14 Financial Freedom Habits to Live Life on Your Terms

Financial freedom is the dream for most.

Having enough money through investments and savings can be the key to a long and happy life. However, the reality is that it’s not easy. 

Most people, including myself, spend their money on things they want instead of what they need. We’re all prone to making mistakes along our financial freedom journeys. However, you must still act and create the right financial planning habits to increase your odds of achieving your financial goals.  

From mindful spending habits to having a growth mindset, let’s explore the key habits you need to permanently leave that job you hate, avoid being vulnerable to layoffs, and start building wealth.

1. Truthfully Evaluate Where You Stand

Man seeing credit card bills
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Although this can be accomplished in a few minutes, being truthful with yourself about where your finances stand can be a tough pill to swallow.

If you’re thousands of dollars in debt, the first step to financial success is admitting you’re in a financial hole. Start by taking a moment to unplug from all your electronics and go somewhere you won’t be easily distracted.

Once alone, evaluate what you’ve been doing over the past few weeks. Have you been eating out too much? Do you keep paying the minimum on your credit card every month without looking at the balance? Do you live paycheck to paycheck?

Digging deep here is crucial because this will be important for the next step.

2. Set Goals

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Setting goals is the #1 way to accomplish anything. 

It may not be a “sexy” task, but the results will be worth the trouble. Start by making your goals smart. Remember the first habit we covered?

This is where you review your notes or simply recall where you stand with your personal finances. If you’re in debt, the first step is to get out of debt. You’ll still want to save, but before that can happen, you must stop digging yourself into debt.

A SMART goal for the above scenario would be “I want to repay $5000 in 18 months.” This works because you can break this goal down every month and evaluate if you’re on track each month.

3. Live Below Your Means

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Trying to keep up with the Joneses or your friends and family will only delay you on your path to financial freedom. There’s a difference between being cheap and being strategically frugal.

Eating out four times a week may feel necessary, but you’re better off cooking at home and eating out weekly or once a month, depending on your budget.

4. Grow Your Income

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If only you had more money. All of your problems would suddenly go away, right?

Not so fast. There’s a reason why there are countless stories of people who win millions in the lottery just to spend it all a few years later.

If you can’t manage a small amount of money, you won’t magically be able to manage a large sum. The good news is that winning the lottery isn’t the only way to make millions.

You can earn more through a high-demand career or by starting a business. Starting a blog or creating content online is what we preach here because it’s low in cost with a huge return on investment. Still, there’s money to be made doing practical jobs.

For some, starting a blog on the side may be what helps them reach financial freedom within a few years. For you, it may mean driving an Uber for extra cash on the weekends and using the money to reach financial freedom faster.

5. Choose a Good Career or Business

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This habit may seem similar to the last one, but it’s slightly different.

It’s not enough to earn a large amount of money if the career or business you’re building isn’t fulfilling. You don’t have to spend Sundays filled with dread about going to a job you hate the next day. Your journey to achieve financial freedom may be long, and you’ll face setbacks along the way.

Still, you can switch to a more fulfilling career that enables you to learn and pays well. Additionally, if your business is taking too much of your time, maybe it’s time to tweak processes and figure out how to do less of what you don’t like and more of what you enjoy.

6. Budget

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Once you’re earning a good amount of money and enjoying how you make it, it’s time to ensure your cash is put to work. Budgeting is a crucial skill for money management and will help you with your long-term financial goals.

There are many tools you can use to manage your budget, such as YNAB and Mint. However, even a simple spreadsheet with all your expenses will do.

Start by listing your expenses and income for a given month. Then, break down how much money you have for each pay cycle and make a budget for your bills and miscellaneous items. The end result may look like this:

Income: $5000

Bills: $3000

Personal Expenses: $500

Misc: $500

Savings: $1000

7. Take Care of Your Health

Man with doctor
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Working a remote job is no excuse to sit around all day. However, if you want to pay later, set a monthly budget for your future medical expenses.

This is a hard pill to swallow for most, but if you don’t prioritize your health now, you’ll likely develop more health problems down the road. Do the basics: Visit your primary doctor and dentist at least once a year for a check-up and see where you stand.

This may involve additional follow-ups, depending on what the doctor finds. This is why it’s easier for many to press “snooze” on these appointments.

Think of it this way: If you force yourself to go to the office daily, why not force yourself to go to the doctor once a year?

8. Never Stop Learning

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Some folks stop reading books and taking courses the moment they graduate high school or college. The typical “books and/or school isn’t for me” excuse won’t cut it. 

If your line of work doesn’t require you to take additional training, take the time to learn more about financial literacy through books or podcasts. This will only make you more savvy and creative as you move forward in your financial freedom journey.

It doesn’t always have to be about money. Some of life’s critical lessons are shown through others’ mistakes. You can read up on autobiographies or watch interviews to learn as well.

9. Buy Experiences, Not Things

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With so many advertisements on your phone, tablet, and TV, it’s hard to avoid the fear of missing out on something new and exciting.

“Splurging,” or spending your money on things you want, isn’t always bad. For example, if your goal this year was to save $5000 and you reached it, you could reward yourself with a short weekend getaway that doesn’t break the bank.

Experiences can also be made with physical items. If buying coffee at your favorite shop once a week gives you joy, it’s a good way to spend your money.

Like keeping up with the Joneses, avoid overspending on things “just because.” Be intentional in how you spend your money. The key thing to remember is to focus on the experience.

Traveling to Disneyland or buying coffee can enhance people’s lives. Buying the latest iPhone just because your friend has one may not be money spent wisely.

10. Pay Off Credit Cards

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If you’re living below your means and working to increase your income, getting your credit cards paid off will be easier.

Being free of credit card debt isn’t just good to have—it’s a must for your financial future. If you’re constantly digging yourself into debt and relying on your credit card to make purchases, you’ll constantly feel stressed about money.

Instead, forget about the credit card perks and stick to using your debit card. That way, you’ll only use the money you have. Additionally, you’ll be forced to be intentional with your money.

11. Save Consistently

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Once you have a budget down, it’s important to stick to it.

Don’t make it a habit to sweep money from your savings account to cover negative balances. If you plan on relying on your debit card, you won’t have this problem, but you’ll still need to make a savings plan, especially as you start saving for retirement.

To do this, set up auto-transfers each time you get paid. For example, if you get paid bi-weekly, set up some money to automatically be transferred from your checking account to your savings after getting paid.

12. Invest

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Many are scared to invest because they feel they’re not smart enough.

The reality is that most people are perfectly capable of investing their money. You don’t need to follow the news or the markets or know the technical side of stocks. 

What’s important to understand is the fundamentals of how investing works, what index funds are, and how compound interest works, among a few other things. 

Here are a couple of book suggestions to help you get started:

  • The Little Book of Common Sense Investing
  • The Bogleheads’ Guide to Investing

13. Lower Your Bills

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What you’re paying today for your monthly bills may be too high.

Call to negotiate your car insurance, phone bill, cable bill, etc. Don’t settle for what’s fixed.

You don’t need fancy software to tell you what you owe. Start by logging into your bank account and taking a look at your recurring expenses. 

Next, call your bill providers and ask, “How can I lower my bill?”

14. Give Back

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This may seem counterproductive, but it’s not. Giving not only feels good, but it enables you to earn more.

Don’t wait to reach financial freedom to give to others. You can donate $1 monthly to your favorite charity or offer your time to your friends and family.

The more habitual you are about giving to others, the more fulfilled your life will be. You’ll start developing a growth mindset and be in a great position to uncover more money-making opportunities.

Transform Your Future With These Financial Freedom Habits

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Most assume that once they reach financial independence, they’ll automatically feel happy. However, happiness is just a temporary state. Some days you’ll feel great; others, you’ll feel less so.

Start transforming your financial freedom journey into a positive one by adopting all the habits covered here. They won’t be easy, but your life will slowly get better. You won’t always be happy, but your stress level will feel much more manageable.

Imagine not dreading Mondays and taking a fun getaway with your family on short notice. It might seem like a fairytale, but by adopting these habits, you’ll be well on your way to financial freedom.

Author: Christopher Alarcon

Title: Journalist

Expertise: personal finance, side hustles, time management


Christopher Alarcon is a journalist with a deep passion for personal finance. He has contributed to major online publications, including MSN, Wealth of Geeks, and Business Insider.