Current economic conditions have made it difficult for many young adults to get a robust start asserting their financial independence from their parents. A recent survey conducted by PNC bank found that 46% of people age 20-29 felt they were behind on their expectations when it comes to their personal financial success. Twenty-six percent of the respondents said they were on target with their financial objectives and 25 % rated themselves as ahead of expectations.
Another four percent said they had “no idea.”
When ask about their optimism regarding their personal financial future, 21.4% of respondents displayed optimism. The number declines with age falling to 14% for respondents age 28-29. Eighteen percent of individuals’ polled said they expect to have sufficient money for retirement.
Improve your odds of making a successful go of financial independence from your parents by making adequate plans for the break. Move deliberately when it comes to weaning yourself and striking out on your own.
Below are some tips for making the transition successfully.
Start the Process While Still at Home
Even if you currently stay at home, it helps to have a budget so that you can see where you are spending your money. You should not wake up one day and decide that you want to liberate yourself from mom and dad. Start the process by paying small bills on your own, such as cell phone and other expenses. Many individuals do not track where their money goes each month.
You would be surprised out the amount of money you spend on games, overages for your Smartphone data plan or a night out on the town with your friends. Limiting how much you spend on unnecessary items can free up more money for savings and help you move on your own sooner.
Savings and Financial Protection
Make savings an essential component of your budget. Experts recommend paying yourself first” by putting 10 percent of your take home pay into a savings or retirement account before you do anything else.
Part of declaring your financial independence is to establish a fund to serve as a cushion for emergencies. Most financial advised recommend a fund that is equivalent to six months worth of your expenses. Have your bank automatically transferred, money from your checking account to your savings and emergency fund accounts.
Another area of concern is insurance in the event of a medical problem. Many employers offer coverage through company insurance programs. If your employer do not offer such a plan, look into polices that provide minimum coverage. If you do not have sufficient insurance protection, consider staying on your parent’s insurance plan until you can afford to pay your own way.
Share Managing the Household Budget
Often, young adults – friends or romantic relationships, move in together. One person may handle paying bills and managing the money. Rotate this responsibility so that you can gain experience. For example, a couple can take turns managing the household budget for six months at a time.
If something happens to change the living arrangement, such as a breakup, disability, or other issue, you will already have a thumb on the pulse of household finances and how to manage monies.