3 Steps to Achieve Financial Independence
A few decades ago most young adults were able to achieve financial independence at the age of 23 or 24. Now with rising unemployment rates and low-paying jobs, recent graduates are unable to support themselves without their parents’ help. This dependency not only has caused strain in millions of families, but it has also delayed the maturity process of many young people.
According to the Clark University Poll of Emerging Adults, 51 percent of adults between 18 and 29 don’t feel they are mature because they have failed to reach financial independence. Most respondents said they feel like adults in some areas of their lives, but not in every single aspect. Sixty-three percent said they receive financial assistance from their parents. With the grim job market and student loan debt levels, some analysts say this trend is likely to continue for at least two decades.
While young adults may not have significant financial means, there are still several ways they can take steps toward independence. Experts at Missmoneybee.com offer the following advice:
Accept reality: The first step to address your financial problems is by accepting reality. If you are unemployed or barely paying your bills, you can’t purchase an expensive car or travel around the world for a year. Many young adults rely on credit cards and loans to live in a fantasy world. Rather than relying on credit cards or on parents’ financial assistance, young adults need to take responsibility for their actions and only purchase those things that can afford.
Have trouble budgeting? Try PowerWallet.com: The second step is to create a budget. Many times creating a budget is easy to do, but hard to implement. If this is your case, try out PowerWallet.com. Many young adults use their credit cards too often, forgetting how much they are spending. After determining your budget, separate your expenses into different PowerWallet categories and input the amount of money you intend to spend on each particular expense for a month. For example, if you spend $100 on clothes each month, put that amount into the category and once you reach $100, you can’t use money from other categories to keep buying clothes.
Save strategically to reach your goals: Financial success is a process. You don’t get rich in one day—unless you win the lottery. You need to plan and look at the big picture. It’s important to ask yourself what your goals are. For some people buying a house can be their most important goal, while others may need to acquire a reliable car. The next question you must answer is how to save money for those goals. One way of saving is by deducting a small fraction of your paycheck and depositing it into a savings account. You can also get a part-time job to make extra money. Finally, you can cut-back on small expenses such as eating out or your morning coffee. Even though these expenses don’t seem to make a difference in one day, in a year they can add up to thousands of dollars!