By Steve Garmhausen

Like "getting in shape," the term "financial independence" has the ring of being a worthy goal but resists a clear and universal definition. Thus, it's repeated liberally by everyone from pyramid-scheme promoters to FIRE obsessives to financial advisors. So for this week's Barron's Advisor Big Q, in honor of Independence Day, we asked a selection of advisors how they define the term. We hope their thoughtful responses help you to form a definition that inspires you.

Michael Novak, CEO and founder, Wellspring Financial Advisors: Financial independence relates to all kinds of capital. Unfortunately, we often focus only on financial capital. But there's also human capital, intellectual capital, social capital, and spiritual capital. I think all of them are supported by financial capital, and that's true financial independence. I'm the first of my family to go to college. When I was young, I was taught that you wash your own car, rake your own leaves, cut your own grass, clean your own gutters. I don't do any of those things anymore. Independence for me is now about funding the best use of my time. I'd rather spend time with family and my community than raking the leaves, even though I do enjoy that.

Financial independence to me is being able to do the things you want to do, provided you're living a sustainable lifestyle. A client and I have been thinking about writing a book about the lessons our clients have learned from their parents. This client told me that his mom used to say, "Spend and God will send." She thought, "I'm going to just keep spending money, and God's going to be there and give us more." I guess you're always independent if you think that way [laughs].

Misty Garza, financial advisor, Bogart Wealth: Financial independence by my definition means you are choosing to go to work because you want to rather than have to. You have the flexibility to make decisions that give you joy and excitement, rather than focusing on whether you can pay the bills for the month. When you reach that level where money is not the focus of your life's decisions, that's truly what financial independence is.

I think that when some people think of financial independence, they think of a certain net worth or an amount of money they need to have in order to feel they have financial independence. Financial security has more of an emotional component to it. For some people these can be the same, but for others, financial independence does not give the security they need. The idea of financial security usually stems from some sort of life experience or upbringing that has shaped their emotional connection. For some people, they will need a larger net worth to gain the financial security they desire later in life. For others, they may never feel secure enough even though we as financial advisors tell them they have achieved their independence.

Brian Parker, co-founder, EP Wealth Advisors: The basic definition is the ability to live the life you want now without affecting your future independence. The word "enough" is the key -- having enough for the lifestyle you want. People sometimes define rich in the monetary sense. I know a lot of people who could be defined as rich, but I would say they're actually poor. You can define rich as having enough money to do the things one finds enjoyment in. But what have they sacrificed to get there? What are their relationships at home like? Do they have hobbies? Do they have friendships? Have they all kind of eroded away as they've worked to increase their stack? If not, I would say that person is not winning.

I always talk about three pillars of happiness. If you have financial as well as emotional and physical well-being, you're winning. I'd say to that person who's trying to get that first job: Make sure your decision is made with your heart and not your head. If it's with your head, you may be choosing things based on the monetary outcome. But if you choose something that you're passionate about, you're going to be much more fulfilled and much more successful. And in many ways, in my mind, you'll be rich. You may not have a second home, but in reality I don't know how much happiness a second home actually gives. Yes, there are the few parties a year when you can show it off, but there's also additional stress around all the things that can go wrong with it. In my mind, life is about finding the trade-offs around having enough financial freedom that you feel empowered to do the things that you love.

Joe DiVito, private wealth advisor, RBC Wealth Management: At age 56 now, I would say my definition of financial independence has changed a bit. If you asked me when I was 36, it would be very simple: the ability to pay my bills and to have enough assets to retire comfortably. At 56, and being on several charitable boards, making an impact on my community and leaving a legacy plays into my definition of financial independence. A lot of my clients have that same mentality. I think that financial independence should include some philanthropic legacy. That's the view of an older, and maybe a wiser, person.

But the bare basics are full control. Do you have full control over how you live, how you spend your time, without having to worry about your finances? My life, my terms, no constraints? Is it simple? Is it stress-free, or are you trying to trade your account to get that financial independence? For me and for my clients, you want it to be stress-free, as low risk as possible. Chasing your passions is a big part of it. I love racing cars. If I could be that old guy on the Porsche Cup circuit, that would be part of my financial independence. My clients probably would also tell you that part of their independence is making sure they have taken care of multiple generations. Their family legacy is secure. They know their kids, grandkids, great-grandkids are well taken care of, or at least given a good head start to be successful.

Write to advisor.editors@barrons.com

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July 02, 2025 14:22 ET (18:22 GMT)

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