I have often wondered, specially when I read a lot of financial planning related articles, whether financial independence is an end in itself. A lot of financial planning is geared towards basically creating a corpus for a goal like retirement which can replace your current income stream in inflation adjusted terms. And it is all good when they profess getting out of debt, preach high rates of savings that are put in a manner across asset types to provide returns that enable oneself to reach that goal.
But I sometimes wonder whether financial independence can really be defined? And while the pursuit of that has been one of the key motivators of my life, I have sometimes wondered whether that pursuit of a financially free tomorrow has left me in chains today.
That’s where I realized that, perhaps, the goal of achieving financial freedom is not an end in itself. And while it is good to have a financial plan and work towards it (in fact, highly recommended for most individuals), a blind following of the same, specially without purpose, may be closer to slavery than to freedom. Also, I think the point of financial freedom can, perhaps, be defined to be the one where the marginal utility of having more money diminishes in the eyes of the individual. And this point is likely to be different for different individuals. Basically, from that point, 5 times more money will not make one 5 times happier. You may still continue to chase money beyond that, but in non-financial terms, you are already free from that point. I guess if an individual can carefully assess what that point is for himself, it would serve him well to make financial independence a good journey rather than a destination in itself.
So by all means, the pursuit of financial independence is a very worthy goal, but if one adds to it, a purpose as to why one wants to be financially free, and determines a point at which the marginal utility of money keep diminishing – the journey can be truly fulfilling and make life itself much more rewarding.