Financial Independence vs Retirement

Financial independence is defined by Wikipedia as 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 and/or cash flow that is at least as equal to or more than their expenses.

Financial independence is the ability to stop working for money and still be able to achieve your desired standard of living using only the assets that you have accumulated and be able to maintain that standard of living for the rest of your life. The earlier you can achieve financial independence, the better off you will be.

Financial Independence vs. retirement

Financial Independence and retirement is not the same thing.

Financial independence is critical if you are looking to retire, but financial independence is a worthwhile goal if you love working and intend to continue working for as long as God gives you life. I dare say financial independence is a much more important goal than retirement.

Why Is Financial Independence Important

For most of us, our ability to make progress towards our passions is restricted by the “rat race”. We work for our employers and use our income to pay the government (taxes), to pay the lenders, and meet our needs/consumerism. We do not focus on our passions at all or relegate them to our free time if at all.  

Below are some of the reasons why financial independence is critical:

  1. Job security is an illusion,

In traditional employment, your customer is your boss – he is the one purchasing your services, he can, therefore, decide to stop using your services.  Financial independence is the ultimate unemployment insurance.

  1. A financially independent person is no longer trapped in the “rat race”

Leaving the “rat race” is not necessarily retirement, it is eliminating the need of provision clouding every decision that you make, stopping you from chasing your dreams.

A financially free person possesses insights and goals untainted by concern for sustenance, can pursue opportunities that are generally perceived as risky but have potential for high reward.

  1. A financially independent person has the ability to structure work that suits them.

Being financially independent means that you have more time and resources to explore your skills and abilities, your personality, and your passions and dreams and decide how best to incorporate that into your work. You can go out on your own as an entrepreneur or consultant since you have established a steady stream of income that will be coming in whether or not your venture becomes profitable.  

  1. Freedom to live and work on your own terms

A financially independent person works because they choose to, not because they must from a financial perspective.

We always say “I need to stay in my job for the income”

  1. You can retire early

If you have not achieved financial independence, it’s unwise to try to retire. Retirement before achieving financial independence may lead you to make some very tough tradeoffs later down the road.

 

Why Invest

Investing allows your money to work for you; it allows you to put your money in vehicles that have the potential to earn high rates of return which could be in the form of rent, interest, dividends or capital gains.

Investing is the beginning of your journey towards becoming financially independent. It allows you to accumulate assets that will generate for you more cash flows in the future.

“If you don’t find a way to make money while you sleep, you will work until you die” Warren Buffet.

Investing ensures your money works for you while you sleep.

At TSAVO our purpose is to influence more people who have the desire and the wherewithal to invest in order to start their journey towards their financial independence.

We intend to find more ways to promote financial literacy, so more people understand not only the benefits of investing wisely, but the devastating cost to families of not doing so.

 

Most people do not achieve financial independence mainly because they are afraid of the impact their decision will have on their current lifestyle. They are afraid of the changes they will have to make in life to enable achievement of this goal.

 

Understand what financial independence means to you.

 

This is Leonard Mcharo

Encouraging you to,

Invest in your Financial Independence.

Comments (3)

  • Truth be told.
    We need to invest early in life, as soon as we secure our first employment-whether self employed or working for someone else.
    Financial independence should come early in our lives hence the need to invest in our twenties.

    K Nzomo
  • Sound piece of advise.

    MAKALE
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