The problem here is that this is a lot of work and you'd need to know exactly where to set this up well in advance, or it could easily become a double-edged sword. Notice that they only knew a day or so in advance where exactly to meet the advancing goblins and picked a spot far enough from the village so that stragglers don't just break through and immediately attack it. As for defense, no it could at most be an impediment, hopefully to the attackers only.
What kind of "finance-free" options would that be? Even if they use timber, it's going to require more of it than the entire village can supply. Same for labour and someone needs to know what they are doing. You can't just build a simple wall or palisade and call it a day - that's useless for such a scenario. Fortifications WILL be breached when stormed with overwhelming numbers, their job is to allow the defenders to do a lot of damage to the enemy force with relative safety and hopefully keep them at bay. They are going to need places to shoot from with good cover and as previously pointed out, a lot of men to take those positions and swap out with others. So other than building and maintaining this kind of extensive system, you'd be turning most, if not all the village residents into a standing garrison if you don't provide you own - even if you ignore the difficulty of training and supplying them with weapons and provisions, who's going to run the village? It's not a weekend job. If it were, every medieval village would "protect what's theirs" this way, since they all faced the threat of raids from either bandits, mercenary bands or enemy armies.
