What is financial independence?
Throughout the month of October, we have been discussing financial dependence and financial abuse. While these are important topics, understanding the implications associated with taking personal control of and responsibility for your finances is equally as important, but what does it mean to be financially independent? According to Research Financial Strategies, financial independence means three things:¹
- You control your finances and can make independent, money-related decisions without relying on or being limited by someone else.
- You can support yourself financially, meaning that your income, savings, or investments allow you to rely on yourself instead of outside sources for assistance.
- You have a working-level knowledge about how to manage your finances so that you can make informed financial decisions.
Why does financial independence matter?
Financial independence is the gateway to living your best life. Having control of your finances, the ability to support yourself financially and knowledge about how to manage your finances give you the freedom to make choices that are best for you. To some, this concept may not seem revolutionary. However, this ideal should not be taken for granted. Not everyone is afforded the privilege of financial independence. Women, for example, have been historically marginalized in the western, economic system. As discussed in previous posts, the consequences can be detrimental.
What are the benefits of financial independence?
Securing and investing in a lifestyle rooted in financial dependence has many payoffs. When we have the freedom to make decisions, we can set and work towards goals enriching our lives. Here are just a few tangible benefits associated with financial independence:
Foster and Maintain a Sense of Security: knowing that you have the means and tools to support yourself financially can help foster a sense of stability and peace. With financial independence, you are in control of your own narrative and there is security that comes with that.
Get and Stay Out of Harmful Situations: according to the Women’s Law Center of Maryland, “[b]attered women report that the cycle of violence often beings with controlling of money, relationships, and other personal freedoms.”² Financial independence can help provide a way out of harmful situations and prevent them from happening in the future.
Maintain Healthy Relationships: being in control of your finances allows you to approach personal and professional relations on equal ground. Interactions rooted in equality and mutual respect will help foster healthy relationships.
Ability to Give Back to Others: living a financially independent lifestyle puts you in a position to give back to your community and those around you. When you take care of yourself, you have the capacity to support those around you.
In conclusion, financial independence is a powerful tool with many benefits. Having control of your finances, the ability to support yourself financially and knowledge about how to manage your finances give you the freedom to make choices that are best for you. To learn more about how you can start striving towards financial independence today, reach out to Syracuse University’s Office of Financial Literacy at finlit@syr.edu.
By: Kayla Johnson
¹“Financial Independence for Women of All Ages,” Research Financial Strategies, July 11, 2021, https://www.rfsadvisors.com/six-steps-to-financial-independence-for-women/.
² “Your Money Matters – the Women’s Law Center of Maryland,” 2023, http://wlcmd.org/wp-content/uploads/2013/06/Your-Money-Matters-A-Guide-to-Financial-Independence-for-Women.pdf.