What is meant by "financial independence"?

Financial independence refers to the condition where an individual can sustain their desired lifestyle through income generated from investments, savings, or other passive income sources, without having to rely on a paycheck from active employment. This means that the person has sufficient assets and income that enable them to cover their expenses and live comfortably without the need to work for money actively.

This concept emphasizes the importance of building wealth and managing resources effectively so that one can achieve a state where they are not dependent on a traditional job for financial support, thus allowing for greater freedom in life choices and potentially reducing stress associated with employment. Achieving financial independence involves careful planning, budgeting, and often, a long-term investment strategy.

The other choices address various aspects of financial health but do not accurately encapsulate the essence of financial independence as defined above. For instance, simply earning more than you spend focuses on income and expenditure rather than independence from active work. Paying off debts is indeed a component of financial health but does not inherently mean one is financially independent. Lastly, accumulating wealth is important, but without the capacity to support oneself through that wealth without further employment income, one cannot claim to be financially independent.