With planning, discipline, and a few positive money habits, you can build the foundation you need to get (and stay) financially independent from your parents.
The freedom to do what you want, when you want, is exciting, and financial responsibility is often the last thing tying you to parental control. But the idea of doing things like paying your own rent, signing a lease, and managing bills may feel overwhelming. Here are some steps you can take to become financially independent from your parents.
Key Takeaways
- Opening a savings and checking account is a key first step to managing your own finances. Â
- You can remain on a parent’s health insurance plan until age 26.Â
- After age 26, you can purchase a student health plan, enroll in insurance through your employer, or buy insurance via the Health Insurance Marketplace. Â
- One budgeting method to consider is the the 50/30/20 rule, which will help you plan by allocating 50% of after-tax income for needs, 30% for wants, and 20% for savings.Â
- Start building up an emergency fund to cover three to six months worth of expenses.
7 Steps to Reach Financial IndependenceÂ
Whether you’re recently graduated from high school or college, or just dreaming of a new beginning, the road to financial independence is a journey. The path looks different for everyone, but here are seven steps you can take to set yourself up for long-term financial independence.
Set Up Your Own Bank Account
Having a bank account is key to taking control over your own finances. You’ll need it to pay rent and put utilities in your name, when that time comes. Opening a checking account will enable you to pay bills, and opening a savings account is the first step to putting aside funds to reach longer-term savings goals.
Setting up your own bank accounts (savings and checking) before the end of high school or college and starting by depositing money from family or from a summer job can give you get a head start on…
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