Flywheels have been largely used in rotating machine engines to save inertial energy and to limit speed fluctuations. A stress distribution problem is created due to the centrifugal forces that are formed when the flywheel is spinning around, which leads to different levels of pressure and decompression inside its structure. Lack of balance leads to high energy losses through various mechanisms, which deteriorate both the flywheel’s expectancy and their ability to rotate at high speeds. Deviation in the design of flywheels from their optimum performance can cause instability issues and even a catastrophic failure during operation. This paper aims to analytically examine the stress distribution of radial and tangential directions along the flywheel structure within a linear elastic range. The eigenvalues and eigenvectors, which are representative of free vibrational features, were extracted by applying finite element analysis (FEA). Natural frequencies and their corresponding vibrating mode shapes and mass participation factors were identified. Furthermore, Kirchhoff–Love plate theory was employed to model the transverse vibration of the system. A general solution for the radial component of the equation of flywheel motion was derived with the help of the Bessel function. The results show certain modes of vibration identified as particularly influential in specific directions. Advanced time-frequency analysis techniques, including but not limited to continuous wavelet transform (CWT) and Hilbert–Huang transform (HHT), were applied to extract transverse vibration features of the flywheel system. It was also found that using CWT, low-frequency vibrations contribute to the majority of the energy in the extracted signal spectrum, while HHT exposes the high-frequency components of vibration that may cause significant structural damage if not addressed in time.