January 15, 2025

What is Financial Freedom? 11 Strategies to Work Toward It

What is Financial Freedom 11 Ways to Achieve It@1.5x

How would you live your life if you didn’t have to worry about what anything cost?

Although this is a lofty dream for some, it’s a possibilityfor others who have worked toward achieving financial freedom.

When you manage to find yourself in a position where you have limited financial stress, money to fall back on, and the flexibility to spend as you want, you’re living a financially free life. Here’s more about how to become financially free.

What does it mean to be financially free?

What financial freedom is, differs from person to person, but it broadly means that you have enough savings, investments, and cash to afford the life you want for you and your family.

If you consider yourself financially free, you probably have:

The ability to cover all basic needs and lifestyle choices comfortably
Enough savings and investments to generate regular income to support you, in case of emergencies
Freedom from debt or major financial stress
The power to make life decisions without money as a limiting factor
The option to retire when you want to

Financial freedom serves as a really strong safety net. While a full emergency fund can offer you help in a pinch, being financially free means you have enough money to live well, manage emergencies, and pursue other financial goals with little stress.

It takes careful planning to make this goal or dream come true. You can achieve this freedom by paying off debt, saving for emergencies, and investing for the future.

And financial freedom doesn’t mean you can buy designer goods or expensive vacations on a whim. But it does mean that if you want to focus on saving toward those goals, you can, because your other needs are met.

Benefits of achieving financial freedom

Here are a few reasons why financial freedom is worth working toward:

Financial flexibility. Once you’re in a stable place financially, you can pursue your interests or start a new business without as much worry about your next paycheck.
Less stress. Money worries can make you sick. When you're financially free, you can focus on your health, loved ones, and personal growth instead of paying down debt or making ends meet.
More time. Having access to more money usually gives you access to time-saving things, whether those are measures of convenience (like grocery deliveries and rideshares) or simply less hours spent working.

11 ways to work toward financial freedom

Here are 11 practical steps to financial freedom.

1. Create a budget

Take the time to examine your spending and understand where your money goes and cut unnecessary costs, like unused gym memberships or streaming services. Having this knowledge about your expenses lets you plan how to spend your earnings. Divide your spending into must-haves, savings for the future, and fun money. Find ways to cut back and live within your means. Over time, your savings will grow.

2. Start investing early

Investing is a way to give your money more growth potential. The earlier you start investing, the more you'll earn through compound interest. (Compound interest refers to earning interest on your initial investment and the interest accumulated over time.)

3. Build an emergency fund

Life is unpredictable, and unexpected expenses can throw you off course. A solid emergency fund — 3–6 months of living expenses — gives you some peace of mind and a way to avoid accumulating debt.

4. Pay your debts on time

High-interest debt, like credit card balances, drain your accounts. List your debt by interest rate and pay the minimum on all of them. Make it a priority to pay off your highest-interest debt first. Once you’re spending less on the interest of monthly payments, you’ll free up more cash to save, invest, or put toward lower interest debts.

Paying your debts on time also improves your credit score, leading to lower interest rates on future loans and saving you more money in the long run.

5. Consult with a financial advisor

Financial advisors can offer expert advice tailored to your specific situation. Their insights can help you with budgeting, investment strategies, or retirement planning. Professional guidance also makes it more likely that you both avoid costly mistakes and maximize your money.

6. Check your credit

Watch your credit score and history. A strong credit score opens doors for better interest rates and financial opportunities. Use credit monitoring tools like EarnIn to maintain your financial health, and take steps to improve your credit score whenever you can.

7. Live below your means

Wherever you can, live below your means. This means keeping a mindset that you don’t need as much as you can afford. For example, you could opt to prep and pack lunches from home instead of eating takeout at the office each day. Even if you can afford the daily takeout, you’ll benefit from the cash saved by planning ahead.

8. Automate savings

Automating your savings helps you achieve financial freedom by making saving a habit. Set up automatic transfers to a savings or investment account to save a portion of your income when you get paid. It keeps you disciplined and helps you reach your financial goals faster when you’re paying yourself first.

9. Diversify your income streams

Having more than one income stream gives you more financial stability and increases your cash flow. It could be renting out property or starting a side hustle to grow your sources of income, creating financial security and freedom.

10. Set financial goals

Establishing your financial goals directs your journey. Setting measurable objectives, like saving a specific amount or targeting investment return, keeps you motivated and accountable. By tracking your progress, you can make necessary adjustments, ultimately leading you to the long-term financial security required to become financially free.

11. Be patient and consistent

Becoming financially free isn’t something you have to rush. Keep up your good habits and be patient. Little by little, your hard work will pay off, and you'll gain more freedom over time.

How to know if you’re financially free

Financial freedom is ultimately about aligning your financial choices with your life goals and creating the freedom to choose based on what you want, not just what you can afford.

Here are some signs that you might be on the right path.

1. Lowered money stress

You’ve built an emergency fund that helps you manage unexpected costs, reducing the stress of financial uncertainty. It allows you to handle life’s surprises with confidence.

2. You’re debt-free or have manageable debt

You’ve eliminated high-interest debts and can cover daily expenses without relying on credit, leaving only manageable debts like a reasonable mortgage.

3. Your savings can cover your expenses

Your savings and investments are substantial enough to cover your living expenses for several months or even years, providing financial security without relying on a paycheck.

4. You can make life choices freely without financial concerns

Financial freedom allows you to make important life decisions without money being the primary concern.

5. Continued financial growth

Your wealth continues to grow through investments and appreciating assets, even when you’re not actively working, ensuring long-term financial stability.

6. Passive income covers some expenses

You have passive income streams such as rental income or dividends that cover your living costs, allowing you to work (or not) on your terms.

Make moves toward your financial freedom with EarnIn

To build a better financial future, start by taking control of your money. Making small changes now — like setting up automatic savings or cutting unnecessary costs — can lead to bigger financial wins over time.

With EarnIn’s Credit Monitoring tool, you can monitor your credit score anytime, for free.

Plus, with Cash Out, you can access your money as you earn it — up to $150/day with a max of $750 between paydays — helping you avoid predatory financial loans or cash advances. Instead of relying on credit, you can have more freedom to spend your own money on bills or necessities before your paycheck arrives.

Take a step toward financial freedom and download EarnIn today.

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.