What does financial freedom mean?

Financial freedom means having enough money to afford your desired lifestyle without financial stress. Instead of relying solely on a monthly wage and getting by from month to month, you might build up a strong passive income to be able to work less or even retire early. Explore practical steps towards achieving financial freedom.

The information provided here is for informational and educational purposes only and does not constitute financial advice. Please consult with a licensed financial adviser or professional before making any financial decisions. Your financial situation is unique, and the information provided may not be suitable for your specific circumstances. We are not liable for any financial decisions or actions you take based on this information.

The meaning of financial freedom comes down to being able to live the kind of life you want without relying on a monthly wage or pension. Say someone has accumulated funds from saving or investing to provide passive income. If that income is enough to cover their essential expenses, then they have already achieved a degree of freedom.

Financial freedom is often tied to a goal, because new opportunities can open up when you don’t have the pressure of earning money just to get by. You might choose to work fewer hours, freeing up time to enjoy life outside of work. With more advanced financial freedom, you might even be able to retire early. Essentially, being financially free means your lifestyle choices aren’t dictated by where the money is going to come from.

It’s often assumed that only wealthy people can achieve financial freedom, but that’s not always the case. For some people, simply living within their means and putting money into savings on a regular basis can be a step in the right direction.

Another misconception is that financial freedom means no more responsibility. However, the opposite is often true. In reality, it requires continuous planning and discipline to maintain financial independence, as shown in the ideas below.

Financial freedom isn’t about getting rich quickly. It’s about making steady, realistic changes that strengthen your finances and put you in a better position to achieve financial independence.

High interest charges from debt can hold you back when you’re trying to build up your finances. Tackling your debt repayment head-on can free up money for other goals.

There are two common approaches to prioritising repayments: 

1. The avalanche method, which focuses on debts with the highest interest rates and can save you more money in the long run.

2. The snowball method. You start with your smallest debts first. This can be motivating as you cross off each debt one by one.

When less income is going to debt repayments, this creates the conditions for greater financial freedom.

A budget template can help you see your income and spending clearly. Simply add up your income sources, subtract regular expenses, and decide how to use what remains. The final amount could go towards paying off debt, saving, or anything else you want to do with your money.

Sticking to your budget reveals spending patterns that can guide better financial decisions and bring you closer to independence.

A financial goal could be anything from short-term aims like a holiday to longer-term goals such as early retirement. When you have a specific target to work towards, you give substance to your plans. Faced with a decision about whether to buy something, you can ask yourself: “Does this help me reach my goal or set me back?”

Having a goal in mind is also part of the FIRE movement (Financial Independence, Retire Early). You calculate a FIRE number, which is the amount you’d need to live off your savings without a salary.

Regular saving is one of the simplest ways to reach your financial freedom goals. An automated savings plan typically involves setting up a recurring payment from a current account to a savings account, so you automatically have a fixed monthly amount going into savings each month with no manual transfers required.

With Raisin, you can set up a personalised savings plan that transfers a chosen amount each month into a demand deposit account. You’re free to change the amount anytime. Get started by registering for a free Raisin Account.

A dedicated savings reserve can protect you during unexpected events — for example, job loss or sudden expenses. A financial buffer like this can help prevent a short-term money problem turning into a longer-term issue.

As a general rule of thumb, you might start by saving three to six months of essential expenses. The idea is that the emergency fund can be used to pay for things like rent and household bills without needing to rely on credit.

To build this safety net, you could set aside a fixed amount each month in a demand deposit savings account. That way, you can grow your fund gradually while keeping the money within reach when you need it most.

If you’re comfortable taking some risk and can invest for several years, investing offers the chance to steadily build up wealth. Whether investing is right for you depends on your personal circumstances and how far ahead you’re looking.

Options such as ETFs (exchange-traded funds) provide diversification by spreading risk across markets and sectors. This can be an effective way to build long-term financial stability.

Investing involves risk and is not suitable for everyone. Returns are not guaranteed, and you may lose the amount you invest.

If your monthly spending is less than what you earn, you have a natural opportunity to save. Being careful with money doesn’t mean giving up everything you enjoy. It’s more about rethinking your spending habits.

Even small changes, such as cancelling unused subscriptions or shopping around for better deals on gas or electricity, can go a long way in helping you save. You could also try a budgeting method, such as the 50/30/20 rule, which helps balance saving with spending on essentials and leisure.

Discover more ideas for how to save money day-to-day.

Because each person will have different financial situations, no single approach is guaranteed to bring financial freedom to all. Thinking about your goal from step three can point you in the right direction.

One approach that is accessible to many people is opening a savings account. And the earlier you can start saving, the better. That’s because you can benefit from compound interest on some accounts, meaning interest is earned on any interest already accumulated.

And at a time of global instability, platforms like Raisin open the door to competitive savings accounts beyond Ireland, so you can better maintain the purchasing power of your money.

There are a few signs you may have achieved financial freedom:

• You live comfortably within your means

• Your spending is in line with your financial goals

• You don’t spend more than you earn and always pay your bills on time

• You can afford your wants without sacrificing your essential needs

• Your passive income (from savings, investments, rental income, etc.) covers your basic living expenses

• You no longer depend on a traditional salary to meet your day-to-day costs

• You can choose to lower your working hours without impacting your lifestyle

• You have the freedom to make life decisions based on your values and priorities in life – not just what is possible within the limits of your budget

With Raisin, getting started is easy. You can choose from flexible demand deposit accounts for easy access to your money, or deposit accounts with competitive interest rates. All savings accounts from Raisin’s partner banks are legally protected up to €100,000 per person, per bank by the national deposit guarantee scheme of the country where the bank is headquartered. Register for a free Raisin Account and start putting your savings to work.