So, you're finally out of college and you're looking for ways to achieve financial independence. You're no doubt grateful to your parents for supporting you throughout your four-year college career. But now that you're officially an adult and have your degree, you might be ready to spread your wings and take care of yourself. Here are seven ways to achieve financial independence after graduating college.
1. Ditch Debt before Moving out
Paying off debt is one of the best ways to achieve financial independence after college. Student loan debt, credit cards and other loans can take a large percentage of your income. And depending on how much you owe, you might be unable to fully support yourself. Before leaving school, get serious about paying off debt. You might be unable to eliminate student loan debt, but you can develop a plan to pay off credit card debt.
2. Build Credit While in School
If you never applied for a credit account while in college, you might graduate with no credit history. It can be hard to achieve financial independence without a credit rating. When you apply for a mortgage or apartment, the lender or landlord will check your credit history. You also need credit to get a low-rate auto loan. To build credit while in school, apply for a secured credit card or a student credit card. Pay your statements on time and pay off balances in full.
3. Save While You Have Few Responsibilities
As a college student, you might live in a dorm or at home. Since you're likely to have fewer responsibilities, now's the time to build your savings account. Personally, I recommend getting a part-time job while in school. This puts extra cash in your pocket for fun, and it also jumps start your savings account. No matter how much you earn, deposit at least 10% into your savings account each pay period.
4. Get a Budget
Budget might be an ugly word, but it's necessary to achieving financial independence. With a budget, you can keep your personal finances on track. Write down all your expenses and subtract these from your take-home pay. This is an excellent way to evaluate where your money goes and how much you're bringing in. If you don't have a budget, it's easy to overspend in different areas, such as food, transportation and entertainment.
5. Don’t Get Too Much Too Soon
You might be eager to purchase a home, buy a new car and get everything your parents have. Just know that it took your parents years to build their lifestyle. And if you try to get too much too soon, you could end up in debt.
6. Hustle Your Way to the Top
You might find a job after graduating college, but your salary might not be anything to brag about. To achieve financial independence, you may need a side hustle. Plenty of people work full-time jobs and have side businesses for extra cash. The money earned from your hustle can build your emergency fund, pay off debt or contribute to your retirement account.
7. Share Expenses with a Friend
If you're determined to get from under mom and dad’s roof, share household expenses with a friend. The two of you can rent a home together and split the cost 50-50. You can exert your independence without going broke.
Many young adults strive to achieve financial independence. But given the economic situation today, this is much easier to say than do. However, with careful planning and smart financial choices, it's possible to rely on yourself financially. What are other ways to achieve financial independence after graduating college?