Financial Freedom

Today we are going to talk about what is actually means to become financially free? and how can you achieve that? before knowing what financial freedom is let us discuss about what it is not? Financial freedom is not making six figures, seven figures or even becoming a billionaire, financial freedom doesn't mean to have a tons of money financial freedom is not necessarily being rich or even being wealthy, many people think having financial freedom means having tons of money or have things like crazy high income or live in a mansion so it seems so out of reach to them that they don't even try. Financial freedom is actually much more simple and even more attainable than you even might have thought.

Image source :pixabay

So, what is financial freedom?

Financial freedom is creating a residual income which exceeds your expenses, you know exactly how much residual income you need to create to be able to cover whatever your monthly expenses is, in other words, is a stage in life where you have enough income sources to cover your expenses. Mostly the income sources where you no longer trade time for money, When you are financially free you get to spend your time doing whatever you want with your day.
Financial Freedom

How you can achieve financial freedom?

Obviously, by increasing your income sources.

There are three major types of income
1. Earned income or Active income
2. Portfolio Income
3. Passive Income.

Earned Income or Active Income

This type of income generated by hourly employment which requires your time. That means you have to actively work and you are paid for it. Income of jobs, business (that requires your presence), self-employment, commission, consulting or any other activity that pays based on time/effort you spent are falls on earned or Active income. This types of income are the most common way of making money. It's hard to become wealthy by only depending upon earned Income because once you stop working, You stop making money and earned income is the highest taxed income. You get a fixed amount of money from this income source you have to put more time or effort or you may have to acquire more valuable skills.

The major benefit of earned income is that you don't need any initial capital in order to make earned income, additionally, most people start their investing career by saving some amount of money from earned income.

Portfolio Income

Money generated by investing and selling that investment at a higher price is called portfolio income. All investment option like bonds, mutual funds, interest, stock markets, or from real estate are the activities that generate portfolio income.

Generating portfolio income demands a good bit of knowledge and experience, you must learn to read the financial statement of companies, analysing the market, and it generally requires you to have money to invest but you can start from a little amount of capital. Portfolio income taxed as regular earned income if it held less than 1year.

But portfolio income has some advantage over active income. Once you acquired knowledge and experience you can take benefit of investment in a regular basis by reinvesting your gained income plus if you hold your investment for long run your taxes will be very less so it is easy to build wealth by portfolio income if you have the knowledge.

Passive Income

Passive income is most profitable and less taxed income over active and portfolio income. Passive income is the money that generated from assets that you own or created where you don't have to put much effort or time. Rental income, Affiliate marketing, Business income that could operate independently, creating and selling intellectual property, YouTube, blog, websites etc.  are the income of this type.

Passive income has a huge benefit, with little additional work by you to create an asset, the income will continue to come in a month-after-month or year-after-year, from that assets. You can start with little or no initial capital. Passive income is the best income for creating wealth.

By acquiring all these types of income you can achieve financial freedom. You can achieve financial freedom by increasing income or by decreasing expenses.

To do list for achieving financial freedom :

1. Increase your passive income. (  stop exchanging time for money )

2. Stop saving, Start investing ( Increases your portfolio income, Invest 10 to 20 percent of your income )

3. Spend less Then you earn  ( cut down your expenses)

4. Have patience In the journey of becoming financially free.


  1. Good job brda...thnq for ur information

    1. I can't thank you enough for your kind review.

  2. Great every person should know this....

    1. Thank you Mukti Share this article with your love once

  3. Article is good, but the writing skills are poor, before updating you should check it on grammarly. Secondly, you should have to focus on introduction. If you are writing a large article than you should do it.
    Now coming on your article, it is very knowledge based article. Scarcity is the fundamental problem of every human being, and thats why optimisation is needed every where. So i wish that your next article shoul be on optimisation of resources. For a healthy Financial state everyone should know the utility concept and relocation of its personal assets. In my view.
    Anyway keep writting, this website has a huge potential. Best wishes from my side. Thank you for your time.

    1. Thank you for the feedback Rajdeep, I will definitely improve my future articles, Thank you again for sharing such a valuable suggestion.

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