driven by desire, passion, and interest (vs. profit), the result is a more genuine, happier, motivated, and generous human being.

For if a man is not free, then what is he?

Financial Independence Discussion:

  • How do you qualitatively define financial independence?
  • How do you quantitatively define financial independence?

Related Posts:

About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Money Infant says:

    Qualitatively I would agree with you that financial independence is having sufficient money to do whatever you like without any need to worry about financial compensation.

    Quantitatively to maintain my current lifestyle I would need close to $1 million, assuming a free cash flow of 4% from that money. Of course that doesn’t take inflation into account, so let’s add an additional $250,000 to that.

  • AJ Borowsky says:

    I saw your post when Money Infant tweeted it. I’m glad I did.

    You sound a lot like me but I’ve aged and am now in my early 40s. I am and will continue to be a late adopter of new technology because it’s a financially sound decision. I can relate when you say in “my story” that you occasionally get teased for your old prepaid phone but that is a key element of why you will be financially independent and your friends will be dependent.

    I consider myself financially independent now but that doesn’t mean I simply stop. I still work in spite of some difficult days when I just want to walk away. If I were to lose my job – no big deal. But I won’t just give it up because each day I continue I build a bigger cushion.

    Great post!

  • Pampibon says:

    Qualitative definition:
    – To live comfortably
    – To have the luxury of choosing when & how to work
    – To have the luxury to spend my time

    I disagree with the notion of “without concern” because then you’re just filthy rich and I like to think of being able to reach my goal of financial independence even if I am not considered “rich”.

    Let’s put that in numbers. I am 25 years old and let’s say I stay of my goal of saving $10k/yr so that by the time I’m 50, I have:
    – liquid savings of $320k (not factoring in inflation)
    – no debt
    – secure retirement savings

    That, to me, is financial independence. And I would continue working because I need to feel productive to be happy and I would need income to support my philanthropic passion – working with kids. I would have the ‘luxury’ of taking 2 years off and travel through the Americas.

    So, I would still need to “be concerned” about earning income but just not as much as the average person.

  • Natalie H says:

    Thanks for bringing this up. I didn’t realize until you asked the question that I hadn’t properly defined this for myself.

    For me financial independence doesn’t mean having enough to live indefinitely without working. After seeing that those who reach FI early in life generally continue to work and make money most of the time, I have a slightly more loose definition. I would consider someone to be financially independent who could live their current lifestyle for 10 years without working or could live indefinitely on only casual part time work. This is enough that you will never feel trapped in a job by the need for money.

    For my current frugal lifestyle (which I enjoy and consider to be “enough”) this figure would be somewhere between $250k and $350k. I would need more, about $700k to retire, which for me means no more work at all, ever. I like working part time and trying new things so this works for me. Of course, lack of debt is a key to lowering expenses.

  • Ginger says:

    Qualitatively I also would agree that financial independence is having sufficient money to pay your required bills without needing to work.

    Quantitatively I would need close to $4-$5 million, depending when I stop working.

  • Gally says:


    I have been reading your website for more than 2 years now, and i found that it is one of few websites in which i have been consistently reading for that length of time. Thank you for all the wonderful articles you have written, and i hope you find this message as motiviation to continue to write for this site.


    A little about myself: I am a young engineer (graduated college 3 years ago) and I am well on my way to financial independance. I own one house, one car, and i have just completely paid of my student loans. I plan to pursue my dream of becoming an entrepreneur/venture capitalist when i reach that point of “financial independance.” I hope that in my endeavor, i can “do what I want with my time without concern about how much income I earn.” Many of my financial decisions are thanks to your articles, and other personal finance sites for young investors.

  • Kraig @ Young, Cheap Living says:

    I qualitatively define it as a point where I no longer have to worry about paying my bills if I choose to focus 100% of my professional time on things I’m excited about and want to do. Most of the things I want to be working on today aren’t feasible because if I spent my time working on them instead of at my job, I wouldn’t be able to make it financially. I want to get so far ahead that I break out of that.

    I quantitatively define it as a point where my assets generate enough income for me and my future family to live on, comfortably, indefinitely, without worry about losing our home, not being able to pay our bills or not having a comfortable retirement to look forward to.

    In summary, I seek freedom from financial stress. That’s financial independence for me.


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