Many young adults these days are struggling to stand on their own two feet when it comes to money. The cost of living has risen while incomes have lagged behind, making it difficult for youngsters to leave home. While it is impossible to change inflation rates and the cost of goods and services, there are things you can do to start building financial independence.
Understand and plan
Planning is important for most undertakings and when it comes to money, getting an idea of what’s ahead of you is non-negotiable. Financial independence means being entirely responsible for your own expenses. The principle is quite simple: earn more than what you spend. While you’re still living rent-free draw up a step-by-step plan geared towards the day you expect to become independent.Getting sufficient income might mean upskilling, studying further while working, or working your way up from an entry-level position.
This is an offshoot of planning but takes a bit more effort and ongoing commitment. Record all your outgoing expenses and all your income, whether that’s a monthly salary or payments from multiple part-time jobs or side hustles. Apart from helping you to keep on top of your cash flow, it can be quite eye-opening to check your spreadsheet after a few years and see the fruits of your labors. Recording your expenses will allow you to weed out things you simply don’t need and redirect that credit towards essentials or savings.
Negotiate loans to offset debt
Many, many young people struggle with finances as a result of student loans, while having ongoing debt is a hurdle that people face well into their thirties and forties. Unfortunately in today’s world loans – and student loans especially – are something of a necessary evil. That’s why is important to start planning your long-term finances before you take out a loan for further education. One tip: if you’re not 100% committed to your chosen study path, don’t take out a loan to pay for it.
Prepare for independence
It’s likely that you’ll start working and earning while still dependent on your family or a benefactor for money. If you’re still living at home, that’s the time to start paying rent – try to match the amount to what you would pay to rent a room in a shared house. The rest of your income can be budgeted for entertainment at zarcasino.co.za, food, and other expenses so you can get used to what your financial needs will be when you’re on your own.
Saving is something you need to do both before you become financially independent and after. Retirement might seem a long way off but it’s vital to start saving as soon as you start earning. Likewise, you should have something put aside for emergencies and unforeseen expenses.
Slow And Steady Wins The Race
You might be impatient to become independent but it’s not something to be done in haste – unless there is no other option. Practice and learn while you still have a safety net – it will set you in good stead for the future.