What does it mean to have financial independence? Better yet… what does it take to become truly wealthy in every sense of the word? True wealth and financial independence are two very different, but related, concepts. However, both require you to develop the right habits if you want to achieve real financial freedom and true wealth in your life.
In this article, I'll show you the difference between financial independence and true wealth, how they are related, and the 4 habits you'll need to develop to make them happen.
What is Financial Independence?
Wikipedia defines financial independence as “…a state in which an individual or household has sufficient wealth to live on without having to depend on income from some form of employment. Financially independent people have assets that generate income (cash flow) that is at least equal to their expenses.”
In other words, if you have enough money to stop working and live on what you have, you are financially independent.
What Does Financial Independence Look Like?
So, if you have enough money to where you will never have to work again, that's an awesome position to be in! But that's sort of a broad description of the concept.
What does it really mean to have financial independence? What does it look like when the rubber hits the road?
Well, lets give some examples that apply to everyday life:
- You have the freedom to choose any career you love, regardless of how much you make.
- You can choose to retire altogether.
- Freedom to travel when and where you want, without it straining your finances.
- Freedom to be generous without worrying about the financial ramifications.
- The ability to make better life decisions because money (or lack of it) is not a problem.
- You can handle a financial emergency with cash, and little to no stress, because you have the funds to cover it.
All in all, financial independence is strictly about money. When you have more than enough, it allows you to live life on your terms and make better life decisions.
But there is another level that many people don't achieve, and that is True Wealth.
Financial Independence vs. True Wealth
So, as you have seen, financial independence is all about money and the freedom it can buy. So what is true wealth, and how is it different?
First, let's look at a definition of true wealth I found on Quora:
“True wealth is having a sense of abundance – one that we experience rather than possess. … Seeking true wealth may mean seeking deeper relationships, more personal growth, or ways to create more meaning in life. Achieving true wealth means possessing the ability to enjoy the small, ordinary pleasures of life.”
As you can see, in this definition, money is never mentioned at all.
The thing about true wealth, is that the definition is a little different for everybody.
What is True Wealth?
For me, and for many of you, the definition of true wealth is about connecting with God. When you pursue God's principles for living by fully loving other people, fully loving yourself, and making an impact on the world in the name of Christ, then you are truly wealthy.
But that definition is a little vague in some respects. So let's tighten it up a little and list some of the things that come with being truly wealthy. When you have true wealth:
- You have peace, even when everything around you is chaos.
- You have the understanding that God's love overcomes any challenges you have had or ever will have. His perfect love allows you to love yourself fully and completely.
- Other people's lives are made better because of how you live your life.
- Your mission is to serve people in the name of God. This is done through business, ministry, or any other avenue that helps you help people.
- You are able to focus on the most important things in life, such as family, friends, your relationship with God, and your health.
- Generosity is more evident in your life. You have a higher ability and desire to be generous. You also have more resources to be generous.
I'm sure there are plenty more signifiers of true wealth you can think of. If you know of any I didn't list, leave a comment after the post.
True Wealth and Financial Independence are Compatible
One thing about true wealth, is that financial indepedence fits right in there nicely with all the things I just mentioned above.
Think about it, when you are financially independent, you have a greater ability to do all these things and more. An abundance of financial wealth is an enabler that allows you to live a bigger, better, more connected, more effective life than you can when you are struggling for money.
Not that you can't do some of these things if you're struggling. It's just that you can do much more of it when there is monetary wealth involved. Don't believe me? Consider these scenarios:
- Who can purchase more bibles to send to godless countries- a wealthy, financially independent person, or one that's struggling?
- Who can purchase more medicine to heal the sick?
- Which one can pay to dig more wells in Africa?
- Which person can feed more hungry people?
- and the list goes on…
“And God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work.” 2 Corinthians 9:8
Wealth Apart from God
The main thing though, is that financial wealth apart from God has the opposite effect. When it's not connected to godly actions and principles, then it's simply materialism. And we all know that pure materialism separates you from God. The question is: Are you going to be rich and happy, or rich and miserable?
4 Habits to Create True Wealth and Financial Independence
I'd rather be rich and happy. I'd rather you be rich and happy too! To help with that, I want to tell you about 4 extremely important habits you should be using to accomplish that goal.
Of course, these aren't the only 4 habits you'll need to reach financial independence and true wealth. But they are highly important and extremely necessary to make it happen.
Habit #1: Never Stop Learning- Read Every Day
Reading and educating yourself are essential to building your financial house. You should get into the habit of reading every single day about subjects that will:
- Challenge you to be a better person.
- Help you develop new skills.
- Show you how to think differently than the average person.
This means you should be reading your bible every day. After all, it is by far the best book on how to live a successful life there has ever been! Study it, believe it, and practice it!
Also, you should be reading plenty of nonfiction books on a regular basis. I'm talking about reading books about business, money, developing new habits, investing, self improvement, and anything else that helps you build wealth and create a better life.
The average millionaire reads at least two nonfiction books a month on the subjects I just mentioned. If you want to create financial independence and true wealth, it all starts with reading.
Here are a few favorite books I've read over the years that have helped me tremendously in one way or another:
Financial Peace by Dave Ramsey
The Legacy Journey by Dave Ramsey
Thou Shall Prosper- Ten Commandments for Making Money by Rabbi Daniel Lapin
Business Secrets from the Bible by Rabbi Daniel Lapin
The Morning Miracle for Millionaires by Hal Elrod and David Osborn
Rich Dad, Poor Dad by Robert Kiyosaki
The Cashflow Quadrant by Robert Kiyosaki
This is just a small sample of the books I've read over the years. Do you have any favorites you've read? Leave a comment at the end of the post and tell us your favorite!
Habit #2: Know Your Numbers
You should consistently keep track of where you stand financially. If you have no idea how much your assets are worth, how much debt you have, and how your investments are doing, how can you ever hope to achieve financial freedom?
These days especially, it's not hard keep track and have a complete picture of your financial position at any given time. Even if your investments are in one place, your bank accounts in another, and you have debt accounts spread far and wide, it's still easy to keep track.
A Great Tool to Keep Up With Your Numbers
I personally use Personal Capital to keep up with all my financial accounts. Every account I have is entered into one convenient dashboard where I can see it all.
At a quick glance I can see things like:
- How my investments are doing, including stocks, mutual funds, and my real estate investments too!
- My total net worth, and how it has changed over time.
- How much I owe in debt (I have no debt other than my mortgage).
- My various bank account balances and recent transactions.
- and pretty much any other personal financial information that I need.
I recommend that you go and set up your own account at Personal Capital ASAP. It's totally FREE, and will give you a ton of information about your finances on a level you've never had before!
You will be able to do what millionaires do, and know your numbers in intimate detail so you can make better financial decisions.
You can also read the review post I wrote about Personal Capital at the link below:
Habit #3: Hang With the Right People
You probably heard somewhere that you are the average of the five people you spend the most time with. I believe for the most part, that's true. The people you hang out with tend to rub off on you. So make sure you're hanging out with the right people!
If you're hanging with people who don't share your views and goals about building true wealth and financial independence, you should limit your time with them. That doesn't mean you should get rid of all your friends, but it does mean you should be careful their attitudes don't rub off on you.
I'm a big believer in engaging with people who are achievers. However, I'll admit this is something I've neglected over the years. Recently I've been challenging myself to get to know more successful people who are achieving big things.
I've recently met with awesome people like Cliff Ravenscraft, Aaron Walker, Vincent Pugliesi, Darren Rowse, Joshua Becker, Caitlyn Pyle, and others who are achieving big things. I'm also getting ready to join a mastermind group of like-minded people to help keep me moving in the right direction.
Habit #4: Give and Volunteer
Ok, so how could giving away time and money possibly increase your wealth? After all, time and money are valuable, and if you give them away, you have less of them to build wealth with.
Believe it or not, giving of your time and money is one of the most valuable things you can do to establish true wealth and financial independence.
First of all, giving allows you to truly understand the value of time and money. When you can give up some of what is so difficult to obtain, you tend to value it even more.
Second, when you give, not only does it make the lives of others better, it changes you in some very important ways. When you make the effort to give of your time and money, you feel better physically, mentally, and spiritually. You understand that your wealth is not all about you.
In fact, giving will likely spur you on to find ways you can earn more money while also freeing up more of your time so you can give even more!
I won't get deep into all the benefits of giving here. Here are some of my favorite posts on giving that will give you more details of the awesome benefits of giving:
Check out the CFF Giving Page– a complete list of all my posts on the subject.
Question: Do you know of any other habits that help build true wealth and financial independence? Leave a comment and tell us about the ones you're using.