Many Americans aspire to achieve wealth and financial independence. Yet, the path toward getting there can often seem unclear or daunting.

While only 12% of Americans consider themselves wealthy, 58% believe they need to make at least $100,000 just to cover daily living expenses. But many people misunderstand financial independence, thinking it’s about earning a high income or saving large sums of money. However, true wealth and financial independence aren’t defined by what’s in your bank account—they are about freedom, choices, and living a life free from financial stress.

What It Means to be Financially Independent

At its core, financial independence means living your life the way you want, free from financial worry. With this comes the ability to make decisions based on your desires and values rather than financial constraints.

“Money doesn’t buy you happiness, but it buys you choices,” Danielle Darling, LPL Financial Advisor at Resource One Advisors. “The ability to say yes to opportunities without stress is what financial independence is all about. True financial independence isn’t just about wealth; it’s about designing a lifestyle that feels fulfilling.”

Key Habits for Achieving Financial Independence

When it comes to achieving financial independence, it’s not just about working hard or earning a high income. It’s about having the right mindset and habits, like saving and investing, to set you up for long-term success.

Invest

By starting to invest as soon as possible, you allow your money to work for you, grow it over time, and build the financial cushion needed to eventually become independent. You can diversify your portfolio and maximize your returns with various options, from stocks and cryptocurrency to real estate and mutual funds.

“Even small contributions can go a long way over time, especially when you have the power of compound interest on your side,” Darling said.

Save

Save your money consistently to build a strong financial foundation. Whether it’s a high-yield savings account, a certificate of deposit (CD), or a retirement account, ensure you’re setting something aside. Those who consider themselves independent prioritize saving a portion of their monthly income, regardless of how small, to ensure long-term financial stability.

“They pay themselves first by automating their savings and investments, making their financial future a top priority,” Darling said.

Saving and investing can be difficult without discipline. This doesn’t just require you to pay yourself first or invest wisely. It often means delaying gratification in favor of securing your financial future. It might be tempting to indulge in fleeting moments of pleasure, but if you overdo it, it could cost you your long-term financial stability and freedom.

“Discipline and sacrifice are essential. Financial independence requires living below your means and prioritizing long-term goals over short-term desires,” Darling told Investopedia.

Common Misconceptions About Financial Independence

A major roadblock to achieving financial independence is the misconception that certain factors automatically guarantee wealth and financial freedom. People often misunderstand the relationship among income, lifestyle choices, and wealth accumulation.

For example, many people believe that high salaries automatically lead to wealth, but this isn’t necessarily true. You can make a salary that should allow you to live comfortably, but without careful financial planning, you could have little cash to save and invest.

“Achieving financial independence requires managing your money with discipline and living below your means, regardless of your income level,” Darling said.

A Bank of America study showed that nearly 50% of Americans reported living paycheck to paycheck. This isn’t solely a problem of income level; it’s often poor financial habits and decisions and a lack of budgeting. Even high-income individuals can find themselves in this cycle if they consistently spend beyond their means.

“It’s not about what you make; it’s about how much you keep. You can be earning a six- and seven-figure salary, but if you’re living paycheck to paycheck, spending excessively, or not saving and investing wisely, you’ll never build wealth,” Darling said.

Higher-income households living paycheck to paycheck spend about 95% of their earnings on necessities, but this is partially the result of the decision to purchase larger, more expensive homes that come with higher mortgages, insurance, utility bills, and property taxes. This is just one example of how certain choices can limit an individual’s ability to save and invest, ultimately hindering long-term financial goals.

The Bottom Line

Financial independence goes beyond large savings and high income; it’s about designing a life that reflects your values and goals. It means making decisions without financial stress, knowing you have a safety net.

With the right mindset and habits, anyone can take steps toward financial freedom, but focusing on how you manage and grow your money is the key to getting there.