![]() ![]() Money is an amazing tool that allows you to achieve anything that you could want (though not everything you could want). This helps when you’re threatened by a scarcity mindset to realize that money (and the ability to make money) is essentially limitless, and there is enough to go around.įrom there, you want to start asking what your money can do for you. You need to believe in the abundance that the world has to offer and focus on choosing to see the good. What Does an Attitude of Financial Freedom Look Like?Ĭultivating an attitude of financial freedom starts with mindset work. While both financial freedom and financial independence are important markers of financial success, I argue that financial freedom is more important than financial independence.Įven if you achieve financial independence, you might feel trapped and limited without financial freedom.Ĭultivating an attitude of financial freedom will help you feel completely free to live the life of your dreams. That’s not to say you should go into debt for these things, but true financial freedom allows you to pursue your biggest dreams, and financial independence is the vehicle that allows you to do so. Or about fancy cars, and then buying them. You can use it to imagine going on wild trips, and then taking them. You can use this mindset to think beyond just being financially independent. Since financial freedom is a mindset that allows you to live your best life, you can leverage that during your journey to financial independence. The magic happens when you combine financial independence with the mindset of financial freedom. What Happens When You Combine Financial Independence and Financial Freedom? You’ve eliminated all credit card debt, have passive income streams, and are able to cover your annual expenses without working. The financial goal of this level of independence is to be able to retire early and have enough retirement savings and passive income to last until you die. Either way, you have a positive cash flow and will live well in retirement, regardless of what age you are. Or, you can save enough to live off of your investments. You can build up passive income, with real estate investing or dividends from the stock market. There are several ways to achieve early financial independence. You can support yourself on your own without any help from anyone else. You’re completely independent of a job or family. You might still want to work, but you don’t need to. It’s the moment you reach enough money that you could stop working and be financially okay for the rest of your life. What Are the Elements of Financial Independence?įinancial independence is a milestone in your finances. You’re able to do the things that you love, regardless of money. Regardless, you’ve set your finances up to have those choices. You might decide to quit working and pursue a side hustle, or to drop down to part-time work. You’re able to shift your thinking and live life the way that you want to. You stop making decisions based on money and start making them based on what you want to do. You’ve paid off all your debt and you have enough in savings to cover any large emergencies. It’s when you’re financially stable enough to not need to rely on the specific job you’re currently working because you have enough to float you. What Are the Elements of Financial Freedom?įinancial freedom is a lifestyle choice. ![]() But one-financial freedom-is a lifestyle choice the other-financial independence-is a financial milestone. They both focus on your financial journey. ![]() I think that’s because their goals are similar. Unfortunately, these terms are often confused for one another. In This Article Why Are the Terms “Financial Freedom” and “Financial Independence” Often Confused? It’s a much more defined term because it looks at the money aspect of your lifestyle. All of your living expenses will be covered, regardless of earned income. Essentially, you’re financially independent and can step out of your job without fear of repercussions. You don’t feel the confines of money because you’ve set up your finances to work for you.įinancial independence is the number in your bank account that allows you to leave work forever. You’re free to do things like travel and buy cool stuff that you want. If your job is stressing you out, you can find another job without fear of where your next meal will come from. You might still need to work, but you have enough in savings that you can live life on your terms. It’s the ability to live your life for yourself and not for a boss. While they’re often used as synonyms in the personal finance community, there’s actually a distinct difference between financial freedom and financial independence.įinancial freedom is the mindset that allows you to live the life you want. ![]()
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