Introduction: The Skilled Trades Pathway to Financial Independence
1 Definition of Financial Independence
Anne Lee
Many Canadians dream of financial freedom. There is sometimes a myth that one needs to win the lottery or be lucky enough to receive a significant inheritance in order to obtain financial independence. Financial independence entails having sufficient savings, investments, and other passive income sources to meet an individual or family’s lifestyle means without further reliance on income from employment. The pathway towards financial independence can be for individuals starting at any age, wealth, or current salary level.
Example: Financial Independence Not Achieved
James is a Red Seal Endorsed bricklayer journeyperson. James has been employed with a trade union for 32 years and is entitled to receive pension income of $3,500 a month after-taxes, upon retirement from his long-term employment. James’ current lifestyle has expenses of about $5,000 a month. James is not considered to have achieved financial independence, as his state of expenses exceeds the predicted pension income he will receive on an ongoing basis. After James retires as a bricklayer journeyperson, he will still be required to earn further employment income to make up the difference in his continuing expenses.
Example: Financial Independence Achieved
Angela is a Red Seal Endorsed boilermaker journeyperson. Angela has been employed with a trade union for 15 years and is entitled to receive pension income of $2,300 a month after-taxes upon retirement. Angela’s current expenses are approximately $1,900 a month. Angela has achieved financial independence at this point of time, as her expected pension income will cover her lifestyle expenses each month. Even though Angela has gotten to a financially independent state, Angela can choose to work further as a boilermaker journeyperson so that her pension income will be higher in the future. Additional years of employment will assist Angela to incorporate an increased comfortable lifestyle upon her retirement.
Having financial freedom can be attained through a variety of approaches. Steps can be taken by any individual to build financial literacy, transform your life, and work towards financial independence.
the state of having enough assets and/or passive income sources to cover one’s living expenses in perpetuity, without support from further employment.
any income earned with little or no active effort, not to include such working hours as an employee
the state of having enough assets or passive income sources to cover one’s living expenses perpetuity without support from further employment. Also called financial independence
having the knowledge, skills, and confidence to make responsible financial decisions
