Show me the money ? How do you define "financially free"?

Someone asked this question on Linkedin and I decided to share my two cents since it is a question I ask myself almost everyday. Below is what I answered.

This is the exact same question I ask myself every waking moment, especially since I'm nowhere near there. :(

To me, "financially free" or "financial freedom" or "financial independence" all refers to the state where you no longer need to "work to live" but rather you "live to work". i.e. You have a net worth that is enough to sustain your desired lifestyle from now till the very day you leave this world.

I believe most people will agree with me up to this point. The next logical question to ask is then "what should this net worth amount to in today's dollar?" and here is where it gets personal and subjective.

To the risk adverse, this magic number will probably be obscenely huge and requires you to work till you kick the bucket (or alternatively strike the lottery _a_few_times_) as they factor in high inflation rates, zero return on investment (i.e. spending the base amount and not investing it), providing for their kids, parents, grand parents, grand children, ... (you get the idea) and even throw in a few exceptions aka worst case scenarios (like accidents or suffering from critical illness although this should really have been taken care of by proper insurance planning) for good measure.

Likewise for the materialistic folks whose desired lifestyle includes a jet, Rolls or Zonda, an estate perched on a cliff overlooking the ocean, wardrobe decked out in Prada, LV and Gucci, this number will probably be something that only 1% of the population can really claim to have or your surname happens to be "Buffett" or "Gates". (ok, I'm exaggerating here)

To the easily contented and happy-go-lucky folks, this number can be reached well within their working lifetime. But bear in mind that this number will probably be a moving target (usually upwards) as your situation changes (desire for higher lifestyle, having more kids than expected, etc) and being influenced by this global economy (I attribute all these to capitalism being evil but lets not open that can of worms)

In short, "financial freedom" is really a state of mind for most people and all boils down to your expectations and the amount of risks you are willing to take and adjustments you are willing to make.

Of course, all this means zilch to the filthy rich who can truly afford to say that and never have to worry about it in the first place... Hmm... Hey Bill, are you by any chance looking for a godson? :)