“Financial independence” is one of those phrases we hear thrown around constantly, but if you ask 10 people what it actually means, you’ll probably get 10 different answers. Some picture a beach, an early retirement. Others picture a giant number sitting in a brokerage account. A client asked me recently what the “magic number” was to be financially independent, and my honest answer surprised him. There isn’t one. This week, let’s talk about what financial independence really means, because I think a lot of people are chasing the wrong definition.
Financial independence is not a number; it’s a choice. The most common mistake I see is treating financial independence as a single dollar figure, as if crossing some finish line suddenly makes you free. In my opinion, that’s backwards. It isn’t about hitting a specific number; it’s about reaching the point where money is no longer the thing making your decisions for you. It’s the day you could walk away from a job you dislike, help out a family member, or take a year off, and know your life wouldn’t fall apart. The number matters, but only because of the freedom it buys, not for its own sake.
I like to think about independence in two directions. There’s “freedom from,” and there’s “freedom to.” “Freedom from” is the obvious part: Freedom from debt, from paycheck-to-paycheck stress, from lying awake wondering if one bad month will sink you. But the part people forget is “freedom to:” Freedom to change careers, to be generous, to spend time with the people who matter, to say no to work that drains you. Plenty of people build enough to escape the “from” and never once use the “to.” Real independence is having both, and actually using them.
It’s also about “enough,” not “more.” Here’s a truth that took me years in this business to fully appreciate. The people who feel financially independent aren’t always the ones with the most money. They’re the ones who have figured out what “enough” looks like for them. I’ve met people worth a small fortune who still feel behind, and people of modest means who feel completely free. The difference usually isn’t the size of the account; it’s whether their lifestyle and their expectations are under control. If your definition of “enough” keeps moving every time your income does, no number will ever get you there. I call that moving the goalposts.
You don’t have to be rich. Somewhere along the way, financial independence got tangled up with being wealthy, and I think that scares a lot of people off before they even start. The truth is, independence has far more to do with the gap between what you earn and what you spend than it does with a big salary. Someone who lives on 70% of what they make and saves the rest will reach independence long before someone who earns twice as much and spends every dime. It isn’t about how much comes in. It’s about how much you keep, and how well that keep is put to work.
So how do you actually get there? Start by building margin. Live on less than you make, get rid of the debt that’s working against you, especially debt that isn’t tax-deductible and put the difference to work consistently over time. That’s the unglamorous engine behind every financially independent person I’ve ever worked with. There’s no shortcut or magic bullet, just the boring discipline of spending less than you earn and letting compounding do the heavy lifting over the years. Do that long enough, and one day you’ll look up and realize your money is finally working for you instead of the other way around. I like to say that when your money earns more money than you do from going to work every day, then working becomes optional.
And because everyone’s version of independence looks a little different, this is exactly the kind of thing worth mapping out with your advisor. Sitting down and defining what independence actually means for you, then building a plan around that specific goal, is what turns a vague wish into an enjoyable retirement.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS, visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations.
