Why Is It Hard To Become Financially Independent

You may think that a high-paying job presents the key to your lifetime dreams, but don’t count your chickens before they hatch. You’ll need to pursue something beyond that status quo if you want to achieve true financial independence. And that job, if you don’t use it in the proper context, might be the crutch that’s holding you back.

“The reason you can’t truly be financially independent if you rely on outside income from a source other than your own investments or businesses is that those sources of income are not entirely within your control,” says Tyler Seeger, managing director at Retirement Being in Laguna Niguel, California. “If you’re dependent on a job, for example, you’re at the mercy of your employer. If you rely on government assistance, policy changes could affect your income. True financial independence means having control over your income sources.”

What is financial independence?

Could it be that you’ve been misled into thinking what financial independence really means? Of course, it’s in part measured by money (that’s a key prerequisite). Think about the ability to survive a worst-case scenario.

“Being financially independent means you are financially secure if you lose your job, your business fails, or the market worsens,” says Annette Harris, the owner of Harris Financial Coaching in Jacksonville, Florida. “To be financially independent, if any of these things happen and you can survive without seeking financial assistance from elsewhere, you will have set yourself up for future success.”

But it’s not just about money. It’s about the power to control your life. It’s the freedom to roam about the cabin with no one pressing the button that turns on the “fasten your seat belt” light.


“Being financially independent refers to a state where an individual has achieved a level of financial stability and freedom, enabling them to meet their financial needs and goals without being reliant on external sources of income,” says Percy Grunwald, technical lead at Cisco Meraki in San Francisco. “It means having accumulated sufficient wealth and assets to sustain one’s desired lifestyle, cover expenses, and plan for the future, without the necessity of working for a regular paycheck. Financial independence grants individuals the flexibility and autonomy to make choices based on personal preferences, rather than financial constraints.”

Why should you become financially independent?

If that sounds like a lot of work, you may not be far off the mark. It certainly appears to represent a significant slope to climb. That impression, unfortunately, leaves many too willing to give up without even trying. It’s one reason it is so hard to achieve financial independence. The motivation to overcome that hill isn’t there.

But it should be. Maybe all you need is to imagine what’s on the other side of that mountain.

“Financial independence is a state of being where your assets generate enough income to cover your living expenses without the need for employment,” says James Allen, the founder of Billpin in Los Angeles. “It’s like being on a permanent vacation where your money works for you instead of you working for your money.”

Ah, a “permanent vacation.” Who could deny the allure of that vision? Before you get there, though, you’ll need to make sure you’ve built the legs necessary to support that desire. What exactly comprises the muscle of those legs?

“Being ‘financially independent’ refers to a state where an individual or household has sufficient financial resources and assets to cover their living expenses and achieve their financial goals without relying on external sources of income,” says Brandon Juodikis, of BRJ Wealth Management (brjwealth.com) in Chicago. “It means having the ability to support oneself and maintain a desired lifestyle through one’s own financial means, such as investment income, savings, and passive income streams.”

How much money is considered financially independent?

When you talk about money, it’s only natural to ask, “How much?” There are common heuristics many financial planners use to answer this question.

Faisal Said, director of compliance at Porter & Company CPAs in Irving, Texas, says, “The general rule is that if you have 25 times your annual spending in a retirement or savings account, then you are considered to be financially independent.”

Don’t get too hung up on formulas, however, as the precise answer to the question depends on factors specific to where you are today and where you want to be tomorrow.

“To determine if you are financially independent, you need to assess your financial situation and evaluate whether you can maintain your desired lifestyle without relying on external sources of income or assistance,” says Adam Garcia, CEO of The Stock Dork, based in Orlando, Florida. “Several key indicators can help you gauge your level of financial independence.”

It really starts with something as simple as a budget. This can be an obstacle for many. Unless you know what it costs for you to live, you won’t be able to determine how much income you will need to generate to become financially independent. Your expenses, therefore, give you an income target to shoot for.

“It is crucial to have a stable and sufficient income that covers your essential expenses,” says Garcia. “If your income exceeds your basic needs like housing, utilities, food, transportation, and healthcare costs, it’s a positive sign of financial independence. Additionally, having surplus income that lets you save and invest for the future further strengthens your financial position.”

While the numbers are the immutable math behind financial independence, it will be your heart that best determines when you’ve ascended to the peak.

“You’ll know you’re financially independent when your passive income (from savings, investments, rental income, etc.) covers your living expenses,” says Eliza Arnold, co-founder & CEO of Arnie in San Francisco. “It’s when you wake up in the morning knowing that whether or not you punch in that day, your bills will be paid, and your lifestyle can be maintained.”

When you reach that summit, there’s no doubt your first words will be, “Wow! That wasn’t so hard after all!”

Comments are closed.