How do I define financial freedom? If an individual has the choice at any given moment to stop working for an active income and still maintain their chosen lifestyle throughout their entire life - then he (or she) is financially free. By 'active income' I mean having to do the work themselves to produce the income. The common misconception though is that to be financially free, one must possess monumental wealth. This is not true for everybody. As long as you are in keeping with this simple formulae, whereby your recurring monthly passive income is always greater than your monthly expenses (based on your lifestyle), then you are still considered financially free.
However, life throws curve balls at us once in a while. We've all been there. How about our car that suddenly breaks down and requires $500 in repair/replacements, or $1500 airplane ticket because of an unexpected family emergency? In this situation, you'd be out of balance if your monthly passive income is usually only slightly above your average monthly expenses.
So to refine the above definition, to be completely financially free, not only should your recurring monthly income be able to cover your expenses (based on your lifestyle) and then some, but you need to have enough cash reserves saved up for 'emergency' fund.
The ideal situation would be to be working in your current 'job' because you simply love it and not because you have to. It's a calling whereby you get abundance of joy and fulfillment from your contribution and making a difference in the world. The active income from it (if any) is simply a bi-product but not a necessity to 'make a living' from it. If one is in this position, I think this is where real creativity and productivity resides. One does not need to be distracted by thoughts of worry about how to pay their bills next month, but rather pursue excellence and fill their minds with things that they care about most. Interestingly, people in this kind of position end up with more financial abundance.
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