Financial independence mean that you have a passive income (from a porfolio of stocks, bonds or other resources) and you can live without working, or if you prefer you can exit the “rat race”. What does it mean? According to Cambridge dictionary “a way of life in modernsociety, in which peoplecompete with each other for powerand money”This doesn’t mean you have to stop working at all. Probably you like your work in some ways but you don’t like your boss or some way or working or more simply you need more spare time to enjoy your life and do almost what you like. So financial independence doesn’t mean to watch tv all day long, but get a new vison of work where you do the work you like simply because you like it. Enzo Biagi one of the most important Italian journalist said “I would have been a free journalist too: thank goodness my publishers have never noticed it”. Yes if you are financial independet you can work for free.
In a previous post I said that we have financial independence if passive income from our saving are greater than our expenses. To obtain this goal we save every month some money in some financial tools (stock, etf, bound, cryptocurrency…) with a yield. So suppose I have net salary from my job of $2500 and $2000 expenses every month, and I invest all my savings in financial instruments with 0.67% monthly return when will I be financial independent? In this picture you maintain the money because the passive income are equal to expenses. Only inflation will affect your money. I’ll be financial independent after 225 months
I recommenced to read this before starting your path to financial independence. “Why should I read Letter on happiness of Epicurus? are you crazy?”. The reason is very simple, because the financial independence is a path towards a better life style. So the first and most important question is “what make me happy?” “What happiness really means?”. Read and think what is real important in your life. Financial independence is only finance and math.
According to Wikipedia Financial independence means you have enough wealth to live on without working. Financially independent people have assets that generate income (cash flow) that is at least equal to their expenses. Income you earn without having to work a job is commonly referred to as “passive income”. For example, if someone receives $5000 in dividends from stocks they own, but their expenses total $4000, they can live on their dividend income because it pays for all their expenses to live (with some left over).