Financial Independence is a wonderful thing. I frequently sing its praises, and I am proud to have achieved the milestone for myself and my family.
But the truth is I’ve been straddling the fence, and each time my toes graze the grass on the other side, I retreat. I’m working for something called Financial Freedom.
Independence in this sense means you can live independently of earned income. Maintaining your current lifestyle, likely a relatively frugal one that allowed you to become financially independent, you can reasonably expect to never run out of money.
With Financial Independence, you’re more or less locked into your current standard of living. If that’s a barebones existence, that’s where you’ll want to stay.
It’s your core spending + 2x(discretionary spending). For us, that’s annual spending of $40,000 + 2x($30,000) = $100,000 a year.
Freedom to spend doesn’t mean you should or will spend all those additional dollars. It means you’ve got enough cash to do so without putting your financial future at risk.