What does Financial Independence Mean to You?

This is the step that everyone skips!

Author

Michela Allocca
March 18, 2025

🌷 I am back on the cape this week!! I haven’t been home since the holidays and it feels soooo good to be back with the fam for a little reprieve.

🚨 My new FI/RE Template is coming next week, so in the meantime make sure you KNOW YOUR NUMBERS!! Check out the Basic Budget Template to get started!!

MONEY
What does Financial Independence Mean to You?

Alright everyone the moment you’ve all been waiting for is arriving this weekend: my FI/RE template is READY!! She will be launching live on Sunday which means this week we will be talking about FI/RE!! Be sure to tune in on IG for the live updates.

ICYMI - a few weeks back I shared a newsletter where I discussed the 3 types of FI/RE - you can read it here as a refresher.

Today, we’re going to work through an exercise to understand what Financial Independence truly means to you.

A lot of people think retiring early means winning the lottery and riding off into the sunset.. which could happen but is unlikely. So instead, we need to think about what true independence actually means to you (it will look different for everyone!)

To me, FI means flexibility and choice. I want to choose the type of work I do and how much I work. I want the choice to take some time off if I need (or want) to. I want to minimize the pressure in my life and truly focus on working on things I genuinely enjoy!

For you, FI could look different. It could mean having the flexibility to take a sabbatical and travel. It could mean quitting your high-pressure 9-5 and becoming a teacher instead. Or, it could mean taking 6 months off every few years to travel.

Knowing your WHY and the what the true meaning of FI is for your life can help you better interpret and apply the numbers you calculate.

What I have found to be most interesting about calculating my FI numbers has been the career planning aspect of it all. At different benchmarks, you can actually make entirely different career decisions and determine how much you need to earn, rather than just focusing on climbing the latter up and up and up.

Here are a few questions to ask yourself:

1️⃣  What would you do with your time if money weren't a concern?

This question helps you identify your core values and true passions. Financial independence isn't just about having money—it's about the freedom to spend your life in a way that is truly meaningful to you. Would you continue working but on different terms? Travel more? Focus on creative pursuits or family?

  • What does your daily life look like?

  • Where are you living?

  • How do you spend your time?

  • What worries have disappeared?

  • What new activities have you taken up?

2️⃣ How much is "enough" for you to feel secure and free?

This question forces you to quantify your personal comfort level. Some people need $5 million invested to feel financially independent, while others might feel free with $500,000 and minimal expenses.

Consider: What annual expenses would support your ideal lifestyle? What safety margin would let you sleep peacefully? The number is personal, and highlights the importance of tracking your numbers regularly if you have no idea how to answer this question.

For me, I say that when I have $1M invested I’ll feel comfortable. However, I’ve learned for myself that those benchmarks are constantly moving. Running my FI/RE numbers has actually provided me a lot more peace of mind than just a benchmark.

3️⃣ What trade-offs are you willing to make today for future independence?

Financial independence typically requires a level of sacrifice in the present. This question helps you determine which current comforts or luxuries you're willing to forgo and which are non-negotiable. Are you willing to live below your means? Work extra hours temporarily and/or start a side hustle? Relocate to a lower-cost area? Your willingness to make specific trade-offs will shape your path to FI and timeline to reach your goals!

RESOURCES
What’s Happening This Week at Break Your Budget

  • This week on Don’t Depend on Daddy: I am sharing my Spring State of the Union!! What is In and Out for me this season? I am diving a little deeper than usual here. I want to hear yours too - what’s in and out for you right now?

  • Learn more about FI/RE!!: On Sunday, I shared a deep dive video on all the FI/RE topics including the types of FI/RE, important FI/RE concepts to understand, and so much more. If you’re interested in running your numbers, you need to watch this!

LOOKING FOR MORE?
Check out ALL of my Money & Career Resources!

xoxo,

Michela