Hey! What is financial independence?

Yes, I wrote sometime last year on the importance of setting financial independence as a goal. Oh! Mama mia! My mail box was overwhelmed with positive feedback but one woman’s question struck me and deserved an answer: ‘What is financial freedom?’ she asked. Not only is the question worthy silver and gold but it is so valid and relevant.

She reminded me of the Bible story where Jesus tells a parable of a woman who saw others paying offerings in the synagogue and she gave out her only coin. Interestingly, Jesus singles out this woman as having given the best out of the whole lot—surpassing even the bourgeoisie who gave impressively. I wish to also conclude, therefore, that the woman who asked on the definition of financial independence gave the best feedback of them all— because she did not want to pretend that she knew exactly what the term means but also did ask a question on behalf of many silent readers.

Does “financial independence” mean complete freedom from debt? Does it mean the ability to stop being on a salaried job or switching jobs without creating financial panic in your household? Does it mean having enough money to survive on without worrying to make more money?

Here is the thing: there are all definitions of financial independence. However, I subscribe to the idea that financial independence means that you have enough money to survive even if you did not have your current salaried job or if your current business runs dry. That does not preclude you from working for additional income. It merely means that if you were to quit working or if your business nose-dived today, you would not lose any significant part of your way of life due to lack of income. Such financial independence is the ideal life expected of retirees.

Ideally, when one reaches retirement age, one does not have to work to maintain a basic lifestyle because they are expected to save for their retirement so they can maintain their life styles. This is not easy for most Malawians since the wage earned is largely used hand-to-mouth (if it reaches the mouth at all). But many middle-class workers retire on a good package, and only choose to work out of a desire to do something interesting and productive with their time, and also a desire to live a lifestyle beyond their idea of a basic lifestyle—traveling around, a nice home, and so forth.

Others might have different viewpoints. Financial independence might occur for them once they are outside of the burden of excessive debt. Others might feel independence when they can freely switch jobs, or when they have the ability to start their own business. They are very right too!

The important question, however, is not what financial independence means to me or what it means to some so- called financial expert out there. What matters is what financial independence means to you. What does it mean to you?

On one level, this discussion really is about goal-setting. Many people look at financial independence as a state beyond what they currently have—and it is something that has attributes that they want. Do you want the ability to easily switch jobs without panic? Do you want the ability to survive without having to work? Those are goals that fall under the umbrella of financial independence.

The key part is to turn that idea of financial independence that you have in your head and in your heart into a long term goal, one that you are planning on reaching in the future. What can you do today to move towards that definition of financial independence?

Wishing you well as you sit cheek-in-hand to find the most relevant definition of financial independence for yourself. I am with you in spirit as you set the goals to realizing your independence. A blessed weekend to you and yours. n