Financial Freedom vs. Financial Independence, do you know the difference? Every day you hear the terms financial freedom and financial independence thrown around, often interchangeably. But does this portray the true meaning of these concepts?
No, I digress.
I’m here to help you understand the two concepts and uncover how crucial they are to helping you achieve your financial goals.
At the end of my financial freedom vs. financial independence analysis, you will understand why you need to pursue financial freedom and how home-based businesses such as network marketing and affiliate marketing are bridges to getting there. Just to name a few.
Let’s get into my article.
What is Financial Freedom?
Financial freedom is the state where you acquire more than enough income and assets to enable you to live the lifestyle you desire. It is essentially getting to a point where you do not have to worry about your living expenses, debts, or discretionary spending.
You know how it is said that being rich is having money and being wealthy is having time? That, in a nutshell, is what it means to attain financial freedom, getting to a point where you have what money cannot buy, TIME!
Develop a Financial Freedom Mindset
The idea behind attaining financial freedom is getting to a point where your lifestyle is not dictated by how well you can live from paycheck to paycheck. However, as with everything, you must first develop a financial freedom mindset.
Do you know why?
I’ll tell you this, it’s because achieving financial freedom involves much more than aggressively running after money. The secret lies in developing the right mindset, as this is the only thing that will propel you to scale financial heights.
To do this, you must be ready to become a different person. I’m not talking about physically but mentally. You have to know what you want in life.
I know that sounds cliche however, maybe there are some goals have set for yourself like sending your kids to college or leaving your grandkids and inheritance.
Start first educating yourself, and look into ways to grow your money or earn additional income.
I’m always talking about multiple streams of income so if you are not savvy about the stock market or mutual funds there are other ways to meet your income goal.
• Change your perceptions of what it takes to acquire wealth
Too many people are stuck in a financial rat race as they have the wrong perceptions about building wealth. Yes, it’s good that you are busy giving your all to your work.
But even with those extra hours you put in, you won’t significantly change your financial status anytime soon if you have the wrong perception.
How do I know this?
Well, I was stuck in the rat race, constantly overworking myself to make more money and attain financial freedom. However, nothing ever improved until I changed my perceptions about acquiring wealth, started learning about affiliate marketing, and took the initiative to start my online business.
So, start by looking beyond your employment as the only way to make money.
Do you know why? No, ok
Well, let me tell you. To be financially free, you should be able to make money while you sleep, and there is no better way to achieve this than by having multiple income streams.
• Have a clear-cut strategy for your finances
It is never enough to understand that achieving financial freedom requires going above and beyond relying on your paycheck.
Yes, that is the first and most crucial step, no doubt about that. But, as I have discovered, knowledge without the proper strategies will lead you nowhere, especially regarding finances.
The best way to do this is to start by reevaluating your financial goals (You already set these goals, right?). Next, consider your living expenses and plan how best to manage your debt even as you build your wealth.
• Take control of your life
While pursuing financial freedom, you must also work on taking control of your life. Making money without good health, supportive relationships, and not enough time to enjoy life is meaningless.
Therefore to attain financial freedom, you must prioritize building a lifestyle that allows you to pursue your passions and enjoy time with your loved ones while building wealth.
Can I save enough money to be financially free?
Ok, let me say this!
No, you cannot save enough money to be financially free.
Let me explain why!
Saving money is excellent and essential for achieving some personal financial goals, as it teaches you discipline. However, there is a limit to how much you can realistically save, regardless of how good you are at it.
On the contrary, to become financially free, you need to get to a state where you do not have to rely on your paycheck to sustain your lifestyle. The only way to achieve this is by building multiple income streams so your life is not dependent on a paycheck and how much you can save.
What is your freedom number?
Your financial freedom number refers to the level of passive income you need to build to satisfy your lifestyle comfortably.
My financial freedom number is personalized to my wants and needs. For me, it is based on the amount of monthly cashflow. ok, now you see this number can be whatever you want it to be.
Since we all live different lifestyles, this number cannot be the same for everyone. To know your financial freedom number, you need to:
• Have a vision of your ideal lifestyle
• Estimate how much you will incur to sustain this lifestyle
• Focus on building passive income and cash-flowing assets that are enough to cover your expenses and lifestyle
What is Financial Independence?
Ok, Financial independence refers to getting to a state where you do not have to rely on anyone else but yourself to meet your financial needs.
Put it this way. It is not having to rely on the economic system of working for someone else to earn money. Being separated from this system financially shows that you learned how to earn money without depending on corporations to provide the income.
Essentially, it elevates you to a point where you can comfortably pay your bills and debt while having enough cash flow to live well, even in retirement.
And I certainly hope you are thinking about retirement no matter what your age.
In order to achieve financial independence, you need more than a paycheck but a build-up of passive income, enough savings, and other investments, so you are set for life.
What does it mean to be financially free, and what does it look like?
Becoming financially free can mean different things to different people, as our dreams differ. I can tell you that my financial independence number has more to do with how much cash I have coming in monthly. And you should have a number as well.
Now, tell me. What you would consider an ultimate lifestyle would be worlds apart from the next person pursuing financial freedom. Wouldn’t you agree?
Regardless, here are some elements to consider when you have attained financial freedom.
Check them out!
• Ability to lead a comfortable lifestyle without relying on a paycheck
• Freedom of time as you are not tied down to working for hours on end to cover living expenses
• No worries about future living expenses
• Paid off consumer debts
• True financial happiness
Similarities: Financial Independence vs. Financial Freedom
A major similarity between financial independence and financial freedom involves building passive income streams so you do not have to rely on a paycheck.
These concepts also represent getting to a point where getting the money to lead a comfortable lifestyle is no longer a problem.
You are not worried about those bills, whether you can afford to take your family for a vacation or spend time with your family and friends because you are busy working.
Differences: Financial Independence vs. Financial Freedom
The primary difference between financial freedom and financial independence is that when you attain financial freedom, you can live the life you desire without being limited by living from paycheck to paycheck.
On the other hand, with financial independence, you elevate yourself to a higher level of financial security where you can lead that dream lifestyle even without having to work or hold a traditional job.
Did you know there are different levels of financial freedom, as each person has distinct ideas of what it takes to be financially happy? On the contrary, financial independence is anchored by the capacity to not rely on anyone to keep leading the dream lifestyle you have built.
If you desire to be in the driver’s seat of your life then you need to consider other ways to save money and earn money.
Examples of Financial Freedom and Why You Should Pursue It
There are many examples of what it means to achieve financial freedom, and these include:
• Getting to a point where your budget or living expenses are not solely dependent on your paycheck
• Coming from struggling with debt to being debt-free while having income streams that do not require you to report to an office every day
• Having enough savings and investments to cover those unexpected emergencies and even retirement
• No longer worrying about whether you can lead a balanced lifestyle where you have time to pursue your passions and spend time with your family and friends.
Obtaining this level of time and money is not a privilege of a select few but a goal you can start pursuing today as it is attained.
The only reason most people do not get to achieve it is having the wrong mindset and failure to focus on building passive income streams and taping into ways to grow your money for example cryptocurrency.
Luckily, this does not have to be the case for you, as you can take the path less traveled and get out of the race.
Remember, you are destined for greatness, but you must step out and start making the right moves for financial freedom and independence to be a reality. And in this age, there is no better way to do this than by running an online business.
Start making that difference in your finances by learning how you can get your money working for you in the new digital era.