‘What is your definition of financial freedom?’, is a question I get asked by readers from time to time. Opinions and definitions in this regard vary widely and often a matter of convenience. Some call it financial freedom, some, financial independence, some early retirement!
Here is my take on this subject. The following should have been in a flow chart form, but I am too lazy to draw one.
Can you quit your present job to do nothing or whatever you want?
If ‘NO’ go to part II below.
If ‘YES’, proceed to Part I
Part I
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Can your corpus handle day-to-day expenses for the rest of your life (including the typical expenses of your partner, or spouse)?
If ‘YES’,
It implies, You are
- retired if you do not work for money anymore.
or
- financially independent if you work for money when and how you feel like it. The income can be spent or invested without constraints, unless something out of the ordinary occurs. You are neither dependent on your spouse or on anyone else for income.
Assuming the corpus is large enough and nothing abnormal happens, you can be retired or financially independent for life. You can switch between the two states at will or remain in one state for as long as you want/can.
If ‘NO’
This means
- You are dependent on your parents, partner or spouse to support you while you explore your options. Obviously a less than ideal situation which we shall not discuss further.
or
- Your corpus can handle day-to-day expenses for some years to come, but not for the rest of your life. You are free to take a break, pursue a passion that would give you a steady income down the line (before your corpus runs out!). You can handle your typical family expenses for a few years without depending on your partner (who may or may not be working). It seems fit to say that you free to do what you like but not whatever you like (like not working again).
You need to work, but you are free to choose your line of work. You are financially free as long as your income steadily increases and the dependence on your corpus to provide monthly income decreases.
Financial freedom is not permanent. If something goes wrong -you are out of work, your income does not increase enough – you might be forced to take up a job that you are not too thrilled about …again.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Part II
You cannot quit your job, but would like to asap to be either independent or free.
Here is a checklist
1) Are you investing like your ass is on fire?
2) Are you investing productively?
3) Have you factored in at least 8% inflation after you quit your job?
4) Are you confident that you can lead a frugal life? Good but dont depend on it too much!
5) Are you hoping to beat inflation? You might, but it is best to plan with zero real-return after taxes.
6) Are you influenced by blogs like Money Mustache, Early Retirement Extreme? Don’t be. They are clueless about Indian inflation levels. So understand retirement mathematics first. That is universal. Underestimate the longetivity of your corpus.
7) Do you like the idea of a safe withdrawal rate? Don’t. Will not work for our inflation levels. You will keep withdrawing more and more as time goes by. Are you ready?
8) Have you assumed a real return for your entire portfolio or only your equity component? Common mistake. You need a good amount of debt. So don’t expect too much returns from your folio.
9) Understand volatility. Don’t assume a SWP from an equity fund will work. It might, it might not. You can’t take that chance.
10) Keep your CV up to date. You never know, you know!
We now publish both equity fund and debt fund (+ hybrid fund) screeners each month!
Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video! ⇐ More than 415 investors and advisors use this!
Unlock the secrets of successful financial advisors and entrepreneurs with our new course!
My new book for kids: “Chinchu gets a superpower!” is now available!


Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Join our courses in exclusive Facebook Groups!
- 550+ members are now part of our new course: How to get people to pay for your skills! (watch 1st lecture for free). Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show how to achieve by showcasing your skills and building a community that trusts you and pays you!
- Goal-based portfolio management! Join 2220+ members and get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment of Rs. 3000 only. No recurring fees! Life-long access to videos (10+ hours content) in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About the Author

About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Your Ultimate Guide to Travel

Free android apps
- All calculators from our book, “You can be Rich Too” are now available on Google Play!
- Install the Financial Freedom App! (Google Play Store)
- Install Freefincal Retirement Planner App! (Google Play Store)
- Find out if you have enough to say "goodbye" to your employer (Google Play Store)