“I’m living so far beyond my income that we may almost be said to be living apart.” E.E. Cummings.

This quote expresses the sentiments of many who long to be free to pursue their dreams without worrying about where their next paycheck will come from. In short, they want financial independence.

Financial independence is having enough personal assets generating money to be able to live without having to actively work for the necessities of life. Financial independence is important because it allows you to maintain your lifestyle if you become disabled or lose your principal livelihood.

There is no magic age by which you should be financially independent, but the sooner you start saving, the sooner you will achieve your goal. As Groucho Marx says, “Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy.”

The path to financial independence begins with having more income than expenses. Rule No. 1 given by financial experts is: save as much as you can.

Benjamin Franklin’s quote, “If you would be wealthy, think of saving as well as getting,” applies to insurance as a step in achieving financial independence.

Studies show that more than 90 percent of Americans buy the wrong types and amounts of insurance coverage. Whether it is health or home insurance, you can save money by avoiding unnecessarily high premiums; at the same time, you get protection in the event a financial catastrophe occurs.

However, you do not want to simply purchase the cheapest insurance available. Rather, you want to buy the cheapest insurance that gives you the amount of coverage you need.

Insurance is designed to protect against catastrophic loss, not small bumps in the road. One way to save on premiums year after year is to have a high deductible.

For example, your home insurance needs to cover the cost of rebuilding your home if it were destroyed by fire or tornado; it does not need to cover the cost of replacing a window.

Simply by raising your deductible, you can immediately start saving the money needed to achieve financial independence.

Erika Stewart is a freelance finance writer for many online publications.

The focus of her writings are mainly about personal finance, frugal living

and insurance. She has written many articles about personal

finance and insurance guides that were published in different websites

and weblogs.

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