How important is our financial independence?

If you Google ‘financial independence’ and ‘women’s financial independence’ you get two different definitions. 

Financial independence, lots of industry blogs and other such nonsense say, is about having enough passive income to cover your lifestyle and potentially even retirement. It means not having to work, basically.

Women’s financial independence seems mainly defined as having enough money to make your own decisions and meet various spending or savings goals. Even just being debt-free is an example of financial independence for women apparently - a far cry from living solely off your investments. 

Potentially sexist undertones aside, only the second of these definitions is important. Having an emergency savings fund to be able to leave an abusive relationship or job, for example, is something we should strive for everyone to have access to, or being the only person making decisions about your paycheque.

The first definition undermines the second, so is very much not important. For example, you buy a house so you can live off the money you make squeezing rent out of another woman. Replicate that over and over, and you get the picture. 

Independence and equality

Beyond providing security, the importance of financial independence is up for debate. On an individual level, you might see your work-life balance, or other factors, as more important than your financial independence. On a broader level, what is important is making sure everyone has access to these kinds of choices, and isn’t, say, forced into financial dependence because childcare costs are too expensive. 

Also part of the wider picture is whether women’s financial independence has any bearing on women’s equality. Some say an increase in women’s financial independence (51% of UK women now feel financially independent apparently, up from 45% last year) has helped elevate women’s voices, or as one article channelling quite a sexist vibe put it, it gives women “credibility to participate in important matters of decision making”. Yikes.

Women are also thought to make ‘good decisions’ when financially independent, probably by the same people who think we need help getting our little heads around budgeting or are more risk averse when it comes to investing, by channelling more to our families and communities.

But there isn’t really a tangible link between independence and equality because there is very little discussion around financial independence outside existing labour markets, which are unequal.

Action of the week: What do you think about these debates and how important do you think financial independence is? Let us know.