Becoming financially independent means that you no longer need to rely on a paycheck. But the benefits of not needing employment to maintain a good lifestyle stretch far beyond the financial numbers. Here are a few additional perks to look forward to once you no longer have to wait for payday:
You will be much less stressed out. It's no secret that money decisions add stress to many people's lives. But it may surprise you to learn that much of the tension in other areas of your life could be indirectly caused by a lack of funds. When you are no longer trying to squeeze every last cent out of your career, you won't have to deal with a stressful job just because you need a paycheck. When the difference of a dollar is less important to you, you can shrug off situations where you paid more for a service or product. You will be much happier when money doesn't drive every decision in your life.
You will have more energy for self-improvement. As your stress level comes down and you spend less time worrying about your finances, you'll become much more interested in improving other areas of your life. Many people would like to eat healthier, but not everyone actually has time to cook and learn what healthy eating actually entails. And almost everyone you meet would probably like to improve their relationship with close friends and relatives, but not everyone has the energy to do what it takes to build and maintain their bond with others. When you attain financial freedom you also gain more time to do the things that really matter.
You will have more opportunities to think long term. This sounds counterintuitive, but you may be able to increase your wealth even more by not making your every move about money. Many people will never leave their job to work on something they're passionate about because they really need that paycheck. But working on what you truly enjoy is one of the most effective ways to make more money. Without the worry of short-term financials, you will be able to pursue your dreams, which might actually turn out to be the best financial decision over the long haul.
Thinking long term can be beneficial for your investments as well. As your assets grow, the day-to-day volatility will affect you less and less, which gives you the ability to take more risk for potentially higher returns. This topic is complex and should be weighed against your risk tolerance. After all, why would you even want to chase higher returns when you already have enough money stashed away in low-risk investments? But the opportunity to aim for a higher return is there as your financials improve.
Financial independence has obvious financial benefits, but the net positive effect reaches far beyond your bank account. No longer needing a paycheck gives you the freedom to do what you truly want to be doing without needing to worry constantly about money.
David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.
- Banking & Budgeting