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Recently I’ve been reevaluating my long term and short term goals (I’ll post about those soon enough), and one thing I’ve been looking into more is – what does it mean to be financially free.
Of course, I talk about Financial Independence a lot, and I sometimes use the term Financial Freedom interchangeably with FI. So I decided to hit up the internet and look it up…
…And I found just about every possible meaning you can think of. There is literally no agreement on the difference in meaning between the two terms.
The funny thing is Google doesn’t seem to think there is a difference:
What is the difference between financial freedom and financial independence?
I’d say 95% of the time Google is right, so I can say these words are probably synonyms and mean the same exact thing…though people feel there is a difference somehow.
I may have written it once or twice – Words have meaning. So I decided to hit up Google to check out the definitions.
1. not influenced or controlled by others in matters of opinion, conduct,etc.; thinking or acting for oneself:
2. not subject to another’s authority or jurisdiction; autonomous; free:
1. not under the control or in the power of another; able to act or be done as one wishes.
2. not physically restrained, obstructed, or fixed; unimpeded.
…and you can see the definitions are very similar – they both share nearly identical first definitions.
But, there are some subtle differences in #2 – Free is focused more on not being physically fixed, while independent is focused entirely on authority.
This is how I would define each:
Financial Independence (according to Wikipedia) is generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses.
Financial Freedom (according to me) is financial independence with that added ability to be location independent. When one’s assets generate income greater than their expenses, and they also have the ability to move or travel freely.
Being financially free means being unbound physically, not just from your job, but from your location.
I want to travel the world with my family and raise my children with a completely unique upbringing. I’m already financially independence, and since I need a term to call my dream, I will call it becoming financially free.
And now to the readers…
Eric is an investor that achieved financial independence at the age of 30. He started in 2009 with the purchase of his first triplex and now owns over 470 units. He spends his time with his family, growing his businesses, diversifying his income, and teaching others how to achieve financial independence through real estate. Eric has been seen on Forbes, Trulia, WiseBread, TheStreet, and other financial publications.
I started out as a full-time student, over $60,000 in debt, and didn't even have a full-time job (two part-time jobs).
Learn the system I used to create a 6-figure passive income.
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