Independence Day Special | 5 financial freedom myths busted

Plan meticulously to achieve financial freedom

The phrase "financial freedom" is in currency and thrown around at the first available opportunity but what does it mean? For many, it conjures up images of early retirement, lavish lifestyles or simply having "enough money". The reality, however, is far more nuanced.

Financial freedom is less about a number in your bank account and more about the peace of mind that comes from having a solid plan.

Let’s debunk the five most common myths and explore what true financial independence looks like:

Myth 1: High income equals financial freedom

Many assume that a large pay cheque automatically grants financial independence. But freedom isn't determined by income. It is shaped by how much you retain after commitments. A person earning Rs 2 lakh a month but tied down with EMIs may feel more financially constrained than someone earning half that with no liabilities.

Take the case of Rakesh*, a 32-year-old IT professional earning Rs 24 lakh annually. Despite his high income, Rakesh is buried under a mountain of EMIs — car loan, home loan and even for gadgets. Every month feels like a race to clear dues.

Income alone doesn't provide freedom unless your spending is in check.

Also read: Pursuing financial freedom: A step-by-step guide towards FIRE

Myth 2: Rs 1 crore is enough to retire

A figure like Rs 1 crore may sound impressive but it rarely holds up when mapped against long-term goals, inflation and increasing life expectancy.

With healthcare costs rising and retirement spanning 25–30 years, this number can fall short quickly. Financial freedom requires dynamic planning, not static targets.

Myth 3: Quitting your job means you are free

Walking away from job is often equated with freedom. In reality, it can lead to financial stress unless it's backed by passive income, emergency funds and a sustainable strategy. Freedom is about choice not compulsion. It's the ability to say “no” to financial pressure and “yes” to life goals.

Myth 4: Real estate or gold are the safest avenues

While traditional investments like gold and real estate have their place, they often lack liquidity and may not beat inflation consistently. Relying solely on savings without market-linked returns is risky. Over time, inflation quietly eats into savings.

Also read: Asset allocation in 2025: Optimise and diversify your portfolio to thrive in uncertain times

Myth 5: Saving alone is enough

Sejalben*, a retired teacher from Ahmedabad, relied entirely on her bank savings and gold holdings. She didn’t invest in mutual funds or equities. Despite a frugal lifestyle, her monthly income barely keeps pace with inflation. Had she begun a small SIP in her working years, she would have created a better safety net.

Put simply, financial freedom is not a destination marked by wealth alone -- it’s a mind set that necessitates planning, discipline and aligning money with your life goals.

Here’s a roadmap to achieving financial independence:

1 Being debt-free is the first step towards financial independence

EMIs have become a silent trap in the modern financial lifestyle. Cars, gadgets, even vacations are financed but each EMI chips away at your future. Being debt-free may not sound cool but it's the new luxury. The less you owe, the greater control you have on your life.

2 Start SIPs in your 20s, retire early in your 40s

Starting early is the biggest advantage. A Rs 5,000 monthly SIP started at 25 can grow to over Rs 50 lakh in 20 years. Wait till 35 and you'd need to invest over Rs 12,000 a month for the same outcome.

Discipline matters more than the amount. The earlier you start, the cheaper your financial freedom is.

3 Freedom from job or freedom from financial worry?

It’s tempting to think that quitting your job is the ultimate mark of success but financial freedom is about not being forced to stay in a job you don’t love. Work becomes joyful when you don’t dependen on your next pay cheque to survive. That’s real freedom—working by choice not by compulsion.

Financial freedom isn’t a one-size-fits-all milestone. It’s a personal, evolving journey. In a world full of noise, trends, and hype, stick to the fundamentals: live within your means, invest regularly, avoid unnecessary debt, and define what “freedom” means to you.

Remember it’s not about chasing a number but about building a life where money supports your goals and values. Start now. Stay consistent. And let your money serve your life — not the other way around.

(*Names have been changed to protect the identity and privacy of the individuals)