Many people are asking why is financial independence important? The biggest reason for financial independence is time freedom. It’s only thing to have a lot of money, it’s another to have a lot of time. Time is the most valuable asset ever.
Financial independence isn’t about having a million dollars in the bank. It’s about having the ability to do what you want, when you want it, and how you want it done. There are many rich executives who are miserable because they can’t do what they want.
They’re under pressure from their board, employees, and shareholders to provide as much value as they can. The shareholders do not care about the executives’ well being and happiness. All they care about is what the executive can do for them and how much money they can make for them.
The shareholders see the executives as a bunch of machines who should work day and night to make them rich. Then it’s no wonder when the executives have to take pills just so they can suppress the anxiety they feel on a daily basis.
Why is financial independence important? It gives you the peace of mind that your body deserves. Burnout is real and imagine being able to work on your own terms without someone else dictating when you can and can’t work. That is the definition of freedom.
It’s a goal worth pursuing because freedom is valuable.
Why is Financial Independence Important?
So then what are the concrete reasons why financial independence is important? The 9 reasons are as below!
1) Financial Independence Secures your Family’s Future
Whether we like it or not, money plays a huge part in our lives. True financial independence is when your passive income pays for all of your expenses. That’s when having more than one source of income comes into play.
As soon as your multiple sources of income pays for all of your family’s expenses, then their future is secure.
It doesn’t feel so good when you are dependent on someone else’s mercy to live life. I can’t wait to work on my own terms one day. Work on projects that I want to work on instead of helping someone else build their dreams and make their dreams come true.
Why is financial independence important? Your family’s life completely depends on it. I know what it feels like to struggle with money and penny pinching because you need to. It doesn’t feel so good. Living costs are very expensive. Therefore, not having money doesn’t feel so good.
The bear market of 2022 should teach you that money, to an extent, contributes towards your happiness on some level.
2) Peace of Mind
Peace of mind is priceless. When I was in my early 20s, I valued working as hard as I could to try and make as much money as I could. Even at the cost of not having mental stability. However, now that I’m older, I value peace of mind more than anything.
I don’t want to work as hard as I can and take as much risks as I can to move up in life. I just want to work enough to get a good paycheck but not work so hard that I develop health problems. Why is financial independence important? You have peace of mind.
If the employer suddenly decides they don’t need you anymore and they lay you off, you don’t mind. Why? Your entire family will be fed the day after anyway, if you are financially independent. And you will be well fed the day after as well. That’s how powerful financial independence is.
You have that extra layer of security that floats you through the bad times.
3) Prepared for Emergencies
Emergencies aren’t planned. Whether we like it or not, we will have at least one emergency a year. Something that’s totally unexpected. For me, that was when I had to replace my tires and when I got into a car accident in 2022. That happened totally unexpectedly.
Why is financial independence important? It’s an emergency fund for when emergencies happen. The four decades high inflation we’ve experienced in 2022 is another indicator that you never know when bad things will happen. Our expenses skyrocketed through the roof.
Whether we were prepared for it or not. And now we will have to go through a recession just to get inflation down. A recession is a national emergency and crisis. Layoffs happen and morale as an entire country worsens. Financial independence prepares you for such emergencies.
They happen quicker and more unexpectedly than you would like.
4) Generational Wealth
The real generational wealth is passing down financial literacy. The second best generational wealth is passing down money that your child feels secure with. There are parents who pass down liabilities to their children. That’s a big no-no from me.
Steve Wynn‘s father died and left his family with $350k in gambling debts. Can you imagine the pressure and the burden he felt throughout his life? I can’t even imagine having $350k worth of debt, let alone being responsible for someone else’s $350k debt.
Why is financial independence important? It passes down generational wealth to your children so that they have a better life than you did. My parents did so much for me and I have so much respect and love for them. They taught me everything I know.
All I can hope to do is give my future children half of what my parents gave me.
5) The Power of Choice
When you’re not financially independent, you can’t walk away easily. When someone offers you a $100k job from your $50k job, you really can’t walk away. You don’t have the power to walk away. However, if you were working a $50k job and you already had $5M in the bank, you can easily walk away.
If you felt like the new boss was going to be a bad boss, what’s in it for you? Why wouldn’t you just walk away? You don’t need more money because you already have plenty int he bank. Why is financial independence important? You have the power to walk away.
The power to say no is much more powerful than the power to say yes. If you say no, you are the one fully in control. If you say yes, you are at the mercy of someone else. The power to say no to any job is liberating, trust me.
11 recruiters reached out to me in 2022. I said no to every single one because their interview process was too much of a PITA for me. It felt amazing.
6) Eliminates Unnecessary Spending
The people who became financially independent didn’t get there by spending their heart’s desires. The people who got to financial independence got there because they didn’t spend on things that didn’t provide value to them. It eliminates waste.
Unnecessary spending just doesn’t feel good. You’re not only unnecessarily helping someone else get richer at your expense, you create a lot of landfill waste. When I spend money on things that I need and nothing more, I feel great. Not just in that it helps the environment but it helps my wallet as well.
Why is financial independence important? It eliminates unnecessary spending so that it reduces waste and prevents someone else from undeservedly getting rich at your expense. One of my electric bills came out to be $50 for the month of August 2022.
I split it with my roommate so I only spent $25 for the month. That felt amazing. My friends’ electric bills reach well into the hundreds of dollars. The elimination of wasteful spending is good for the wallet and the environment.
7) Financial Independence Improves Work Ethic
Work ethic does not mean that person who works the most. It means the person who knows how to work the least and gain the most results. Financial independence teaches you how to be efficient with your work. You don’t try to get rich by working the most hours.
You try to get rich by working the least hours and getting someone or something else to do additional work. For example, money. You put your money to work. Work ethic shouldn’t be as highly valued as others think it is. Hard work doesn’t get you to riches.
It’s the person who works the smartest that gets the richest. The rich understand trading hours for dollars is not the way to get rich. There’s only a certain number of hours we have throughout the year. Why is financial independence important?
It teaches you about the right way to approach work ethic.
8) It’s a Great Challenge to Take On
Some people are fine spending to their heart’s desires because they think they’ll never get rich anyway with their salary. That’s just not the right way to think. Why is financial independence important? If you’re generally bored with where you are in life today, financial independence is a great challenge to take on.
I guarantee you won’t be bored with the financial independence challenge because it’s a never-ending and difficult challenge. Only you get to decide when you had enough. If you want to earn more money and continue to challenge yourself further, that’s always a possibility.
That’s the great thing about chasing money. YOU are in full control of when you should stop and when you want to stop. No one else dictates what your ending point is, only you do. There are people who absolutely cannot stop the game of chasing money and do not stop.
That completely works well with them. The great thing is, it’s completely up to you.
9) It Teaches You Many New Skills
If I was just focusing on my job this entire time, I wouldn’t have learned anything about SEO or social media influencing. However, because I took on side hustles to accelerate my financial independence journey and shorten that timeframe, I understand how to do SEO as well.
The side hustles you take on along the way or the investing that you do teaches you real life skills that you wouldn’t learn from solely focusing on the day job. Why is financial independence important? It diversifies your skillset to one where you didn’t think was possible.
I have 10,000+ followers on Twitter not because my day job taught me that. But because I taught myself how to do social media influencing. I know how to do SEO not because my day job taught me that but because I taught myself that. It’s a powerful skill I can take with me anywhere.
When you take on additional side hustles to build wealth with, your skillset diversifies beyond what your 9-5 job is. A great thing.
Why is Financial Independence Important? It Helps You
Financial independence helps you in ways that you didn’t even know. There’s a reason why many blog posts and research says that our jobs are causing us stress. We are in a “produce or you’re out” economy so you are constantly under pressure to produce. For little pay, as well.
It doesn’t matter if you make the company $1,000,000 per year, they will never pay you an extra $100,000. Maybe they’ll pay you an extra $5,000, and if it’s a promotion, maybe an extra $10,000. But either way, you will get paid pennies on the dollar for what you produce.
Why is financial independence important? It helps you avoid that employer/employee relationship game if you want to. It’s completely up to you. What’s the company going to do? Fire you? You’re financially independent anyway, there’s no point. It helps you stand on your own two feet.
Companies want employees to be as poor as possible because they have all the power. There’s a reason why an employer’s favorite hire is someone with six figures worth of MBA student loans with kids. That person is not going to talk back to their employer.
If the employer fires them, what’re they going to do? They have a wife and children to take care of, not to mention the mountain of student loan debt they have to service. Why is financial independence important? There’s less chances to be taken advantage of at work.
You will have choices.
Why is Financial Independence Important? Shortlist Answers
- Financial independence secures your family’s future
- Peace of mind
- Prepared for emergencies
- Generational wealth
- The power of choice
- Eliminates unnecessary spending
- Financial independence improve work ethic
- It’s a great challenge to take on
- It teaches you many new skills
