What’s Your Definition of Financial Independence?

by Vinaya HS on June 11, 2008

in Finance

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Of late, I’ve been thinking a fair bit about financial independence. The Simple Dollar summarizes it best in defining financial independence to include:

  • Freedom from financial reliance on loved ones
  • Freedom from financial reliance on creditors
  • Freedom from financial reliance on employment

That set me into preparing the checklist below which constitutes what I define to be financial independence, given my current situation.

My financial independence checklist:

  1. I do not have any credit card debt
  2. I do not have any vehicle loans to be paid
  3. I do not have any education loans to be paid
  4. I do not have any personal loans to be paid
  5. I do not have any home loans to be paid
  6. I do not owe money to any person
  7. I have a sufficient emergency fund in place
  8. I have independent health insurance for myself
  9. I have independent health insurance for my dependents
  10. I have independent life insurance to take care of my dependents
  11. I have established a plan to achieve my goals (financially)

There’s a lot to be done before I can declare financial independence. But having such a checklist is a start and keeps you focused. Further, having such a list does not imply that one has to be stingy; you just have to be financially responsible.

So, what’s your definition? How do you plan to get there?




Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

{ 6 comments… read them below or add one }

Mark Nelson June 11, 2008 at 6:46 PM

Financial independence is when your passive income is more than your expenses. When that is achieved you have financial independence.

Ramanathan June 12, 2008 at 9:05 AM

An eve opener for me. Thanks.

Grishma July 1, 2008 at 1:22 PM

For me financial independence would mean, being free to walk out of relationships i don’t want to be part of..dependence for money, just sucks, it makes your life miserable and from my experiences, i can’t imagine going through dat for the rest of my life!

Vinaya HS July 1, 2008 at 2:19 PM

Grishma, that’s certainly one way to define financial independence.

john August 2, 2008 at 6:48 PM

thats really awesome post really.

cool dude April 27, 2009 at 7:49 PM

vinyas plz remove my email adress and name from the leave a comment box.. plz yaar

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