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What does financial independence mean?

Financial independence. It’s the overall theme of this blog, but what does it actually mean?

I’ve been wrestling with this topic for a few weeks now. After I wrote Confessions of a PF blogger, I was replying to comments, and found myself writing: I wonder if “financial independence” is just a phrase I use to describe a goal I might reach financially, but might never reach emotionally.

“Financial independence” is such a vague term. I’ve always thought that it meant living a comfortable life where you don’t have to rely on anybody else, or allow yourself to be limited by your finances. But can you really put a dollar amount on that? And if you can’t, how do you know when you’re actually achieved it? Is it just a feeling that you get? Often times I struggle with goals that aren’t black and white, or things that aren’t consistent or universal.

Right now, I’m financially dependent on Vancity for my mortgage. Without the bank, I wouldn’t have my townhouse. So even though I have savings in the bank, and can fully support myself on a day-to-day basis, until I pay off my mortgage, or decide to sell (without buying another place), I wouldn’t consider myself to be financially independent.

I guess it’s kind of open for interpretation. Does “financial independence” mean being completely free of debt? Does it mean having enough money in the bank (or in passive income) to never work again? Or does it simply mean being able to live a comfortable life without being dependent on somebody else?

I’m beginning to realize that for me, “financial independence” is more about feeling, rather than a number or a dollar figure to be obtained. And that scares me a little. I tend to trust logic and facts over emotions and feelings. Like I said before in this post (and in my Confessions post), I’ve never been good with vague goals. Once I think I’ve achieved it, I’ll convince myself that I haven’t, and push the goal out a little further – making it seemingly unattainable.

Yet, I know that I’m not blindly chasing this abstract dream of “financial independence.” I’m fully confident that one day, it will become a reality. I just need to figure out what it means in order to realize it emotionally. Once I’ve stripped away all of my dollar figure goals, and stopped crunching the numbers, what will “financial independence” feel like?

What does financial independence mean to you?

Author: Krystal Yee

I’m a personal finance blogger and marketing professional based in Vancouver. I’m a former Toronto Star (Moneyville) columnist, author of The Beginner’s Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I’m not working, you can usually find me running, climbing, playing field hockey, or plotting my next adventure.


  1. Laura @ nms says:

    Financial indepence to me will be owning the home I live in and having enough monthly passive income to cover my essential expenses.
    My recent post Managing Our Budget: July 2011 Budget vs. Actual

  2. I would consider you to be financially independent. I think it just depends on the definition, and to each person.

    Some days I consider myself financially independent—I make my own money, support myself, put money towards achieving my goals—but then I remember all the stuff I have stored at my parents' house, and that I frequently steal paper towels and kitty litter from them, and then I don't feel quite so independent.
    My recent post The $100 Grocery Challenge

  3. tiffany says:

    I think it's an ever-evolving definition. As your life changes, so do your financial needs. Right now we're financially independent. We can pay our mortgage, our bills and have money leftover for fun and savings…but when we have kids in the next year or so, are we independent enough to survive on only one income? No. So in a year, I won't consider us financially independent at all!

    I think it's something you have to constantly re-evaluate.

  4. kdndollar says:

    I felt comfortable- I bring in about 8k a month after taxes- 2 jobs and rental income. car fully paid for.. mortgage owing 109k.. on average I throw down about 3500/mth on the mortgage, so it should be gone in about 3 yrs.
    BUT i was in a motor vehicle collision- the other driver was charged with careless driving, my body is a bit sore, my car is a write off – it was old and well driven '99 civic at 208kilometers.. I now find out that if i expect to stay off work car insurance accident benefits only supply me with 400 a week, both jobs- they don't top up – rather i must used my saved up sick time- for 13 weeks – if i dont' have 13 weeks worth of sick time, (which i dont) then i take leave without pay or maybe EI – it's not entirely clear to me yet (before long term disability kicks in )- in any case, i am pretty sure i cannot collect EI for both jobs- although i do contribute to the EI fund from both jobs- but one person can only collect one EI cheque… ei maximum is like 412.. i simply cannot live on this measly income, especially since i have to buy another car.. so i must return to work, although I am not sure I am 100% better.. insurance was a pain to deal with.. i don't trust them, and yah , this just shows how things can change in a moments notice. what is financial independence indeed.

  5. SP says:

    My initial definition was essentially not having to rely on anyone to make it (namely, my parents). The next level is extremely hard – not having to rely on ANY job or any thing to have enough money to live.
    My recent post Packing: I’m a failed minimalist

  6. I agree with Tiffany that it's always evolving. In my early 20s I was a slave to a mountain of credit card debt and was very far from financial independence despite supporting myself since 18. After clearing that debt, I began to feel financially independent because I no longer lived paycheck to paycheck and was still providing for myself 100%. I saved up a sizable down payment and bought my house last year and now have mortgage debt, but I still feel somewhat financially independent because I support myself. True, I am financially dependent on the bank that funded my mortgage, but I also make 100% of my own financial decisions, am paying more on my debt than minimum payments require, and spend my money freely as I see fit (much as you do). Compared to where I was a mere 5-6 years ago, that's a hell of a lot of financial independence gained. But as always, there's plenty of room for improvement and goals to help get there. This is the essence of personal finance–it's different for everyone. Thanks for the posts in this series; they're great catalysts for contemplation.
    My recent post "You Bought a Condo….By Yourself?!"

  7. For me, financial independence is fairly simple: 1 million net worth with no debt. I could retire if I reached that goal.

    But saying that, I wouldn't retire. I'm relentless, I'd want to build my net worth to 2 million, and then 3. It's what keeps me motivated.

    Oh, wait, that's not relentless. That's greedy. :)
    My recent post Athletes Are Not Overpaid. Stop Whining About It.

    • Krystal Yee says:

      Aren't you afraid that you will end up working so hard to reach those dollar-driven milestones that you'll either work yourself to an early grave, or you'll miss actually living life? That's what I'm most afraid of. Working too hard for my own good. If that's even possible? I don't know. Now I'm just rambling.

      • Nah. I enjoy the process of finding stuff to invest in. As I get older, I'll slowly transition from working hard to working smart.

        I used to worry about stuff like whether I'd miss living life by worrying too much about money. Then I realized money is my life. Wait, that sounds weird. Maybe I'll do a post on it.
        My recent post Athletes Are Not Overpaid. Stop Whining About It.

      • James H says:

        I agree with you Krystal, there is no end to it, it is a vicious cycle, and after a stage the hunger for Millions increases, so ultimately he will be running after money only, losing his peace of mind. I would say financial independence means asking yourself where are you at on your quest for financial freedom? And what have you done to get there?
        My recent post student car insurance

  8. Jenny~Z says:

    My definition of financial independence is not relying on anyone financially. I feel like despite my large school and credit card debts I'm not financially dependent on anyone. Obviously, I need the banks to continue lending me the money but I don't feel dependent on them, I certainly haven't relied on my parents for at least 6 years now.

    I think to be independent you need to earn your own money and make your own decisions. That being said, once you're in a serious relationship I think it is still possible to be financially dependent on one another but financially independent as a couple.
    My recent post The life of a server: Part 3

  9. Ban Clothing says:

    I thought I reached financial independence when I no longer had my parents credit card in my wallet for emergencies.
    My recent post Sewing For Myself????

  10. christid says:

    I have to agree with some of the posters above. It is a moving goal. As a recent graduate – I will feel some financial independence once I've paid of my first degree in January. But I a few months later I know that I'll have new goals – saving for the next degree, building more income on my own terms, moving out etc. And thus will feel a degree of not "being there yet". But I won't kill myself about it. The goal for me from here on out is not be in debt again (non-housing that is).

  11. Dave g says:

    Working when you want, because you want…. It's simple

  12. Financial independence, I equate that to freedom. I wrote a post about that on my blog last year:

    I’m looking for the freedom to choose what I want to do, when I want to do it. Sounds bold and lofty, but hey, what are goals for right Krystal?

    My recent post My Circle of Competence

  13. Byrocat says:

    For everyone, this term can mean a lot or very little. For me, it's being able to be self-relaint (not liviing off of my parents or children) and able to do the things that I want to or can afford them with a bit of saving. It doesn't mean that I can go out and buy a Maserati or go on the round-the-world Cunard cruises at the drop of a hat. Take care of those around me and meet my commitments and obligations.

    I agree that chasing numbers can become a burdent to you.

    "Feeling comfortable in your own skin" is the closest that I can come to it.
    My recent post Getting the Christmas Bonus

  14. jay says:

    I feel like I've reached financial independence… For me, I define it loosely as: "I can survive on a minimum wage job and still approximate my lifestyle." So yeah, not too exciting. But basically this means that I need to reduce my living expenses to the point where a minimum wage job will provide enough income. The easiest way to accomplish that was to pay off the mortgage.

    Not that I ever want to lose my job. But I want to feel secure that I wouldn't be destitute if it were to happen.

    • Krystal Yee says:

      Interesting take! I never would have thought of financial independence as survival on minimum wage. It really makes me glad that I have multiple streams of income coming in. Because if I only earned minimum wage at my FT job – without making extra money with my freelancing business, I'd most likely be in some serious trouble.

  15. Kevin Press says:

    Great post Krystal. Financial independence is a relative term for me. It means that at any given time, you are at liberty to walk away from paid employment.

  16. says:

    I think that the key to “Financial Independence” is when you control your money, as opposed to your money controlling you.

  17. To me financial independence if having all debts (including mortgage debt paid off) and being able to generate enough passive income to cover monthly expenses and be able to save some money from that too.

    Financial independence is being able to WANT to work, and not HAVE to work.
    My recent post Weekend Ramblings & PF Blog Love: FINALLY Summer Edition

  18. Maria Nedeva says:

    Krystal, I have been looking at your blog for sometime now and really admire what you have done and where you are going. As to the 'financial independence' matter; I wouldn't agree witt you that it is a vague term because it does mean exactly what it says. Financial independence comes when one has sufficiant passive income to cover all their expenses (and a bit more). Where I fully agree with you though is that this doesn't tell us much about 'how much is enough' and how do we feel about it.
    I distinguish between financial independence and financial health. This is why I believe that there is very little 'finance' and even less 'personal' in PF – it is about life, choices and the flows and balances of different resources (including time and energy).
    My recent post Financial sense and financial sensibility: repairing appliances

  19. Ginger says:

    For me, financial independence is not needing a job to pay all your bills. My goal is that my investments (real estate/socks/bonds) can pay all my bills. Once that happens, I'll say I am financially independent.
    My recent post Update on grocery savings plan July

  20. Olivia says:

    Krystal, I am late in finding this post, but have to tell you how much I love it. For me, you hit the nail on the head. What is financial independence… a feeling that keeps changing as one changes. Recently DH and I hit the giant 1 MM. I always thought that was what one needed to be financially independent. Now, as I sit here with one toddler and another on the way, a giant mortgage looming in our future and two full-time, high-stress jobs- I realize 1 MM means so much less than it once did. It now means we have choices- where to live, how to live, how to raise kids, where to work, whether to work. Financial independence for me right now would be that 1 MM plus owning our home in full (or mostly). Everyday that meaning seems to change depending on where one finds oneself.
    BTW, sending you positive vibes for all the changes in your world and the spunky way you go through life!

  21. k says:

    To me, financial independence means that I alone am responsible for my financial matters. I have debt, but I am responsible for those bills. Yes, this is something that can change in an instant, then we may not be financially independent. In my opinion, though, you can be financially independent and still have debt.

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