What does "financial independence" entail?

Financial independence refers to a state in which an individual can sustain their desired lifestyle without needing to rely on employment income. This involves having sufficient savings, investments, or other income sources that can cover living expenses comfortably. Those who are financially independent often have built a diversified portfolio of assets and passive income streams that provide stability and security without the necessity of actively working for a paycheck.

The concept is not limited to any particular source of income; thus, while it could potentially include part-time work as a supplementary source, it fundamentally means that the individual does not have to work to maintain their living standards. Achieving financial independence allows for more freedom and flexibility in how one chooses to spend their time, whether that involves pursuing passions, traveling, or enjoying leisure activities without the stress of needing a job for financial survival.

Other options do not capture the essence of financial independence as effectively. For example, while eliminating debt is beneficial for financial health, it does not equate to independence by itself. Similarly, the ability to avoid expenses is unrealistic and unsustainable since everyone has essential living costs. Hence, living comfortably without employment income truly encapsulates the idea of financial independence.