How Can You Achieve Financial Freedom? (2024)

January 18, 2021 by Mark Ferguson

Financial freedom is a goal for many people but what does financial freedom mean? It can mean different things to different people but to me, it means you have enough passive income that you do not need to work if you do not want to. You have money coming that will cover your expenses through investments. I prefer real estate to provide passive income and I think real estate can be one of the fastest vehicles to get you to financial freedom. It can seem like a daunting task to invest enough money to provide thousands or tens of thousands of dollars a month in passive income but it is possible with a plan and hard work.

What is financial freedom?

Financial freedom means you can live your life the way you want without having to worry about working for a paycheck or a commission. The tricky part of financial freedom is that the number is different for everyone. Some people live very frugally and some people do not. I do not think there is a right or wrong way to live as we are all different and have different wants and needs.

I know a lot of people who sacrifice many things in order to be financially free and afford not to work. I also know many people who buy a lot of things and some would say waste money on things and make way more money than those frugal livers but are not even close to being financially free. Both people can be happy and live great lives.

I would be considered one of the latter by most! I have multiple exotic cars, a big house, and I tend to spend a lot of money on my businesses as well. When I started in real estate I did not spend much and I worked very hard to save and invest money. So while my lifestyle seems crazy to some I did not start out that way and I worked hard not to spend money in the beginning of my career. It was not until later on when I had a lot of income – passive and earned – that I began to spend a lot.

How do you figure out what your financial freedom number is?

Most people will never look at what they spend because they don’t want to know! They know they should save more and spend less but they do not want to do the work to make it happen. The hope that someday things magically work out. The best way to make things work out is to know the numbers.

Your financial freedom number is the monthly expenses that you must pay no matter what:

• Food
• Clothing
• Housing
• Transportation
• Children
• Utilities
• Insurance
• Phones
• Pets

We all have to pay those expenses no matter what although some people will have more of those than others. I can say with experience that children are very expensive! You also have the expenses that you don’t have to incur but most people will:

• Entertainment
• Television
• Internet
• Household items
• Vacations
• Exercise
• Gifts

This list could go on and on. We all spend money on different things and the best way to see how you spend your money is to track it. Look at all of your expenses each month, track how much you spend on what, and then you will get an idea of what your number is. By doing this, you can also get an idea of what expenses you do not need, can cut down on, or get rid of.

You might have two financial freedom numbers: the basic expenses that you must pay for and the extra things that are nice to have but you do not need.

How can you earn passive income?

Once you know how much money you needed to earn passively to become financially free you need to create passive income! Hopefully, you have already figured out a way to earn money passively but do not give up hope if you have not done that yet. There are many ways to earn passive income.

• Stock dividends
• Interest on bank accounts, CDs, Bonds, etc
• Interest on loans to other people
• Rental income
• Mineral rights
• Royalties
• Annuities
• Much more

There is no true passive income as almost everything takes a little bit of work. You have to decide what stocks to buy or what investment advisor to use if you do not want to buy them. You must decide where to put your money and how it will generate passive income.

My expertise is in real estate and I love to buy rentals. Real estate can provide some awesome returns but it takes work to buy those properties and learn what the best ways to invest are. I have worked hard to buy residential and commercial real estate that will provide passive income whether I work or not. Some people will say that real estate is far from passive because you get calls to fix the toilet at night, but I have property managers who do that for me.

How can real estate create financial freedom?

I am not a stock expert or an expert on all things finance. I know a lot about real estate and I love real estate but I am not saying that real estate is the only way to go. A lot of people make a lot of money in many different fields and a lot of people have become financially free in many different ways. I focus on real estate because I know it and it has been very good to me!

I bought my first rental in 2010 when I was working as a real estate agent. I used a mortgage to buy the property for $96,900 and after all the expenses I was making $400 to $500 a month, which equaled about 15 to 20% return on my money. I also got a great deal on the house and the house went up in value as I owned it. On top of that, real estate has some amazing tax advantages, at least in the US, where I am. I could even take money out of the property using a refinance, which allowed me to have no money invested and still make money every month.

Conclusion on financial freedom

Financial freedom is not easy to achieve and it is different for everyone. You also may find that you achieve financial freedom but discover more hobbies or things you want to spend your money on! The number can change as time goes on. Being conscious of what your number is and tracking expenses will put you ahead of 90% of the population. Even if you never achieve financial freedom but are able to create a passive income, you can have a great life.