This is a guest post by author and financial journalist Jonathan Chevreau.  Jon is editor of MoneySense Magazine and the author of the book Findependence Day.  

Roger has kindly asked me to write another guest post for his blog. Earlier this summer my maiden effort here – Forget Retirement Seek Financial Independence – seemed to strike a chord so I thought I’d flesh out some of the thoughts there.

When I Google the word retirement, I get 176 million hits.  Surprisingly, financial independence gets a healthy 73.4 million hits. I’d have guessed the word Retirement would get ten times more hits, not just twice as many.  There are still many more books about Retirement but books on Financial Independence seem to be on the rise.  Google “financial independence books” and you’ll find several titles.

Finally, findependence gets a mere 17,000 hits but that’s because it’s a neologism or invented word. Strangely, “Findependence Day” gets 347 million hits but that’s because Google interprets the search to include Independence. Narrow it down to just “Findependence” and it’s a more realistic 100,000 or so.

No matter. So what exactly is the difference between the terms Retirement and Findependence? For starters, let’s link to an excellent essay that appeared last week entitled 7 Reasons Everyone Should Reach Financial Independence. These are all good points and the article certainly provides some food for thought. Some points are inherent in my own approach to Findependence; others I hadn’t explicitly considered.  Here’s my own take on the seven points.

The Ultimate Unemployment Insurance

This is certainly one of the key attributes of Findependence as I’ve always viewed it. If you’re not findependent then by definition you’re living paycheck to paycheck, which means that if you do lose your job, you’re at the mercy of those who dole out the rather minimal amounts of unemployment insurance – assuming you even qualify and can jump through all the hoops.

Freedom to Live and Work on Your Own Terms

This is the essence of my vision of Findependence.  Even if you choose for the time being to remain employed, as I say in Findependence Day (the novel), you’re working because you CHOOSE to, not because you MUST (financially speaking).  Of course, Findependence also makes it more likely that you can go out on your own as a consultant, freelance writer or speaker or entrepreneur: as with Point 1, you’ve established a steady stream of income that will be coming in whether or not your cultural or entrepreneurial ventures get off the ground in a reasonable amount of time.

License to Take Risks at Work

This is another aspect of Findependence I’ve noticed in my own career. In fact, I wrote the original edition of Findependence Day while I was a salaried staff writer at the Financial Post and wrote the revised all-American edition as a salaried employee in my current position, editor of MoneySense magazine.  I’ve called this financial novel a “financial love story,” but I’m not sure I’d have gone out on such a limb if I were still paying off a mortgage and felt I had to cleave 100% to the company line.

Extra Spending Money

I can’t say I had given this one much thought before but no doubt it’s true. If you still have a day job AND you have investment income coming in and building up, it goes without saying that some of that extra cash flow can be diverted into spending on some really nice stuff. Personally, I believe in “Freedom, Not Stuff!” (to use a line from the novel), so I’m inclined to stay on the path to guerrilla frugality (another term I use), eschewing conspicuous consumption and thereby speeding the arrival of Findependence Day, or even the traditional Retirement Day. (I explain the difference on my own blog at www.findependenceday.com.)

Freedom to Pursue Entrepreneurial Ventures

Findependence means you can put some capital at risk and you take a large chunk of time to develop a business idea or creative project you hope will ultimately generate financial returns in the future.

Retire Early or Very Early

This point reinforces the concept that Findependence and Retirement are NOT the same thing. You need findependence to retire but you can also have Findependence and choose NOT to retire in the traditional sense of the word (that is, gold watch at age 65, followed by endless rounds of golf, bridge and daytime television).  Conversely, if you have NOT achieved Findependence, it’s madness to try to retire.

Spend more time with your family  

Sure, and I’d add “Spend more time at whatever your passion is.” Hopefully we all feel passionate about the immediate members of our family. Spend more time being a painter, or musician, or stand-up comic, whatever your passion, you can be sure that a degree of Findependence will allow you to spend more time on your chosen activity.  One way might be semi-retirement or phased retirement. If you’re findependent but still gainfully employed you may want to go down to a four-day week, thereby having three-day weekends that can be spent with your family.  Assuming they themselves are still on the five-day week you could do the various chores on the Friday or Monday, freeing up the traditional two days of the weekend to focus on family.

Jonathan Chevreau is editor of MoneySense Magazine and can be reached at jonathan@findependenceday.com.  His book Findependence Day  is available at Amazon.com, Barnes & Noble.com and Trafford.com.  Jon is a must follow on Twitter. 

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