What does 'financial independence' mean?

Financial independence refers to the ability to meet one’s basic needs and maintain a desired lifestyle without being reliant on employment income. It signifies that an individual has accumulated sufficient personal wealth or assets to cover their expenses, allowing them to live comfortably without needing to work actively for a paycheck. This concept is particularly important as it emphasizes personal financial security and freedom of choice, enabling individuals to pursue their passions, retire early, or simply enjoy a stress-free financial situation.

Other options, while related to financial health and stability in some context, do not capture the essence of financial independence. For instance, having a high salary without expenses does not guarantee financial independence, as it overlooks the need for wealth accumulation. Being free from all forms of debt is a positive aspect of financial management but does not imply independence if one is still reliant on active employment to cover living costs. Lastly, achieving a substantial retirement fund is an important goal but does not equate to financial independence if an individual does not have enough wealth outside of retirement accounts to sustain their lifestyle day-to-day.