The Financial Freedom Formula

This website is dedicated to helping people break free of financial victim hood and start creating a financial destiny to be proud of. And a big foundation to that process is understanding financial freedom and what it is.

Now, whilst the definition of financial freedom is somewhat widely agreed upon, the financial freedom formula that I am going to dive into here is my own brain-child and what I’ve developed over the years.

This formula won’t be found in an Encyclopedia (showing my age here) nor will you find the exact same thing when you Google it. Financial Freedom is an outcome, but the journey there can be done in various ways – this formula is my preferred approach and one that I’ve seen work for many, many others.

What is Financial Freedom?

Financial Freedom is when you no longer have to work in order to live, and your passive income is capable of paying for your current (or desired) lifestyle.

You can essentially sit on a beach, drinking Margaritas (assuming the cost is included in your lifestyle budget) and could carry on as such indefinitely.

How Do I Calculate My Financial Freedom Number?

If you’re looking to become financially free as soon as possible, then the number you need to think about is the absolute minimum you’d require to live your current life. If possible, get rid of some frivolous expenses. The lower the number required for you to live, the quicker financial freedom can be obtained.

However, essentially your financial freedom number will flex between this and a higher value that includes added comforts and luxuries.

Write this number down. Incorporate it into your goals (I hope you’re writing down your goals).

My Financial Freedom Formula

The below diagram illustrates the 3-key components of Financial Freedom.

Financial Freedom Formula - Graph
Earn More

Well, not very profound this one may seem! Though some analysts out there will be noting that financial freedom is achieved from predominantly passive income sources, so earning more seems counter-intuitive?

Remember, this is a process, a road map. By being able to earn more income, you can then put the extra money to work for you – which is what the two other sections are about.

The best way to earn more? You could upskill for your current employment but that means working in a job for longer, with less flexibility. The real way to earn more whilst moving quickly towards financial freedom is to start your own side hustle (side business). This is where online businesses come to the party as a lot of them offer much greater flexibility and some have relatively small barriers to entry.

The key aspect of financial freedom is passive income, and this comes predominantly from Investments (see below), but it can also come from low activity forms of other income – and this is where your online business can contribute valuably to your financial freedom.

Additionally, if you can set up adequate online businesses that produces a decent income with less and less work going forward, this becomes akin to a passive income.

Invest More

Investments produce passive income. You make your money work for you. These can take many forms, but for passive income to contribute towards your financial freedom, you want assets and investments that cash flow well. Things like dividend yielding stocks, real estate and property, peer to peer lending (as a lender).

In the beginning it could likely be challenging finding additional money for investment purposes, however every little counts. Start with as little as $10/£10 per month and put it into a mutual fund (e.g. S&P500). Once you’ve started the habit, half the battle is already won. Then you can start looking into other forms of investment and learning which forms of investment suit your preferred financial freedom strategy.

There are varying schools of thought out there around how to balance investing and debt repayment, as some may say that the additional $10/£10 is better used for paying down debt, but let’s discuss that next.

Eliminate Debt

Debt is a silent financial cancer and left unchecked, can ravage your finances. Now not all debt is bad – some debt used constructively is fine (e.g. mortgages on real estate investments that generate a profit).

The corrupting debt I’m referring to is consumer debt. Credit cards, personal loans, payday loans, store cards and the like.

And don’t’ forget that debt is a double-edged sword, not only do you need to repay what you’ve borrowed, its evil entourage called “interest” is never far behind.

Did you know that just paying the minimum amount on your credit card means you could be paying it off for up to 20 YEARS? Minimum payments are traps to keep you in debt and paying interest to the card providers.

Always start with the most expensive debt first (highest rate of interest) and put whatever extra you can afford into paying an additional amount off.

In my example under “Invest More” above, if all you could spare every month is $10/£10, then you could split 50% into investment and 50% into over payments on your debt.

This is the approach I would suggest you take, as it’s always good to get some investments going sooner rather than later.

The only caveat I have, is that if you have a lot of expensive debt, you might be better served paying this down first, especially if the interest you’re paying is higher than the average rate of return on your investments.

Final Thoughts

The above structure works, but some people may find it more difficult if they’re in a position where the costs of living are already exhausting their financial means every month. I will be doing a post on this in the near future, so if you think this will benefit you, please subscribe.

This is why I’ve included the “Earn More” element, rather than trying to make the formula work on just your current earnings. Yes, it can still be done that way, it’s more difficult and sacrifices will need to be made, but it’s possible if you’re dedicated.

However, the focus of this site is also to open people’s eyes to the opportunities that are out there and available to everyone, regardless of your background, education or past. Which is why I actively promote looking at alternative means of generating an income to either supplement, or preferably replace, your current salaried earnings. Besides, chances are if you weren’t looking for ways of generating additional income online, you wouldn’t even be here.

I want you to thrive, rather than just survive.

30 thoughts on “The Financial Freedom Formula”

    • Hey Max,
      Great question! eBooks/KDP are great as once you’ve written the book, future sales all happen for you. Another is dividend yielding stocks or rental real estate. That’s for purely passive income.

  1. Hi Gazza, This is true for everyone but it’s not an easy thing to start. Especially for those people struggling half of their lives just trying to find a job. Even though those people might have no debt because they have no job to begin with (my case), it seems impossible to get financial freedom because there is just no money to even invest. What advice would you give there? It would be great to have financial freedom but it seems to me that it’s mostly for people that already have jobs and can put a little away each month. I wish. But Great post nonetheless


    • Hey Chantelle,
      Thanks for your comment. I’m sorry that things are not as straightforward for yourself. This where more focus and effort needs to be put into the first section; Earn More. Easier said than done, I know, but the internet is a wealth of information, strategies and techniques to build online businesses. My advice would be to find some form of employment that can pay the bills, then dedicate your spare time into a low cost (affiliate marketing/Kindle KDP) type business. Don’t rush it. Life is a journey and there will always be bumps in the road, but that is what makes the end result so much more rewarding.
      All the very best – feel free to reach out with any other questions.

  2. Hi Gazza. Great post. You’re dead right about managing finances. I myself paid off some credit agreements not so long ago which is a huge help with monthly finances

    • It’s an amazing feeling, right? Plus, if you’ve now got that extra cash to invest or supercharge your payments on other debt to get rid of it quicker.
      All the best.

  3. Thank you so much for this highly informative article! I definitely want to be financially independent and make my money work for me. The initial challenges, especially as a newbie to the online marketing and investment worlds, is acquiring the knowledge/skills to be able to capitalize on the opportunities that are available to us. I am learning more and more everyday, and I look forward to seeing what the future holds! Great read! God bless you!

    • So glad to hear you enjoyed the article. I know it can be daunting at first, but we all have to start somewhere – the great thing is; you’re taking action. I’ll be putting up plenty more content in the future around all aspects of financial freedom, so keep stopping by or subscribe.

    • Hey Prav,
      For earning more, my go-to choice is affiliate marketing (low cost of entry, very flexible) and Wealthy Affiliate has a FREE program.
      Investing is a personal preference and there are lots of tools. If you really want to start simple; Revolut is a GREAT new bank and it allows you to push your spare change into vaults, plus you can buy fractions of shares directly in the app. They also have cryptocurrency if that’s your bag.
      Eliminating debt – I’ll be putting up a post soon detailing a strategy to tackle this – stay tuned!

  4. Financial freedom is one of the major goals for many people. There are many ways where successful people have achieved this status. One way to getting started is doing what we are excited about. We tend to work more excitedly when we love what we do.

    Joe Joson
    USNavy Retired

    • Completely agree with you Joe, which is why I’m such a huge fan of affiliate marketing, as it allows you to turn your interests/passions/hobbies into a business.
      All the best,

  5. This article is so insightful and easy to understand, very well-written for anyone who would like to start an online business. I am currently trying to put the basis of my online business and seeing your article has helped me a lot.

    The future is to invest whatever money come from this side business into stocks and create a passive income.

    In regards to debt, I might say this is the hardest thing to accomplish.

    • Thanks for the message Yoana.
      Yes, debt elimination is a challenge. I think a key for many people is getting their mindset around avoiding incurring more debt. Once that can be achieved, the process of eliminating it becomes easier as you’re not trying to pay down a growing balance!

  6. The financial freedom formula is something we all are looking to achieve, and with today’s high economy this has become even more of a problem for many of us than ever before

    Thanks for sharing

  7. Hi Gazza,

    I believe the first step is to eliminate your debt first then to consider make more money to invest. I see people invested when they were still in debt, and they didn’t always get the results they want. So, eliminate debt first then invest. For the earn more part, I do want to know your top recommendation? All kinds of online business? It would be great we could learn more from you.


    • Correct Matt, I mentioned it in the article too – if the cost of your debt is higher than the anticipated investment returns, you’re better off putting it all into paying off the debt.
      For earning more, my go-to choice is affiliate marketing (low cost of entry, very flexible) and Wealthy Affiliate has a FREE program. I’ve done a review here and I’ll be putting up more content in the near future 🙂
      Great observation and thanks for bringing it up 🙂

  8. Hi Gazza,

    This is a proper, well-written informative article! Your website looks attractive and invites people to read it.

    I believe everything starts with the right mindset and dedication 🙂

    Think about what you’re spending… That will save you a lot of expenses and debts. Do you really need all that stuff or can you make the money work for you?
    Dividend yielding stocks can create a nice passive income, besides affiliate marketing.

    I like to see the process of financial freedom as an adventure in which the sky really is the limit. Did you already wrote something about FIRE?

    Kind regards,

    • Exactly Catherine, you’ve got to view it as a journey and a growth experience. And I agree with you; always ask yourself whether you really need something, or whether the money can be better used (invested/paid into debt) elsewhere.
      Apologies, but what are you referring to when you say FIRE? 🙂

  9. Hi Gazza,

    This is one of the crucial area in today’s modern living. But, people find it difficult to put it into practice, and some of those reasons you’ve already mentioned in this post such as living expenses are too high compared to what goes into the account.
    That’s when we need to level up our expenses such as having an online business such as affiliate marketing or any other form.

    Thank you for this knowledge.


  10. Great post. I’m really into finance freedom. It is an amazing concept that everybody should follow. There is no magic and a lot of work to make it happen but once you have it then, as you said, you can relax in the beach. It’s not overnight, it’s a roadmap indeed, but we can make it with persistent and consistent daily actions. I’m sure the effort will payoff.

    • That’s a great approach to have 🙂 It’s just a conscious effort to maintain focus on the end goal. Then it gets easier and easier as you make progress – it becomes addictive!
      Wishing you all the best!

  11. I would love to have financial freedom and retire early and am sure this is the dream of many people. Have you ever heard about the 200 rule and can explain how it works to me?

    • Hi Catherine,
      Thanks for your post! I’m actually going to be doing an article really soon covering the 200 rule – keep checking in, or join our mailing list and you’ll be alerted on all new posts.
      Gareth 🙂


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