#257 Financial Independence vs. Financial Freedom: Which One Are You Really Chasing?

Hey, everyone. Hope you've had another amazing week. Welcome back to the Passive Income MD Podcast. I'm your host, Peter Kim, and today we're diving into a topic that I hear so many physicians talk about. It's these concepts of financial independence versus financial freedom. Here's my question. Which one are you really chasing? Are they different? Are they the same? We're going to dive into that in this episode, so stay tuned. Welcome to the Passive Income MD Podcast, where we talk about creating your ideal life through multiple streams of income. If you enjoy hearing about this stuff, make sure to hit subscribe. Now, let's get on with the show. Okay, so when you talk about financial independence versus financial freedom now, these two terms, they. I know they often get used interchangeably, but actually they're quite different. Now, I believe there's a distinction here that, if you can understand it, can help you clarify your financial goals and create a path that really aligns with what you want in life, that ideal lifestyle that you're looking for. I know that many physicians maybe like you listening to this. You find yourself on this, like, relentless hamster wheel where you feel like you're spinning harder, you're working harder and harder, hoping things will eventually get better, but it doesn't seem like you're getting ahead. Where is the income at the end of the day? At some point, you finally arrived at what was called the promised land, or you became an Attending. It's like that milestone of graduating residency and fellowship, and you realize maybe it's not all that it's cracked up to be. You still have these long hours, endless paperwork. You have this feeling of always being on call. And there's a cost to this. Not only mentally, emotionally, physically. Probably many of you have already sacrificed time with your families that you can't get back. You've missed out on some of your child's early years by working, and you wish you were there for that. Maybe you're at a point now where you'd love to travel more, but your kids are a little older, they're busier. Little bit like, my kids are starting to get a lot busier now in school with activities. And it feels like travel is starting to get a little bit more difficult. And so most of us are doing the thing that we don't want to do. We just trade our time for money, meaning that we only get paid when we show up, and when we don't, we don't get paid. The problem is, anytime we go on vacation, it's like a double whammy. Since we're not working. It's like we're spending money, but we're not making money either. And it doesn't feel good. But what if we thought about this differently? We didn't accept that. What if we designed our lives to prioritize our time, flexibility and freedom? I mean, this is why I think it's crucial to think about these terms, financial independence and financial freedom. Understand them really well so that we can have a goal. Ultimately, it's not about money, it's about having choices. So let me ask you, which one are you going for? Is it financial independence? Is it financial freedom? Does it matter? Let's talk about these terms and figure out where you are on your journey and what your goal posts are. So let's start with financial independence. Some people call this fi. I believe this is when you have enough passive income through your investments, rental properties, maybe your other income streams to really cover your essential living expenses. And what I mean by living expenses are things like your housing costs, whether that's rent or your mortgage, your utilities, your groceries, transportation, your insurance, health or home or your auto. You have different loans that you got to pay off, maybe some of your basic medical expenses, and then just normal, necessary day to day costs to maintain a basic lifestyle, maybe of education costs for your kids, for example. Now what if your passive income covered this? Now we've talked about so many ways to make this happen. That's not for this talk, but we're going to talk about this concept. If you reach this point of financial independence, that means that you could choose to step away from your job, you could have the basic necessities covered. But if you want the true lifestyle that you want, you want some extras for like travel, hobbies or some luxuries out there, you're not quite there yet. Now let me talk about FI and what I think some of the key characteristics are. Again, work is optional, but maybe you still choose to work for additional income or a little bit of personal fulfillment, or because you want a little bit more in life to step it up in terms of a lifestyle. Like you built those income streams through real estate, through some of your businesses. Maybe the stock market has already started to create dividends for you, maybe some other investments that you've done, and your focus is just covering your basic needs, not your wants. For example, let's say you're a physician with a portfolio of rental properties. You've been building this up through rental properties and passive real estate investing, like syndications and funds. And now you're generating $15,000 of passive income a month and your monthly expenses. When it comes to all of this, you factor everything together, come out to about 15,000. You reach financial independence because your passive income meets and covers your basic needs. Hey everyone, this is Peter Kim. I've got some exciting news for those of you thinking about taking your career Beyond Clinical Medicine. PIMDCON 2025 is officially happening this September 25th through 27th in Newport Beach, California. Now, this isn't your typical conference. It's designed specifically for physicians like you, those who are exploring science side hustles, thinking about starting a business, or wanting to learn how to invest in passive real estate. Now, at pimdcon, you'll hear from top experts, investors and entrepreneurs who've been in your shoes and are ready to share what works. Now, we built this event with you in mind with Taylor tracks focusing on real estate investing as well as entrepreneurship. So whether you're just starting out or looking to scale, there's something here for you. And if you can't join us in person, we've made it easy for you to participate virtually from anywhere. Now, if you've been thinking about creating more freedom in your life, financially or professionally or time now this is your chance to take the next step. So head over to pimdcon.com to grab your ticket. I hope. See you in Newport Beach. It's going to be an incredible weekend of learning, connection and inspiration. What if you want to live a little? And I think that's the life that most of us want. You want to travel, you want to make an impact on the world. You have some philanthropic really goals that you want to meet. You want to take care of your family, you want to take care of your parents or your loved ones. That's where financial freedom comes in. So let's talk about financial freedom, or instead of fi. Some people call it ff, whatever it is, but financial freedom is the term that I like to use now. This is the ultimate level. This is where money is really not the deciding factor in any of your choices. Like, you have enough wealth to fully fund your ideal lifestyle without having to worry about making money for trading that time for money. Now, what this might include, it might look like this. You have the freedom to live life on your own terms without financial stress. Like, who wouldn't want that, right? You can spend on your needs and your wants without worrying about depleting your wealth. There's not a scarcity there, there's an abundance there. You have multiple income streams or a really amazing portfolio that continues to grow even after covering your expenses. Now, how do you get this? Some of the investments and things that we've talked about in the past, but I know of a physician. He happened to sell his medical practice. He sold it for millions. He took that and put it into investments that create cash flow. And now he doesn't have to even think about money. Again, that is financial freedom. What if your real estate investments can got to the point where they far exceeded your basic needs? And more, what if you worked again because you wanted to, not because you had to? I believe at this stage, the focus shifts from making money to making an impact. Whether it's through philanthropy, like some passion projects, mentorship, you have the time and the ability to do that. Your focus is on your family. So again, to summarize, financial independence, it's more about covering your needs. And while financial freedom is more about abundance. Now, I know most people think that once they reach FI, it feels completely free. Now, I found it not to be the case. I feel like it gives you options, but when you get to financial freedom, that's when you feel completely free, like you have unlimited choices. I think this is very personal and individualized too. What's enough for you? What do you want? What do you want your lifestyle to look like? And again, that's up to you, your family, and your personal preferences. I know what mine looks like. Mine is working because I want to. Mine is finding great places to impact the world through money and time and energy. It's running this platform called Passive Income MD where I get to connect with so many amazing physicians, and we're able to create communities around this stuff. And I just really enjoy it and enjoy the impact that this podcast and hopefully our community makes. It's about traveling with my family, creating extraordinary, amazing moments that I know we'll be talking about for years to come. It's about living a life without regrets. It's about maximizing my time before my health changes. It's about having fun and living passionately again. It's not about the money, but without that money, without that passive income, this doesn't happen just practically. So what are you shooting for? Are you shooting for financial independence? Are you shooting for financial freedom? Did you think that there was a difference between the two? You know, at the core, we went into medicine because we want to help people. I believe that people, once they reach the stage and out of abundance, they continue to help and serve in a great way. Maybe you don't agree with me, but I think we would get bored just sitting on a beach every single day. We're meant for more. We're meant to give more, to be more. I think people in this community want that for themselves and their family. So if you know what the goal is, what are the steps that you're taking to get there? That's my next question. I'll let you think about that. But in the meanwhile, have an amazing week. Thank you for being part of our community, and let's talk again soon. Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us in. And if you haven't already, make sure to hit subscribe. Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. Learn more at our website, passiveincomemd. Com. Thanks again for allowing me to be a part of your journey. See you next time.