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:
- I do not have any credit card debt
- I do not have any vehicle loans to be paid
- I do not have any education loans to be paid
- I do not have any personal loans to be paid
- I do not have any home loans to be paid
- I do not owe money to any person
- I have a sufficient emergency fund in place
- I have independent health insurance for myself
- I have independent health insurance for my dependents
- I have independent life insurance to take care of my dependents
- 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?