Financially Independent

Becoming financially independent from your parents — making your own decisions, paying your own bills — can be exhilarating. But it can also be intimidating.
 
Planning ahead will help put you on firm ground. Developing good money habits now will set you up for success when you move into your first apartment. You can then build on that foundation to create a secure future for yourself.

What is financial independence for young adults?

A young adult has achieved financial independence when they earn enough income to cover their own living expenses. They can pay their rent, buy groceries, and pay their utilities on their own, without their parents’ help.
 
Among young adults 18 to 34 years old, 68 percent say they are completely or mostly financially independent from their parents, according to a Pew Research Center study. Nearly half — 45 percent — report being completely financially independent. That number jumps to 67 percent for those in their early thirties.

Financial independence, stability, and prosperity

As you embark on your life’s journey, there are three key financial milestones to set your sights on.

Financial independence is the first step in a young adult’s financial journey. If you’re able to cover your bills without your family’s help, you’re off to a solid start.

Once you’ve attained financial independence, you can work toward financial stability. Being financially stable means you can cover your current expenses with ease, while also preparing for your future. A Patelco Certified Financial Specialist can offer personalized advice to help get you there.

Reaching this level of stability brings not only financial security but also confidence and peace of mind. Some key strategies include living within your means, building an emergency fund, paying off debt, and saving and investing for retirement.

For many people, the ultimate goal is financial prosperity. This means having enough resources — savings, investments, and other income-generating assets — to afford the lifestyle you want without having to rely on your employer or outside financial help.

Proper planning can help you achieve financial prosperity, so you can enjoy your life as you wish, without being preoccupied with money concerns.

To ensure that you’re on the right track, meet with your financial advisor to review your progress and build on the good habits you’ve established. A Patelco Financial Solutions’ Financial Advisor can advise on any adjustments you might make such as increasing your savings or reviewing your investments.

Living with your parents has its benefits

Among young adults who live with their parents, 64% say it helped their finances and 55% said it positively impacted their relationship with their parent(s), according to Pew Research.

How to become financially independent from your parents

If you’re young, taking these steps will help you become financially independent:

• Set financial goals. Would you like to get your own apartment? Save for an emergency fund? Take a weekend ski trip? List your goals so you can craft a plan to meet them.
• Set up a bank account. Having your own account will help you better understand spending and saving. Patelco offers a Student Checking account that works with our Mobile App.
• Start paying for small expenses. While living with your parents, start paying for expenses such as your cell phone bill or haircuts. This will give you practice making financial decisions and planning ahead.
• Pay down debt. If you have debt, such as student loan debt, take advantage of this time — when your parents are covering most of your expenses — to pay down your debt.
• Start saving. Taking command of your money now will help you develop good money habits (and may speed your journey to financial independence). You might, for example, consider living by the 50/30/20 rule — spending 50 percent of your income on needs, 30 percent on wants, and 20 percent on savings.
• Create a plan for living on your own income. You may need to move to a less expensive neighborhood, for example, or cut back on dining out.
• Apply for a credit card. This will help you start building a credit history, which will be key when you’re ready to rent an apartment, buy your first home, or buy a new car. Concerned that you won’t qualify? Get tips on applying for your first credit card.