6 Ways to Work Toward Financial Freedom in 2025

Financial freedom can mean a few different things. It could mean freedom from debt, freedom from a job you can't stand, or freedom from money-related worries.

Financial freedom is just as much about your state of mind and outlook as it is about the number in your bank account. It’s a great thing to know that you can spend money on something you love without having to stress about paying it off, or that you can tackle an unplanned expense without worrying about needing debt relief afterward. If your goal is financial freedom in 2025, here are some key steps to take.

1. Get Onto a Budget

Following a budget might seem like the opposite of financial freedom. In fact, a budget empowers you to take control of your finances and understand where your dollars go. And the more knowledge you have, the less financially stressed you might feel.

You have several options for budgeting hacks, and it pays to experiment with different methods to find a good fit. You can list your expenses on a spreadsheet or sheet of paper, use the envelope system of putting physical cash aside for different expenses, or download a budgeting app you’re comfortable using.

2. Reexamine Your Spending

The U.S. economy is in a weird place. Though unemployment is low and inflation has calmed down a bit this year, the threat of tariffs looms over all of us. Tariffs could drive up the cost of certain products, not to mention lead to shortages. 

You can set yourself up to manage the impact of tariffs by not only budgeting, but practicing mindful spending. This doesn't mean cutting back on all of the things you love. Rather, it means making sure that when you do spend, it's for a good reason. You get to be the one to decide if a reason is good enough to justify the cost. That’s the magic of a budget.

You might get takeout once a week to save time in the kitchen. Or hire a babysitter for a few hours so you can go grocery shopping without your kids, thereby getting a mental break. In any case, you think clearly and carefully each time you spend money, and make a conscious choice to spend it on that thing, rather than anything else that might also be important to you.

3. Pay off Costly Debt

When you owe money on credit cards, you’re beholden to the companies that issued them to you. When you owe money on a personal loan, your lender gets a chunk of every paycheck you earn.

Paying off expensive debt gives you freedom from your lenders and credit card companies. Once you have your budget in place, you can come up with a plan to attack your debts. You might spend less on expenses, earn more money, or both.

If the debt you have is overwhelming and you can’t envision yourself paying it off even with significant changes to your spending and income, then it may be time to seek debt relief. A debt expert can walk you through your options, which may include debt settlement or consolidation.

Every extra dollar that you can apply toward your debt could get you over the finish line sooner.

4. Build an Emergency Fund

Easier said than done, right? It’s worth your energy to focus on this goal, even if you start small.

Knowing you have money in the bank to cover an unplanned expense or financial hiccup could give you peace of mind. And in today’s economy, that’s important.

A lot of people are worried about a recession. It’s not guaranteed to happen, and not all recessions are drawn-out, painful events. The economy could slump for a few months and recover quickly. But it helps to be prepared in case things worsen. 

An emergency fund could serve as your financial and mental safety net. Some experts suggest saving up a three-month emergency fund, which could get you through a period of unemployment. But it may take a while to save enough money to cover three months’ worth of living expenses, so try not to stress if it’s slow going. Set small goals and celebrate each one.

If your ideal emergency fund requires $6,000, celebrate your first $100, and then work your way toward the $200 mark as you’re able to. 

Don’t think of it as a race. It’s meant to be an ongoing effort. 

5. Put Your Savings on Autopilot

Automate your savings (which means setting up a direct transfer to your savings account each time you get paid). That could make it easier to meet your emergency fund goal and knock down debt. 

But there’s another benefit: feeling free to spend your remaining money as you wish.

Let’s say you set a monthly savings goal of $200, and that money gets transferred into your savings automatically at the start of the month when your paycheck arrives. Once that money is gone from your checking account, it’ll be harder to spend. If you avoid the habit of pulling that money back out of savings, it could be easier to build up funds and hit your goals. 

Also, automating your savings could make it possible to splurge with less guilt. If you know you’ve met your savings goal for the month, you notice something you want to buy, and you can afford to pay for it in full, why not go for it?

6. Put Your Money to Work by Investing

If your dream is to one day have the option to stop working for a paycheck, you’re in good company. Money that doesn’t come from work is passive income. The more passive income you earn, the less you’ll have to actively earn by working. 

Investing your money is a way to create financial freedom. If your money is growing while you’re out living your life, you’ll eventually have more of it. 

In time, investing could be your ticket to a retirement with enough money to pay your bills without worry. Not having to work for a living is a great way to experience financial freedom. 

Explore your options for investing with an employer-sponsored plan like a 401(k). Your employer might even match a portion of your contributions. You can also open a retirement account on your own to invest in your future. 

The Journey to Financial Freedom Starts Today

Financial freedom doesn’t only mean reducing your debt and hitting a specific number in your savings account. Rather, it’s a mindset and way of life. These moves could fuel your journey to financial freedom so you’re able to feel fantastic about where you stand.