Friday, January 25, 2013

How do you know whether you've reached Financial Independence?

If you are going to a place or a party, you will know that you've reached there when you recognize the place and your friends greeted you at the party. With increasingly more and more people embarking the Financial Independence journey, how do you know whether you've reached there one day. Do you measure it by the amount of capital you have? or perhaps it's your passive income? How exaclty do you know whether you've reached your goal of financial freedom?

For me, I will use these few metrics below to measure the level of my financial freedom:

Age: Up. We can't hide from time. We age each and everyday in life and there's nothing that you can do to stop it. Regardless of whether it rains or shines, your age will only have one direction to go and that is up north.

Active Income: Down. Don't get me wrong. As I move closer to financial freedom, I would like to see my active income coming down gradually. This is due to the fact that I will want to one day take on social work in replace of the corporate world I am in now. After all, we all aim for financial independence so that we can do what we like right!?

Passive Income: Up. Passive income has to go up in order to replace the loss in active income I will be getting. I will be depending mostly on income that works for me, not the other way round.

No. of hours spend at work: Down. As with active income, the goal of financial independence is to have a choice. My choice is to spend lesser time at work and more time at home with my family. I hope to see this gradually come down now.

Health: Up. As I spend lesser time at work and therefore more time for exercise, I will be expecting my health status to get better, even as I age each and everyday.

Hobby: Up. I hope to be able to spend more time on my hobby. I hope to travel around the world. I hope to see Novak Djokovic live in person. And I hope to see Liverpool plays at Anfield. I have plenty of dreams and hobbies and I hope to achieve them when I reach financial freedom.

When all things are going as it is, I will know I have reached my target of Financial Independence. What is your metrics of measuring your Financial Independence?


  1. Replies
    1. Thanks Uncle CW8888.

      You're at the edge of FI.

  2. Hey bro, i am a Liverpool fan too!
    Maybe we can visit Anfield together when we are retired! Hahaha.

    Sweet and summarized points you have there! :-)

    1. Hi Bro SI@SG

      We will go to Anfield when they will win the EPL, hopefully it will come sooner than later :)