12 Strategies for Reaching Financial Freedom

For me, financial freedom means the liberation of worrying about money and money related problems. I personally believe strongly that there is much more to living then making money and even thinking about it. But don’t get me wrong, I believe that money is very important to a successful life. With money, you can help more people, expand your influence and develop the qualities of a high performance life more effectively than without it. Currently most people spend most of their waking lives working for a paycheck at a job they dislike, some 40 hours or so a week (2,080 hours a year, or 83,200 hours for the average workers lifetime).

Imagine what you could do with that time? Help people build solar farms in Haiti, back-pack through Europe, work towards achieving your life’s purpose, etc.

So what is financial freedom really? Typically people consider it a few things:

  • Not worrying about making money (Hence the freedom from finances)
  • A Wealth Ratio of 1.0 (Passive Income / Personal Expenses = Wealth Ratio. Anything higher than 1.0 means that your passive income matches or is greater than your personal expenses.)
  • A certain amount of funds saved up in the bank (such as a million dollars, or a year of reserves)
  • And the list goes on..

So how do you get there? I consider two types of ways to make money and I believe both should be utilized strategically: Active Income and Passive Income.

The Two Main Types of Income

Active Income being anything that requires your personal labor to generate money. I highly recommend actually enjoying what you do for active income when you use this method. If you don’t enjoy the job, in my opinion you are wasting your most valuable asset, time.

Passive Income can be generated whether you are sitting on a beach in Aruba or backing packing in Antarctica. However, Passive income has one caveat. It typically requires an upfront investment of time or money and usually requires the implementation of systems.

Tip: Don’t put all your eggs in one basket! Consider utilizing a variety of different income producing methods for the best results!

Active Income Examples

1. Consulting Work: Ah the excitement of billable hours. While consulting work can be tiring it can always be rewarding if done correctly. You should first always do active income work on something you are passionate in. Avoid taking on consulting projects that lack enjoyment. Second, always value your time. Don’t skimp out here. I suggest you strive for amazing quality work at a respectful rate. You can get started by telling people at networking events that you do part time work in a specific field or by looking for gigs on freelance.com and related sites.

2. Starting a Company: I want to stress that this is not easy – It will require a lot of work. But it can also be very rewarding. First decide what problem you want to solve that aligns with your mission statement. Second, you will want to research your target demographic to see if this is something they might be interested in. If you feel that the marketplace has a hole and that your business will solve it, then consider trying it out.

3. Educational Workshops: If you’ve been in the workforce for awhile or consider yourself an expert on a certain topic than this stream of income may be for you. This could take the form of a low cost class you teach on Saturday morning through Meetup or even connecting with a nearby university and seeing if their is a need for a similar class there. Either way, consider trying a few free workshops first to see if people like what you have to say.

4. Coaching: This is similar to the educational workshop example but geared more towards 1 on 1 meetings. This might take the form of a one off meeting with a colleague interested in your experience on a similar issue or through a more formal coaching business. Either way, typically this style can be fun when it is something you are passionate with.

Passive Income Examples

5. Starting a Blog: This is not an easy one. Personally, I’m not a fan of paid advertisements ruining my blog reading experience but that is a way to earn some income passively. I think a better approach on the blog is not to promote or sell but instead use it as a way to help others. Typically, once you are established as someone of authority on your topic, you can begin to explore options of monetizing the blog but until then and even after then the primary focus is on helping others.

6. Writing an E-Book: Writing a E-Book or self-publishing a book is always another option for passive income, however, this example requires an up-front investment of time and some personal capital to get started. If this is something that interests you, consider first writing in a blog and see if people are curious about your content. If so, you may be on to something and could consider writing a book if you have the time to spare.

7. Investing in Real Estate: Rental properties are a great way to earn passive income in my personal opinion. However it comes with several caveats as well. First, this often requires some initial capital (there are many ways to reduce this but often some money is required). Second, an investment of time to build up the systems to make the business run smoothly and allow yourself to step away from the business. I personally find this more lucrative then stocks because you can directly effect the outcome of your investment. You’re the one in complete control.

8. Crafting Creative Work: This is sometimes an overlooked area for passive income but has been used often by many different types of people for years. Creative work can be anything from a musical album to a painting piece or selling your photography to a stock imaging site. There’s many options here for someone with a little bit of creative juices and an investment in personal time.

9. Starting an Online Store: Today, you don’t need a brick and mortar store to sell products. You can to do it from your bedroom in your pajamas’s. There’s many different ways to swing this. You can design your own product line or fashion brand and outsource the production of it. Then you could bulk sell it to stores or directly to your consumers. You could also be a distributor for pre-existing products by ordering materials in bulk from a wholesaler then marketing and selling to a consumer. Only thing is this typically will require some risk, capital and time to start it up. But often, this could be a great side income stream to another strategy like a personal brand or business brand.

10. Affiliate Marketing Sales: I discovered this method relatively recently from a vast quantity of targeted YouTube ads. I never took it too seriously but eventually after researching it more, found it an interesting strategy for passive income. The basics are that you become affiliated with a larger brand like Amazon and market their products for them to make sales. This can often be automated and when someone purchases the product from your advertisement, you will get a commission from the parent brand (Amazon or similar site). In most cases, this doesn’t require too much capital and only a moderate investments in time.

11. Creating an App: If you’re creative and have a great idea for an app then you’re in luck. Because now, more than ever, it is possible to outsource the development of an app design to a developer (unless you yourself are one) and create something you can sell over time. Typically this will require an upfront investment of both time and money to achieve and often has the risks of flopping or not working out to your favor. But if done correctly, and with a little bit of luck, it can be a great source of passive income.

12. Creating an Online Course: This is similar to the active income example of educational workshops and often can go hand-in-hand. Basically it requires a decent amount of expertise on a subject manner and upfront time developing the course content. But when done correctly, you can have a product to market to consumers or something you can sell to an online course site.

How to Generate Excess Capital for Investing?

You may have noticed that one of the biggest impediments for starting any of these strategies is lack of excess capital to spend. So how do you go about solving this problem? I’ll cover that in more detail on a later post – Budgeting 101 and Developing a Personal Income Statement. Stay tuned!


Bill Womeldorf is an energy efficiency consultant and real estate entrepreneur in Boston, MA. He’s typically the one with the reusable water bottle in business meetings. When we all work together, he believes, it’s possible to solve the climate crisis. You can follow Bill on twitter @BillWomeldorf and read more about self-improvement and sustainability on his blog.


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