Wednesday, February 1, 2017
Becoming Financially Independent From Your Parents
It’s happening later and later than ever before, but at some stage we must all become financially independent from our parents. It’s not fair on them, for a start, but it also holds you back from your own hopes and dreams. If you’ve left it later than you’d have liked to remove yourself financially from them, then go easy on yourself: things have been stacked against you, with bountiful jobs, cheap housing, and all the other benefits your parents enjoyed not being handed down to you. Now’s the time to move forward and become your own person.
Step One: Make the Decision
Nobody can become financially independent over night, but they can begin the journey towards being so. This means making the decision and sticking to it. Talk to your parents about the direction you’d like to go; they’ll feel relief, most probably, but also a determination to help you. From now on, you’ve moving towards being responsible for your own finances. Congratulations, you no longer need to fear what might happen should they lose their job, take a trip to their wills lawyer, or decide to cut you off!
Step Two: Make a Plan
Financial independence is a long game. Make a plan, a realistic one. What is your current financial position? What does the endgame of your road to independence look like? And how long are you going to give yourself to get there? It might be that you’re not yet able to even move out of your parents home, never mind not rely on them for money. But with a clear plan of where you’re going, you’ll be taking a significant and positive step.
Step Three: Budget and Save
Part of becoming an adult is to understand that you have responsibilities: you can’t just spend whatever you like, do whatever you like, and hope to come out on the other side with everything neatly in place. Make a budget for your money: what are your outgoings? Then take a pen and strike a line through anything that can be cut, which should include the luxuries like trips to the pub and eating out at restaurants. You don’t have to be hermit, but you’ll need to think more about where your money is going. Then SAVE the money you’re not spending. We don’t mean for a holiday - we mean for your life! You should aim to put around 15% of your wages into a savings account. Even if that doesn’t seem like much, it’ll soon build up.
Step Four: Long Term Income
The first three steps will set you up to become financially independent, but to make it stick you’ll need to have a reliable source of income, one with which you’ll be able to maintain the standard of life you want for yourself. If you’re already in a career, think about where it might take you in the future: is it secure and well paying enough to set you up? If not, investing some of your savings in further training might be a solution.