What does "financial independence" mean?

Financial independence refers to the condition in which an individual has amassed enough personal wealth that they can cover their basic living expenses without the need to actively work for a salary or wages. This can mean having sufficient income from investments, savings, or other sources that meet one's financial needs, allowing for greater flexibility and freedom in one’s lifestyle choices. It signifies a form of financial security where one is not dependent on employment for basic necessities, thereby providing the opportunity to pursue passions, retire early, or simply enjoy life without the usual constraints of traditional work commitments.

In contrast to this concept, the other options either reflect a lack of independence or misconstrue the financial independence idea. For example, working part-time does not necessarily equate to financial independence, as one may still need to supplement that income with active work. Similarly, a large debt-to-income ratio indicates financial stress rather than security, and relying solely on government assistance suggests a dependence rather than independence. Hence, the correct definition revolves around having sufficient wealth to become financially self-sufficient.