Financial Independence vs Financial Freedom is a bit like arguing about the difference between freedom from and freedom to. But, perhaps more appropriately it’s more like an argument over whether you’re likely to experience “the light” of successful early retirement or “the high” it provides in terms of unencumbered time, choice and potential for taking on goals that were previously constrained by your work-a-day job.
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Financial Freedom allows you to do the things that you value
Financial Independence means having enough money to live on. It’s an important milestone to achieve, but it’s not necessarily the end of your journey to financial freedom.
Financial Freedom allows you to do the things that you value. It means being able to do what you want when you want. It means that when something comes up and you don’t have the cash flow to fund it, you can borrow from your future self without worrying about how it will affect your retirement plans or financial independence calculations.
In other words, financial freedom is about being free from money worries in life whether it be buying a house or car, starting a business or going on trips while still having enough savings and investments set aside to cover emergencies and unexpected expenses. As long as your standard of living doesn’t change much from year to year, then anything extra you earn can be invested for retirement or used for other goals like starting a business or buying property abroad.
Financial Freedom does not require a person to change their lifestyle
Financial Independence is the freedom to choose your own lifestyle. Financial independence is when you have enough money saved to cover your expenses and live a comfortable life while still being able to do what you want when you want.
Financial Freedom is the freedom to choose how you want your money to work for you. Financial freedom is having enough money so that you can make investments and grow your wealth so that it works for you instead of you working for it.
Financial Independence does not require a person to change their lifestyle. You don’t need to quit your job or sell all of your belongings and move into an RV in order to be financially independent. All that’s required is that the person has enough saved up so that they can continue living their current lifestyle without having to worry about finding more work or running out of money.
Financial Freedom does require a person to change how they use their money. They usually need to stop relying on earned income such as wages or salary and start relying on passive income sources such as dividends or rental income from rental properties they own.
Financial Freedom is being able to make individual choices
Financial independence is a term coined by the “4 per cent rule,” which says that if you withdraw 4 per cent of your savings each year, adjusted for inflation, your portfolio will be able to last forever.
Financial independence is being able to make individual choices, whether they are about working or spending money. You can take an extended vacation or choose to retire early if you want. It’s about having control over your life and not being dependent on someone else for money.
Also Read: Importance of Financial Freedom for Women
Financial freedom is having enough money so that you don’t need to worry about money anymore. It means having enough money so that you don’t have to worry about paying bills or even saving for retirement because you can just live off the income from your investments indefinitely (or until death). Being financially free doesn’t mean that you won’t have any worries; it just means that those worries will be about things other than money.
Financial Independence is the ability to cover your expenses
Financial independence is the ability to cover your expenses with the money you earn. Financial freedom is the ability to do whatever you want with your income, without having to worry about it.
When people talk about financial independence and financial freedom, they often use the terms interchangeably. But in reality, they’re very different things.
The first step toward achieving financial independence is to build up your savings so that you can cover your expenses if or when you lose your job or otherwise stop working. That’s a good thing because it means that if something happens to your income, you’ll still have enough money coming in to pay for necessities like housing, food and transportation.
Financial freedom goes beyond that by allowing you to do whatever you want with your income. It’s the ultimate goal for many people who are trying to live on their own terms: owning a home outright so they don’t have to pay rent; living abroad; spending more time with family; starting their own business or nonprofit organization, or even retiring early and working part-time so they can spend more time doing what they love most.
Also Read: Do You Pay Yourself?
Financial independence is a different thing than financial freedom
financial freedom and Financial independence are both financial goals, but they are not the same thing. Financial independence is an important milestone on the road to financial freedom.
Financial Independence Vs. Financial Freedom
Financial Independence vs Financial Freedom. Financial independence is the point at which you have enough savings and investments to cover your expenses for the rest of your life. This means that you don’t have to work for money anymore, so you can retire early if you choose, or continue working but with reduced hours or a different job. You’re no longer dependent on employment or income as your primary source of funding in order to survive and thrive. This is an important milestone on the road to financial freedom because it gives you more options in life including being able to spend more time doing what matters most to you.
Financial Freedom Is More Than Just Independence
Financial freedom goes beyond just having enough money in your bank account so that you don’t have to keep working at a job that doesn’t fulfil you or pay well enough to support your lifestyle choices. Achieving financial freedom means having enough money so that even if something happens and takes away some of your income (for example, losing a job), it won’t affect your lifestyle choices.
Independence from money gives you the resources so you are free to choose your path
When you’re free to choose your path b/w Financial Independence vs Financial Freedom, you can live the life you want. Financial independence is about having enough money to support yourself for the rest of your life. Once you reach this level of wealth, you can retire and never have to work again.
Financial freedom is about being able to choose the path you want without having to worry about money. In other words, it means that money is not a constraint on what you do with your life. For example, suppose I am financially independent but not financially free. In that case, I may have enough money to retire early but still have mortgage payments, health care costs and other expenses that will keep me from doing what I want with my time after I leave my job.
If I am financially free but not financially independent, then I may be able to afford to quit my job right now but have no savings or investments set aside to continue living in comfort if something goes wrong (like an unexpected medical bill).
Also Read: How to achieve financial freedom in 5 years
The goal of financial independence is more modest
Financial independence is the point where you no longer need to work to pay the bills. It’s the point at which your passive income is high enough that you can cover all of your expenses and more. Financial independence is a great goal to have, but it isn’t necessarily the same as financial freedom. Financial freedom means having control over your life and being able to do whatever you want. It’s about being able to choose what to do with your time instead of having to make money in order to buy things.
Conclusion
Financial independence is the first step toward building financial freedom, but it isn’t enough on its own. You’ll still need some additional savings because there are always unexpected expenses that come up during retirement. The goal of financial independence is more modest it only requires that your passive income covers all of your expenses, including taxes and inflation adjustments.