In today’s society, the concept of “making it” is often associated with achieving financial independence. But what does it really mean to be financially independent? Is it about having a six-figure salary, a fancy car, or a prestigious job title? Surprisingly, it appears that most Americans have a simpler and less materialistic definition of financial independence.
According to recent research conducted by Empower financial services, 67% of the 2,000 adults surveyed in the United States identified reaching financial independence as the most important marker of success. However, achieving this milestone is not as common as one might think, with less than a quarter of respondents claiming to have attained financial independence.
The Changing Definition of Financial Independence
Traditionally, the American dream involved finding a fulfilling job, moving out of the family home, and settling down. However, young people today face skyrocketing rental costs, heavy student debt burdens, and a challenging job market. As a result, achieving financial independence has become increasingly difficult.
In fact, over half of the survey respondents admitted to still relying on their family and friends for financial support. This assistance often includes help with rent, internet and streaming services, and phone bills. Given these circumstances, it’s no wonder that Americans believe they need a staggering $233,000 to live comfortably in today’s economic climate.
The True Cost of Financial Freedom
Despite the high price tag associated with a comfortable lifestyle, the average American actually believes they would need to earn around $94,000 per year to achieve financial independence. This figure is significantly higher than the median household income of $74,580, indicating a gap between aspirations and reality.
Strategies for Achieving Financial Freedom
While the idea of financial freedom may vary from person to person, there are several common ways in which individuals define it. For some, it means being able to rely on passive income instead of working a traditional 9-to-5 job. Others view financial freedom as the ability to live independently without relying on financial support from family and friends.
According to the survey, 92% of financially independent adults only started feeling that way after reaching the age of 36. This suggests that financial independence is often a long-term goal that requires time and effort to achieve. Establishing clear financial goals is crucial in working towards a more secure and satisfying financial future.
Signs of Financial Independence
The survey also revealed the top 10 signs that Americans associate with having “made it” financially. These signs include:
- Being financially independent and not relying on anyone else for money (44%)
- Advancing in one’s career and receiving promotions (39%)
- Having a job that brings joy and fulfillment (37%)
- Earning a certain amount of money (25%)
- Not having to work at all (25%)
- Being able to spend money without worrying (22%)
- Paying bills on time (9%)
- Affording luxury items (7%)
- Retiring comfortably (7%)
- Owning a home (6%)
It’s important to note that these signs may vary from person to person, and it’s crucial to define financial independence based on individual circumstances and goals.
Conclusion
Financial independence is a highly sought-after goal for many Americans. While the traditional markers of success, such as a high salary or luxury possessions, may be desirable, most Americans believe that financial independence is the ultimate measure of achievement. However, achieving this goal can be challenging in today’s economic climate, with rising costs and a difficult job market. It’s essential to establish clear financial goals and work towards them to pave the way for a more secure and satisfying financial future.
Remember, financial independence is a personal journey, and everyone’s definition may differ. By gaining clarity on what financial independence means to you, you can create a roadmap to achieve your own version of success. Whether it’s living off passive income, escaping the need for financial support, or reaching a certain net worth, financial independence is within reach with dedication and smart financial planning.