Introduction
Financial independence Vs financial freedom: Many meanings and ways of thinking about these words. However, they are often used interchangeably in a unique economic environment.
Consider a young child learning to walk. Once they have figured out how to pull and take a few steps on their own, they have reached a new level of mobility. As a result, they may not need their parents to move them from one room to another. However, as toddlers gradually gain access to their mobile phones, any parent can tell you about the “I’m tired” cry on the long haul. It suggests that, although the child already knows the basics of walking, they cannot walk alone. Therefore, it has not yet received the complete FREEDOM of the mobile phone.
Money works the same way. So let’s understand what being financially independent means compared to having financial freedom and how investing in real estate can help you get there.
However, by making a difference, with financial independence as a goal of numbers and financial freedom as a state of mind, you will eventually lead a meaningful and successful financial journey.
While financial independence is a noble goal, gaining a sense of financial independence is equally important. It is also possible to attain financial freedom and the benefits that come with it before you reach financial security.
Financial Independence
Financial independence refers to having an adequate income or wealth to cover the cost of living a life without employment or dependence on others. It is a point where you do not need to work because you have generated enough income to do what you love in life and earn a living.
Now, what is Passive income? Remuneration earned without working for work is referred to as passive income.
But in reality, it may mean different things to different people with the same basic premise that it is a situation in which one can afford at least the necessities without relying on someone under all the living conditions of life.
To read more about Financial Independence and Its importance.
Financial Freedom
Financial freedom is not a number. It is an idea. That’s when money no longer drives you to make decisions. Instead, you are guided by your passions and values instead of just the prices.
Another way to express this concept is using three levels of wealth or three forms that people often think about their money and how to use it:
1. Price: Direct dollar value – you only care about how much you spend.
2. Cost: Every economic impact – considering what you get for the price.
3. Value: Your sense of satisfaction – is this item or experience in line with your values? Does it bring you happiness?
You begin to take over the investor mindset as you progress toward these levels. You get financial freedom when you think about value first, second cost, and third value.
Financial freedom is where money is no longer the main reason you do or do not do something. Price alone does not determine your actions. Want to know what are ways to achieve Financial Freedom?
Now lets see Financial Independence Vs Financial Freedom
Difference between Financial Independence and Financial Freedom
Financial Independence Vs Financial Freedom, With financial independence, you are a little trapped in your current standard of living. If that is an empty life, that is where you will want to live. Yes, you may be pleased with that way of life now and forever, but I do not want to take chances. Build a pillow to buy insurance against a change of heart or a big curveball from above.
If you have Financial Freedom, you can feel free to do other things you may not have thought of while on that laser path to FI. For example, you can, without regrets:
- Order your favorite menu item; there is a better value
- Sit by the sea, instead of four blocks above the road
- Spend a year in western Europe; there are LCOL destinations
- Find a motorhome with slide exit features and scaling features
- Buy Express Pass in the theme park
- Pay the babysitter often
- Share a bottle of Utopias or [funnily add your favorite beverage] with friends
- Pay for high-cost internet on the plane to see the whole game.
Financial freedom also states that you can withstand unforeseen economic challenges. Tax laws change, and “your fair share” goes from zero to $ 10,000 per night. A sick relative will stay with you. The Roth conversion ladder is made obsolete with one signature. Your home, outside the floodplain, is flooded. You will need more than water pants to keep a smile on your face. Financial freedom should do it. This was key aspect in Financial Independence Vs Financial Freedom.
The ladder to Early Retirement
Milestone #1 – Financial Security
Financial security gives you the confidence to know that, even if you lose your job today, you can still afford to pay for all your essentials without borrowing your mom and dad.
Milestone #2 – Financial Independence
Suppose you have enough income to cover your current lifestyle fully, including all the little extra over the empty foundations you currently enjoy. In that case, you will be considered financially independent.
Milestone #3 – Financial Freedom
True financial independence means that your idle income can cover your current lifestyle and the lifestyle you have always dreamed of. You are flying with the first-class regularly. Find that ocean-view suite.
Conclusion
Enjoy Your Journey to Financial Freedom
There is no accurate way to financial freedom, just as there is no single type of investment that will speed up your journey.
They can be a simple, slow, and steady way of achieving financial security regardless of your current level of financial security. However, you will enjoy the journey if you focus on the lessons, relationships, and surprises you will encounter.