What is financial freedom? The 2 essential things you must focus on to achieve your financial independence

Jun 9, 2022 | Finances | 1 comment

Are you ready to discover what is financial freedom?

Since we were kids we have learned both consciously and subconsciously that to earn money, which is the exchange system that rules our lives nowadays, we have to have a job from 9-5, in which our time is exchanged for money.

Then with this money, we pay bills, taxes, food, debts… and an infinity more of expenses that leave us with barely any money left, creating this never-ending cycle where we go to work to earn money that we don´t even have the time to enjoy. 

It´s scary the number of people who live from pay check to pay check, enslaving their lives to a job that controls their time, a job that most of the time people don´t like and that only brings them unhappiness.

Unfortunately, nobody taught us anything about money, nor how to intelligently manage it, or even what money is, so we follow these ideas that have been planted in our minds since we were little that this is the only way of living.

But can we even call this living? Isn´t there a way to work with the system rather than subject to it?

This article is for the people who want to avoid this system.

This is not a criticism to the people who work on a job from 9-5 or who like this system, but rather a wake-up call and a new perspective of our world showing you that this life we are leading isn´t really living and that there is a better way to live our lives.

We came into this world for the purpose of living, to experience the most wonderful things and emotions this world has to offer, to develop ourselves and help the people around us with our gifts and talents, to serve our purpose, not to work in an office job and follow a system that deprives us of such experiences and callings.

So if you are dissatisfied with your life, if you are terrified at the thought of having to work in an office for the next 40 years of your life and are looking for a way to escape the system, this article is for you.

what is financial freedom

Why do we follow this system that dominates our lives?

Not many people are aware of this enslaving system that controls our lives, and in fact, there are even people who are “aware” of it and are happy to follow it. But why is that?

There are two emotions that control people’s lives: fear and greed.

First, the fear of not having money motivates us to work hard and once we get paid, greed or avarice makes us think of all the wonderful things money can buy.

And then the pattern of get up, go to work, pay bills and again get up, go to work, pay bills is established. […]

If you offer them more money, they will continue forever in that cycle and spend more and more. That’s what I call the Rat Race.[…]

Excerpt from the book Rich Dad, Poor Dad, by Robert Kiyosaki.

People’s lives are controlled by two emotions fear and greed and the combination of these two emotions creates a cycle called the Rat Race, as defined by Robert Kiyosaki, where we go to work to receive a paycheck hoping that it will mitigate our fear.

However, when we receive this paycheck our greed takes over, closing the cycle

Many people remain submitted to this system even though they are aware of its existence, because of their fear: fear of not having money, fear of not being able to provide for themselves (and their families). They lie to themselves by talking about the security and the benefits that working for someone has, creating a very big and convincing lie. 

Since we were kids they have assured us that by working a job from 9-5 for the next 40, 45 years of our lives that we´ll be safe, and that they will take care of us when we are not able to work anymore.

This lie is reinforced by systems such as retirement pay, 401k’s, savings accounts, etc.

And maybe at some point in history, this system did work and provided people with security and allowed them to live a better life. 

But the world has evolved while this system has remained with the rules and mentality of the past.

That is why this scheme does not work anymore and only provokes unhappiness and unfulfillment instead of safety and security. 

How can we escape this trap?

As you can see, we were taught since we were young that this system is the only way to “survive”, and that this is the way in which we should live. 

But now you know that is this not true, so what can you do to escape it, to get out of the race rat? 

By achieving our financial freedom.

As we say earlier money is a huge factor that controls people’s lives nowadays. Money is also the exchange system that rules our world. It is the reason why we get up every morning and go to work.

So really the key to escaping the system is to take care of the monetary part, the key is not to let money control our life, let it be a part of it, but never let money take control.

Intelligence solves problems and produces money, but money without financial intelligence is money that soon disappears”.

Learning about money, personal finances and money management are incredibly important topics everyone should take the time to learn about. But in order to avoid this trap and escape the system, we need to take it a step further, we need to achieve our financial freedom.

But what is financial freedom?

Financial freedom is being in such a position where you have enough income to pay one’s living expenses without having to be employed or depend on anyone.

In other words, if you stopped working today, how long could you survive?

How to achieve your financial freedom?

There is a very important idea you have to learn in order to achieve your financial freedom, one idea that makes all the difference and that idea is that the poor and middle-class work for money and the rich make money to work for them.

In school we learned the formula of going to work to get money, that is, we were taught to exchange our time for money.

But if you want to achieve financial freedom, you need to make money work for you.

But what does this mean?

Our money works for us when it is not linked to the time we invest in earning it.

An example of this is when we earn money while we sleep. In this case, we are not working or investing our time in a job, but we are still receiving an income.

When we have a job the amount of money we can earn is directly linked and limited to the time we dedicate to that job, the more we work, the more we earn.

But the truth is that we do not have an infinite amount of time and everyone has a limit to how much time they can devote to work.

That is why this formula for earning money is so inefficient and enslaving.

Okay, so with this very important idea explained, let´s jump to the most important question: how can I make money work for me?

The three types of incomes

To make money work for you, you need to know about the three following types of income:

  • Earned or active income 
  • Portfolio income
  • Passive income

Earned or active income means that your earnings are directly related to the time you spend performing a service/activity. For example wages, tips, commissions…

Passive income or portfolio income consists of earnings or an income in which the person is not actively involved.

To put an example is like wanting to create a snowball that rolls down a ladder by itself. You have to put the effort, in the beginning, to create the snowball and make it big enough until it starts moving on its own. And when it starts rolling and becoming bigger and bigger, that´s when the magic happens.

Creating passive income streams is similar to the example explained above. You put the effort in the beginning to create the stream and automatize it, but when it starts rolling and creating money on its own, without you being actively involved that is how you make money work for YOU.

In the vast majority of cases, people have no idea about the last two types of earnings and focus entirely on the first type.

But why is it important to know about these three types of income?

Because if you want to be rich and achieve your financial freedom you have to know which type of income is worth working for, how to keep it, how to protect it, and most importantly, how to turn earned income into portfolio income and passive income.


Want to discover 4 effective ways in which you can create passive income streams?

 Learn the difference between assets and liabilities

Another important lesson we need to learn in order to make money work for us and achieve our financial freedom is to learn the difference between assets and liabilities.

Everyone has the free will to do with the money they earn what they please. However, because of our lack of financial intelligence, we make numerous mistakes in the way we use our money, mistakes that make the difference between obtaining our financial freedom or not.

Now, when you buy something, anything, it can either be an asset or a liability.

A liability is something that takes money OUT of your pocket. An asset is something that puts money IN your pocket.

For example, buying a new phone is a liability, and investing in real estate or a seminar is an asset. 

The rich buy assets, the poor only incur expenses and the middle class buys liabilities that they believe to be assets.

Most people spend their lives buying liabilities that they think are assets, others simply are unaware of this classification and only spend their money on expenses.

Understanding the difference between these two types of expenses will literally make the difference between being able to achieve your financial freedom or not, because in the end it´s not about how much money you earn, but about what you do with it.

Invest in your financial intelligence

The second most important thing to focus on to achieve your financial freedom is to develop your financial intelligence.

But why should you focus on developing your financial IQ?

Because financial intelligence simply consists of having more options. Investing in it gives you the opportunity to live a better life, to live a life on your terms, to not be forced to accept conditions that you know will make you unhappy because you have “no other choice”, it gives you the ability to take what you have and turn it into something better.

Financial intelligence is not so much about what happens, but about how many solutions you can come up with to become rich. 

The mind is the most powerful asset we have. If we train it well, it can produce enormous wealth in what seems like an instant.

Take away

Since we were young were taught the formula that in order to earn money you need to have a job. This idea along with fear and greed (two emotions that greatly control our lives) created this never-ending cycle that motivates us to wake up, go to work, pay bills, wake up, go to work…

This is the system that rules our lives, but is this really living? Isn´t there a way to work with the system rather than allow it to enslave our lives to money?

There is and the answer to achieving this type of life is by obtaining our financial freedom. Financial freedom is being in such a position where you have enough income to pay one’s living expenses without having to be employed or depend on anyone.

In order to achieve our financial freedom we primarily need to understand this very important idea:

The poor and the middle-class work for money and the rich make money work for them.

Following this idea, it is important that we focus on two main things:

The first is to invest our money in assets in order to build passive income streams.

And the second is to learn about financial intelligence, this includes personal finances, money management, and how to turn our earned income into passive income…

Thank you so much for investing your time in this article. I hope the tips and exercises in this article will help you achieve your financial freedom and escape the Rat Race.

Always remember that you are worthy of even your deepest and wildest desires!

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sofia success

Hey there, I´m Sofia!

 I´m a passionate, determined and happy person. I´m also a book lover and my passions include interior design, art, music and travel. I’m the creator of Sofia Success, a platform created to empower young woman to build their dream life and become their highest self.



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