The Difference Between Financial Independence & Being Financially Comfortable

Meeting financial goals requires proactive planning that spans years.
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While there’s no financial industry standards that define concepts such as independence and security, common explanations describe these different goals. Financial independence means being able to pay your own bills, while living comfortably often means being able to afford basic lifestyle amenities while funding long-term needs without stress. Knowing how to budget as your needs change throughout your life will help you achieve your personal financial goals.

Financial Independence

In its truest sense, financial independence means you can pay all of your bills without loans, employer advances, family money or overwhelming credit card debt. Early in your life, this might mean being able to pay your living expenses, but not necessarily setting aside savings. While you won’t rely on your folks to help you, you know they’re there in an emergency. Credit cards can help you temporarily pick up slack, but you can pay them off each year. As you age, you’ll not only need to pay your monthly bills, but you’ll also need or want to address how to fund your retirement, set aside cash for emergencies, save for a house down payment, help your children with college costs, supplement your health insurance and perhaps carry life insurance.

Living Comfortably

Living comfortably means different things to different people based on their incomes. For those living on a budget, it might be living stress-free because they can pay all of their bills and meet their savings goals. As you make more money, it might mean having extra to spend on an annual vacation, wardrobe additions, joining a fitness center, going to dinner and a movie and getting a new car every few years. As your income rises and you start to hang with others who make larger salaries, living comfortably might mean being able to spend money on more things you want, but don’t necessarily need. This might include putting in a spa bathroom or granite countertops, getting leather seats and a moon roof on a more expensive car, taking a Caribbean or European vacation and spending more on clothes. These expenses aren’t necessarily extravagant, and you might need to budget for them, but you’re able to make these purchases without stressing about going deep into debt.

Comprehensive Financial Planning

One of the best ways to become financially independent and move to a comfortable lifestyle is to create a comprehensive financial plan. Even if you’re fresh out of college and don’t feel a need to start your retirement or kids’ college fund yet, planning on when you’re going to do that will help you control your costs and spend your money wisely now. Meet with a financial planner and discuss a long-term plan that includes the following: retirement accounts, life insurance, house down payment, investments, college fund and tax planning.


The easiest way to get to financial freedom is with a personal budget. It’s easy to create a budget using a simple spreadsheet and last year’s credit card and bank statements. List your recurring monthly expenses and average them. List one-time or semi-regular expenses, such as auto insurance premiums, holiday gift giving or a vacation and divide them by 12. List your income sources and average them per month. Subtract your average monthly expenses from your average monthly income to determine if you need to cut your expenses to become financially independent. Create a cash flow statement that shows the exact dates you’ll need to pay each bill, rather than using averages. Insert your income into this document based on when it arrives, rather than when it’s earned. This will help you keep enough cash on hand to pay semi-regular bills, such as quarterly insurance premiums, without having to call mom and dad for help.

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