Happy Independence Day for those of us in the United States. Celebrating our country’s independence is a ton of fun if your state hasn’t banned fireworks due to the crazy dry weather. If you’re going to set your own fireworks off please be careful…
I have a quick favor to ask of you! I am taking part in the Tour de Personal Finance! Today, my post, I Got a Crazy Deal: Samsung Galaxy Skyrocket, is in competition with Budgets are Sexy! I’d really appreciate it if you headed over to My Personal Finance Journey and voted for my post! It doesn’t appear to be up yet as of 6:30am central time but I think it should be up later today. All you have to do is leave a comment with the word provided next to my post! THANKS!
On to today’s post!
While it would be awesome to be completely financially independent from earning money (other than your investments) that isn’t the financial independence I am discussing today. Instead I’d like to talk about when you first became financially independent from your parents.
I was lucky in the fact that my parents helped me through college. They paid for my room and board while I paid for my own tuition and books. I got a nice gift when I graduated in May of that year but didn’t start my job until October. I spent the summer hanging around at my girlfriend’s parents house and then went down to visit my parents 1,000 miles away for a few weeks.
I finally became completely financially independent after my parents helped me move my stuff from Florida into my first post college apartment just outside of Washington, D.C.. I was pretty prepared as I had been reading personal finance blogs for a while but I realize that everyone isn’t or wasn’t as prepared as I was. On that note, here are some tips to help anyone who may need them.
Keep Your Expenses Low
Keeping your expenses low will get you far in life. If you always spend a significant amount less than you earn you’ll be able to take advantage of the opportunities that come your way. It will also set you up for the rough times.
Don’t Buy a New Car
By new car I don’t mean a new new car. I mean any car that is new to you. Take a year or two and keep your current car. Figure out what things you value most in your life. If a car is at the top of your list after that year or two and you can afford it I say go for it. Otherwise keep your old car until it dies or buy a car that is in line with your values.
If you’ve just gone through college chances are you’re sick of roommates. I completely understand and was in the same place myself but there was no way I could justify living by myself near Washington, DC. I easily saved 50% of what the rent would have been for a one bedroom by sharing a three bedroom apartment with two friends.
Sure there were some arguments but I had that extra money I could use for other goals. In the end the money saved was worth the minor inconveniences. Even if you live with roommates for just a year or two after college that extra savings can help you get to your goals a lot quicker than you would be able to otherwise.
Plan for the Future
What do you want to do in the next few years? Want to buy a car? A house? Get married? Travel around Europe? These goals require a significant amount of money and take a while to save up for. It can be done though. Start early and make a plan. Determine when you want to reach the goal and how much it will cost. Then divide the cost by the time to figure out how much you have to save each month!
One more quick note about the future. You never know what is going to happen. You’ll run into some good luck but chances are there will be bad luck too. Save some cash and don’t touch it. This is called an emergency fund. Use it for emergencies only and keep it separate from your other money.
Have a Budget
Based on the above suggestions come up with a budget! Take your income and then subtract your proposed expenses. Don’t forget to save for the future goals and the ultimate future goal, retirement. Record all of your expenses and evaluate your budget monthly. You probably won’t get it perfect the first try but modify your budget until you have one that works for you. You can’t have everything so make sure you pay attention to your highest wants and goals and spend less on things that aren’t as important to you.
Well there you have it. I hope my five tips for your financial independence day help!
When was your financial independence day? If it hasn’t happened yet when will it be? Is there anything you wished you knew or have questions about? Let me know in the comments!