3 Easy Ways to Become Financially Independent
May 11, 2018
It’s easy to become overwhelmed by the pessimism surrounding millennials and money. There are countless articles about how the younger generation, in particular, is struggling to become financially independent based on their spending and living habits. A few forecasted potential realities included lower marriage rates, higher student debt, and more young adults living at home due to increasing housing costs. In fact, The Institute for College Access & Success found that 71% of all students, or 1.3 million people, attending four-year colleges will graduate with student loan debt.
If you’re currently a postsecondary student, you might have the looming thought about graduating in the next few years and becoming completely financially independent, and what that all means for your future. Accompanying graduation is the possible reality of not having a job offer, the decision where to live to best facilitate finding a job, and the financial struggles you’re sure to meet.
So, how can you strive for financial independence when it seems that the odds are against you? The trick is to prepare to face the realities of your future by becoming financially independent. Here are some things you can do to kickstart your financial independence right now.
3 Easy Ways to Become Financially Independent
1. Set SMART Financial Goals
Sure, you might set a goal that you want to save enough money to save for a new car, but the problem is that goal doesn’t hold you accountable in any way. SMART goal-setting is an acronym that stands for Specific, Measurable, Achievable, Relevant, and Time-bound. A great example of a SMART goal would be to invest $1000 in common stock in exactly two years from today. Setting SMART goals for yourself allows you to stay committed to a timeline and measure your results accordingly, which keeps you on track for your financial goals.
2. Reconsider and Adjust your Spending Habits
This could apply to any purchase you make, small or large. If you’re about to buy something, don’t always race to pull out your credit card. The key is to think things through and give yourself time. Here’s a trick: if there’s something you really want when you’re shopping, but you feel guilty for spending your money on it, ask the store to put it on hold for a day. Walk away for the time being and think about the value of the purchase you’re going to make – if the next day you still feel confident it’s an important purchase, go back and buy it.
Spending habits and style of living go hand-in-hand. If your friends are the kinds of people that love going out for drinks or brunch all the time, suggest going for a picnic instead and offer to help make the sandwiches. If you spend time studying in coffee shops and often spend over $5 per day at Starbucks, take a step back and realize that’s an extra $140 per month. Start by writing down every purchase you make for one week, and then compare that amount with your SMART goals. Using that information, you can easily determine what habits are okay continuing and which need to be cut out.
3. Save and Invest
Save money as often as you can – even if you can only put away a few dollars a week, it’s better than doing nothing for your financial future. Some weeks you might have the ability to put away $100, others you might only have $5 to spare, and that’s completely okay. The key is to focus on setting SMART goals that are realistic based on your personal financial situation and then striving to achieve them.
Once you have some money saved up (and you really don’t need much!), you can start investing to accelerate your goal toward financial independence. Financial independence is not easy, regardless of what generation you’re from. It takes commitment, dedication, and discipline, just like anything else. If you’re currently on the journey to financial independence, remind yourself to focus on the long-term gains, rather than short-term satisfaction. Whether you’re planning to buy your first car, a nice home, or retire in Hawaii, financial independence gives you the freedom to create the future you envision for yourself.
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