(Financial) Independence Day

By: Dan Sexton, CFP®

Independence Day is more than a holiday to grill hamburgers and hot dogs and shoot off some fireworks.  It is an opportunity for Americans to celebrate and ponder our own distinctive brand of freedom.  And, what that hard-fought independence means to each of us is as varied and unique as the people that make up the U.S.  But now that the BBQ grill has cooled, the ice chest is put away, and the smell of gunpowder has dissipated, I am left to wonder.  What does it mean to be financially independent?

When I had my first job, financial independence was having my own money to do with it as I please.  No longer was I beholden to mom and dad for an allowance where their watchful eye seemed always there scrutinizing every purchase.  But is that financial independence?  To a certain degree, yes.  Being responsible for the financial needs and wants of my family and myself without the help of others is being financially independent.  But now that I am older, that definition does not quite hit the mark; it seems lacking.  It is more like a baby step or right of passage on the way to independence.

What about accumulating as much money or wealth to buy anything you want and need?  Is that Financial Independence?  There is a cynical side of me that believes what the influential rocker of my youth, David Lee Roth, once said, “Money can’t buy you happiness, but it can buy you a yacht big enough to sail right up next to it.” (or something to that effect).  If I’m being honest, this does tickle that “Hell Ya!” attitude of youth deep in my soul.  But the undeniable truth is, the difference between happiness and sailing right up next to it, no matter how close you get, is vast.  Independence? Yeah, but not the kind I’m thinking of.

In the 25 years of providing investment and financial advice, I have learned a few things.  First off money…wealth…is not an end.  It is a means to an end (or goal).  It is a tool.  And you can do a lot more with a tool than without one.  Take a screwdriver for instance.  Imagine all the things you can do with a screwdriver that you can’t do with your hands alone.  Not only can it be used on screws, but it can also be used as a lever, a wedge, a chisel, and a punch; the list goes on and on.  Money is the same, it opens the door of possibilities.

Another thing I have learned is that wealth can afford many things and chief among those is choice.  It does not matter if you have a little or a lot, being able to have a choice of how our money is used to achieve our goals, provide security, and enrich our lives has provided more relief, confidence, and (dare I say) happiness in our client’s lives than anything else.   This is where Financial Independence thrives.

It is not about affordability.  The choice between “Can I” versus “Can’t I”.  It is about what is important and what works best.  It is the heady space of “Do I” versus “Do I not”.  The only obstacle, sometimes, is understanding what the options are.

Like any independence whether it is political, religious, or financial if there is no choice, what are we really talking about?  What does Financial Independence mean to you?