Financial Freedom: What Does it Mean to You?
If you’d asked me a decade or so ago what financial freedom meant, I probably wouldn’t have had a clue. Winning the lottery, maybe? Not having debt coming out my ears? I was too caught up in just getting by to even think about being free financially.
Then I read Your Money or Your Life by Joe Dominguez and Vicky Robin, and a whole world of possibility opened up to me. It appealed to the part of me that loved the books by Laura Ingalls Wilder — books where pioneers made do, wore things out, got creative, and worked together to actually build a life.
Your Money or Your Life had concepts like FI (financial independence) and the crossover point in it. According to the book, the crossover point is the point in time at which “monthly investment income crosses above monthly expenses” — the point at which “you will be financially independent in the traditional sense of that term. You will have a safe, steady income for life from a source other than a job.”
Suddenly, I saw that it would be possible to not have to work for a living at a job indefinitely. Of course I could continue to do so if I were still willing and able to, but I wouldn’t have to. It means the ability to work because you want to — either at a paid job, in a business, as a volunteer, you name it.
It’s not just about the money in the bank (meaning savings, investments, and passive income sources in this case.) It’s about what you can choose to do or not do because of how you’ve arranged your financial life.
And that to me is what financial freedom means. What does it mean to you?