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what is financial freedom


What Is Financial Freedom?

Financial freedom can be defined in many ways, but I believe that financial freedom is being able to do what you want to do when you want to do it without having to worry about how to pay for it.

I think that is the ultimate definition of financial freedom, but there are other important elements of financial freedom, as well. Below I will give several more practical answers to the question, what is financial freedom?


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7 Simple Ways to Answer the Question “What Is Financial Freedom?”

In addition to the answer above, there are several other helpful answers to the question of what is financial freedom. Here are my top 7.

You could also look at these as simple steps to financial freedom. Put another way, you could look at these 7 steps as a financial freedom plan or a financial freedom formula for success.


1. Financial freedom is freedom from credit card debt.

The first answer for what is financial freedom is that it is freedom from credit card debt.

If you have ever felt trapped by credit card debt or other obscenely high interest rate debt, then you know why I list this definition next. If you do not pay off your credit card balance every month, then you yourself are ensnared to an extent by this merciless captor.

If you have gotten into a financial bind where you feel dependent on credit cards, know that there is a way to get out and there is a better way to live! Find out how to stop relying on credit cards. Also learn how to save up to pay for large purchases with cash to end the debt cycle forever! Free yourself from bondage!


2. Financial freedom means having an emergency fund.

An adequate emergency fund is a crucial part of financial freedom because you need an emergency stash to be able to pay for life’s unexpected (but inevitable) financial troubles.

Most families will have a major financial setback of $10,000 or more in a 10-year period, and if you don’t have the cash and you continue to rack up debt, then that emergency becomes debt that adds up to tie up all of your money.

Having an adequate emergency fund of at least three months (but I think six months is even better and recommend that amount) is crucial to your family’s financial well-being and their financial peace.

Learn how to create a starter emergency fund of at least $1,000, and learn how to build a full emergency fund as quickly as possible.


3. Financial freedom is freedom from all nonmortgage debt.

Another facet of being financially free is to be out of all debt except for the mortgage. In our credit-loving society, this is an amazing feat in and of itself; it really is!

If you have had tens of thousands of dollars of debt, rest assured that your situtaion is not unique. Many people have been in the same circumstances, including yours truly. The $60,000 of debt that we had before we bought our first home was one of the main impetuses that set me on a quest to learn all I could about personal finance.

You can get unburied from all that debt, just like we did. It probably will not be easy, but it will be simple—and I promise that it will be worth it! Being consuming debt free feels amazing once you get there!

Learn how you can get out of debt (and stay out of debt)! Yes, you can even avoid car loans by saving up to pay for your vehicles with cash. Learn how to never have a car payment again!


Check out these related articles:

Learn How to Get (and Stay!) Out of Debt!

How to Stop Relying on Credit Cards

How to Use Sinking Funds to Build Your Savings and Avoid Debt



4. Financial freedom means not living paycheck to paycheck.

Just like having lots of credit card and other consumer debt, living paycheck to paycheck is a scary way to live. Being broke all the time is no fun!

One very important and powerful level of financial freedom (and financial peace) is not having to constantly worry about how you will pay your bills or put food on the table.

If you are always running out of money and constantly living paycheck to paycheck, look at ways to reduce your spending. You may also need to honestly differentiate between needs and wants. And also consider ways that you can increase your income!

There is only so much you can do to spend less money (but there is a lot that you can do!), but your potential for increasing your income is virtually limitless. One way to make more money that can be a lot of fun is to start a side hustle. Find 19 awesome side hustles that you can do from home. And learn 11 simple steps to start a successful side hustle.

If you are tired of living paycheck to paycheck, read this article with simple steps to stop living paycheck to paycheck for good!


5. Financial freedom means paying off the mortgage and becoming completely debt free!

The day that we paid off our mortgage was honestly one of the best days of my life! After going through a time when I was seriously afraid (as in, often had knots in my stomach and sometimes found it difficult to sleep at night) that we would never be able to get out of all of the debt that we had, becoming completely debt free was something I looked forward to like a freshman looks forward to graduation. 🙂 (Actually, maybe even more than that!)

We had been working very diligently toward that goal ever since we learned about Dave Ramsey and this whole crazy part of society that seeks for and then lives debt free (what an amazing concept!), and when it finally happened and we became debt free ourselves, it was amazing! It was life changing! And we plan to never go back! #debtfreeforlife #100percentdownplan

By following the financial principles that I teach on this website, we were able to pay off our home (on one income!) in less than 6 years! Learn 7 simple steps to take to pay off your mortgage early!


6. Financial freedom means being able to retire and work only if you want to!

According to one oft-quoted study, close to 70 percent of employees are either unengaged or actively disengaged at work. That is really sad to me. I am fortunate enough to have a full-time job (as an editor) that I love (most of the time :)).

And yet I still look forward to the day that we have enough money that I can choose to stop working and can spend more time with my children or volunteer more in the community or pursue other interests or a different line of work that may not pay well.

In order to retire with comfort and dignity, you have to save a significant amount of money. And because of the amazing power of compound interest, the sooner you start to invest for retirement, the better.

Are you ready to get serious about investing for retirement so that you can have an awesome financial future? Join the 5-day Invest Your Money, Change Your Life challenge to learn how to invest, the kinds of investments that I recommend, the amount that I recommend you invest, how we choose the mutual funds we invest in, and more! Sign up now! 


7. Financial freedom means being able to afford whatever you want to whenever you want to. 

Now we are back to my first, and I believe the ultimate, way to answer the question of what is financial freedom.

Very few people will ever have the money to do 100% of whatever they want whenever they want, but by investing a good amount (at least 10 percent but preferably 15 percent of your income) early and continually, you will by the time you retire be able to do much or even most of what you want when you want.

How Do You Achieve Financial Freedom?

I truly believe that there are more ways to reach financial freedom today than there have probably ever been before. You can invest for retirement in a 401(k), as many traditional employees do to help you work toward financial independence. You can also start your own business (like starting a money-making blog! :)) to help you reach financial freedom. And you can do a side hustle (side job) as a way to augment your income and achieve financial freedom. And you can find streams of passive income to help you achieve financial freedom, as well.


What Does Financial Freedom Look Like?

As we learned above, financial freedom can look like different things to different people. To me, one meaning of financial freedom is to be able to pay all of your bills. Another is to be debt free. Another level of financial freedom is to have enough in savings and investments that you could quit your job for a time if you wanted to or needed to. And ultimate financial freedom to me is to be able to work only if and when you want to, for an indefinite amount of time and for the rest of your life if you chose to. Being able to retire early is a great measure of financial freedom for many people (and for me!).

In another sense, financial freedom may look like a big house and nice cars. It may look like a beach house or vacation home. It may look like being able to take vacations to exotic places whenever you want. It could look like being able to buy the car of your dreams or the boat of your dreams or the motorcycle of your dreams without debt and without the niggling feeling in the back of your mind that you probably cannot really afford this particular luxury.

Or it could look like being able to give very generously to the causes that you love. It could look like starting a nonprofit organization. It could look like helping to build schools in developing countries. It could look like building a wing of a hospital or donating generously to an orphanage or retirement home.

Financial freedom looks different to everyone, but financial freedom could mean being able to afford to go after your hopes and dreams and make them a reality.


How Important Is Financial Freedom?

To me, financial freedom is very important (of course!). Financial freedom in the sense of debt freedom is a must for us, a chosen way of life. We do not want to be slaves to lenders ever again. We do not want the added stress and financial obligation of interest payments ever again. We do not want the worry of someone else being able to repossess our vehicles or home or anything else ever again.

And the ultimate financial freedom of being able to retire early is definitely something that we are hoping for and working toward.

Financial freedom means security. Financial freedom means peace. Financial freedom means flexibility. Financial freedom means opportunities.

Financial freedom means options. And options are a beautiful thing.


How Much Money Do You Need for Financial Freedom?

If you have asked yourself, How much money do I need for financial freedom? then you are asking the right kinds of questions to be able to get there someday.

There is no set amount of money. For many people for many years, $1 million has been a sign of reaching an important financial milestone. And depending on how much longer you have to live and the kind of lifestyle you want to live and how you invest the money, $1 million may be enough to give you financial freedom.

For even more financial security and a higher likelihood of sustained financial freedom, having $2 million or more in investments and cash would be a great goal to shoot for.


What is financial freedom to you? To me, financial freedom is financial peace. And financial freedom is being able to work doing something that I love only when I want to (or not at all, if I don’t want to).

Since we live on my one good but average income, with my husband as our stay at home parent, that level of financial freedom may take several (or many) more years, but I do believe we will get there as we follow the financial principles that I teach on this blog.

And if you follow them, I wholeheartedly believe that you will get there, as well! Best wishes to you as you pursue your own financial freedom!


How would you answer the question,what is financial freedom? And where are you on the path to financial freedom? I would love to hear your thoughts and cheer you on! Leave a comment below and let me know!

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help a family member or friend or people in general? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being with others. Thank you!

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