Financial Independence vs. Financial Freedom: Know the Difference, Build Both
Financial Independence vs. Financial Freedom: Know the Difference, Build Both
Jordan Rosenfeld Sun, April 27, 2025 GOBankingRates
The terms financial independence and financial freedom are tossed around a lot when discussing goals related to security and wealth building. Do they mean the same thing? And more importantly, how do their definitions affect your financial life?
While they’re closely related — and often part of the same journey — they aren’t the same thing, according to Melissa Murphy Pavone, CFP and founder of Mindful Financial Partners.
Here’s how to understand the difference — and what it takes to build both.
Financial Independence: The ‘Enough’ Threshold
Financial independence means you’ve accumulated enough assets to cover your lifestyle without relying on traditional employment, according to Christopher Stroup, CFP and owner of Silicon Beach Financial. “It’s the foundation, as your money works for you.”
In other words, Pavone said financial independence means “work becomes a choice, not a necessity.”
Financial Freedom: Unlocking Possibility
Financial freedom builds on that foundation, Stroup said, allowing you “flexibility and control.” This could look like a variety of things, like “the ability to take a sabbatical, fund a passion project or change careers without financial pressure,” he said.
In a nutshell, “Independence provides security; freedom unlocks possibility,” Stroup said.
Financial freedom can also bring a sense of peace or ease because you can “live life on your own terms,” according to Autumn Knutson, CFP, founder of Styled Wealth and a CFP Board Ambassador.
A Real-World Scenario
To illustrate the difference, Stroup offered this example: Imagine an early employee at a growing tech company who leverages stock options, invests bonus income and avoids lifestyle creep.
“They reach financial independence in their 40s, but they achieve freedom by shifting into advisory work, traveling more, and spending time on causes they care about,” he explained.
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