It was in 2022 that Collins Dictionary picked permacrisis as its word of the year, but the word still seems to have resonance.
In a chaotic world, human nature sees us grasping for areas of control wherever we can; low uncertainty being a key driver of wellness. Chaos in modern society is usually felt foremost as economic anxiety. Politicians know this well, as evidenced by the current federal platforms being released.
Clearly making this point, 42 per cent of Canadians
cited money as their top source of stress
in the 2025 Financial Stress Index, which was significantly higher than health, the second-highest stressor, at 21 per cent.
Since modern life is highly structured around money, concepts around financial independence continue to gain interest. What does it mean to be
financially independent
? Simply put, it typically means you don’t have to work a regular job to maintain life’s necessities.
That might sound like retirement, but it’s a little different.
Financial independence offers freedom to align your time closer to your values and passions, which may still involve working. This might be more time with family, pursuing projects or hobbies, engaging in philanthropy or just punching the nine-to-five clock less often. Really, there’s no wrong answer so long as the individual feels financially free to follow their whims.
Most importantly, financial independence means Canadians can minimize their most common stressor. In an ever-challenging ecosystem of geopolitics, culture and climate,
any stress reduction could be more than welcome
.
The compass and the map
Financial independence is a journey, not a destination. The goal is not to accumulate capital in and of itself; it’s to ensure you maximize your available capital in a way that will best serve your life.
The compass here is why you want to build independence. Is it to spend more time with family? To be free of basic economic worry in a conflict-laden world? To be able to absorb a pay cut in order to work in a field you’re passionate about? The fun part is that you get to decide the criteria.
The map, on the other hand, i
s your financial plan
: a clear route defined by budgeting, saving and investing. To draft your map, the first step is to understand your budget. What are your non-negotiable expenses? What are your flexible costs? What happens monthly and what happens only once a year?
Once you have a concrete budget in place, you can then work backwards on understanding the total cost of your financial independence. The basic arithmetic is the total lump sum of investments you need to have in place to earn sufficient income to cover your costs indefinitely.
For example, if your costs are $50,000 per year and you think you can safely earn five per cent per year, then you would need roughly $1 million in savings.
Note that there is a bit more nuance than this simple calculation — things such as inflation, life expectancy, your comfort with encroaching on capital, the predictability of earnings, etc. — but the basic formula should be intuitive.
From this point, the timeline will be laid out, essentially based on how much you can save until you get to your
required savings goal
. For those with greater earning power or who plan to keep working, this might be a quick timeline. For those who want to put a hard stop to work or have high expenses relative to income, this could be a multi-decade project.
If the timeline to financial independence looks far too long for comfort, as it will inevitably be for some, then the process of self-negotiation begins.
This will be unique for everyone, but some common questions may include: What am I willing to compromise on? What do I need now to maintain a healthy balance of savings discipline and daily life fulfillment? Can I increase my income and/or decrease my expenses?
Get off the (hedonic) treadmill
In Greek mythology, the sirens lured sailors to their doom with enchanting songs. In our lives, the sirens are things such as luxury homes, high-end goods and vehicles, and vacations. Our ability to save is highly interconnected to our spending habits.
Over time, you would expect savings to increase as income increases, but there is often a competing lifestyle creep. How do you resist this? By automating savings and adjusting savings with each pay increase before you get used to the extra income.
The concept of “paying yourself first” ensures that before you even see your paycheque, a portion is tucked away. This way, you make decisions with what’s left, not what’s possible.
For most people, debt is unavoidable, but not all debt is created equal.
Mortgages or student loans are often considered good debt because they tend to lead to appreciating assets or increased earning potential. Conversely, things such as high-interest credit cards and payday loans are usually bad debt. They considerably add more to costs than if you were able to simply save enough to purchase the goods outright.
The goal is to minimize the latter and to responsibly manage the former. Remember that every dollar not spent on interest is a dollar that can grow for your future self.
Compounding: A critical ingredient
Once you’ve got your savings map in place, it’s time to put it into action. Invest those savings early and often.
Albert Einstein famously called
compound interest
the eighth wonder of the world. The concept is enormously powerful. Imagine planting a single apple seed. It takes a few years for it to grow into a sapling, then more to become a mature tree. Eventually, though, it produces hundreds of apples every season. Before long, you’re planting an entire orchard from those seeds.
Investments can behave the same way
. The earlier you start, the greater the growth. As the adage goes, “Time in the market beats timing the market.” To get to a level of financial freedom, sufficient time spent with compounded returns will be essential.
Financial independence is the reward for discipline, patience, and intentionality. Define your goals, automate your savings, resist the sirens of overspending and remember the magic of compounding. By doing so, while we can’t ignore permacrises altogether, we can maximize our freedom to focus on what’s most important to us.
Chris Warner, FCSI, CIM, CFP, PFP, is a wealth adviser and client relationship manager at Nicola Wealth Management Ltd., and Simran Arora, FCSI, CIM, CFP, CIWM, is a wealth adviser and portfolio manager there.
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