8 Tips to Achieve Financial Freedom

There are plenty of books, radio programs, podcasts and TV shows that offer advice on how to achieve “financial freedom.” It sounds nice in theory, but it’s a difficult term to define. One person might imagine financial freedom as living a lavish, millionaire lifestyle, while another may consider not living paycheck-to-paycheck to be enough. If there isn’t a textbook definition for this term, why is it important, and how can you get there?

In this blog, we’ll discuss how to find your definition of financial freedom and the steps you can take to achieve it.

What is Financial Freedom?

“Financial freedom is often perceived as a vague, distant dream – or maybe even a completely unattainable goal,” explained Caleb Frankel, co-founder and COO at EarlyBird, “While the meaning of “financial freedom” is unique to each individual, having money set aside for our futures enables us to make decisions based on our passions, not our finances (or lack thereof).”

While financial freedom is subjective, it shouldn’t be confused with being incredibly rich. It also shouldn’t be interpreted to mean that you can be completely hands-off when it comes to financial planning.

“There is a misconception that financial freedom represents an existence where you’re free of the responsibility of dealing with your finances,” explained Scott Nelson, founder and CEO of MoneyNerd. “This isn’t the case; everyone, even the ‘financially free,’ should have a handle on their finances, and be using their money intentionally to work towards their goals. Financial freedom doesn’t mean you are able to relinquish all control of your finances. It simply means that you control your finances, rather than being controlled by them.”

Considering this advice, you might best describe financial freedom as a state in which you can do the following:

  1. Effectively manage your everyday finances
  2. Actively pursue the short and long-term things you’re passionate about

Defining Your Version of Financial Freedom

The above formula for financial freedom will vary wildly depending on your interests and life circumstances. How can you personalize it to fit you?

Randa Hoffman, financial planner and CEO of Radiant Wealth Planning, suggests that you start by listing your future goals, then digging deeper. 

“I want to know the why, the four layers down why, not the first answer top layer,” she explained. “I recommend writing a sentence of what financial freedom means to you. Then ask why that’s important to you and write the answer down, then ask why that answer is important to you and write it down – keep asking “why” until the answer is something that comes from the depths of your heart.”

If you’re feeling stuck while trying to determine your goals, try asking yourself the following questions:

  • Am I satisfied with the kind of home I live in and my current location? Would investing in a new home or moving to a new location give me a sense of fulfillment?
  • Am I happy in my current position at my current job? Is my salary giving me enough freedom to make the money moves that I want to? Would additional education or a promotion, company change or career change help me get to where I want to be?
  • Do I have a safety net for emergency expenses? If not, would making a plan make me feel more empowered to work towards my other financial goals?
  • Do I have the financial security to tend to myself and my family? Am I able to take time off and pay for preventative and curative healthcare? If not, what can I do to make sure I can invest in my health and wellbeing?
  • What recreational things in life, such as traveling, hobbies and activities, do I value most? Do I have the financial resources to invest in those things now? If not, what steps can I take to get there?
  • Do I have debt or overwhelming financial commitments that are holding me back?
  • Am I on track for retirement? Am I saving enough to enjoy my retirement to the fullest? Are there steps I should take now to ensure I feel free financially in retirement?

How to Achieve Financial Freedom

Eight Tips to Achieve Financial Freedom

Now that you’ve defined your personal version of financial freedom, it’s time to bring it to life. Check out these tips for turning your financial dreams into reality: 

  1. Write out your goals. After digging deep and discovering what you truly want, make sure you record it. Whether you jot them down in a personal journal, save them on your desktop or put them on a vision board, be sure you store your goals in a place where you can revisit them later. Try using the S.M.A.R.T. goal system to make your goals clear and actionable.
  2. Sort out your budget. Is your everyday spending supporting your journey towards financial freedom? Update your budgeting system or create a new budget with your new goals in mind. 
  3. Consider your career. In addition to being your source of income and benefits, your job can play a big part in your overall life satisfaction. Does your job interest you and utilize your talents? Are there opportunities to increase your salary and grow professionally, or have you reached a financial dead-end? If your current role isn’t giving you the freedom to work towards your long-term plans, it may be time to brush up your resume and look for a more rewarding position.
  4. Pay off your debts. It’s hard to put money away for your future when you’re busy paying back what you owe. If you make ditching your debt a priority now, you’ll have more freedom to do what you want with your money sooner.
  5. Build your emergency fund. Another way to protect your savings and avoid future debt is to prepare in advance for emergencies. Having an emergency fund allows you to lean on a cushion of cash when you need it rather than taking on additional debt. 
  6. Save and invest. Now that you know what you want, it’s time to save the money you need to make it all happen. In addition to paying down your debt and putting cash towards your short-term goals, you should invest in your future by putting some funds towards your retirement.
  7. Keep an eye on your credit. Your financial goals may require that you take on a loan or a mortgage. Building a good credit history can help make the borrowing process easier.  
  8. Reevaluate and change when necessary. It’s likely that some of your priorities and dreams for the future have changed over the years. Likewise, your personal definition of financial freedom will change and grow over time. This is perfectly normal! Be sure to revisit your goals every few years and make adjustments to your financial freedom game plan as your interests and desires change.

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