5 ways millennials can achieve financial independence

by. Holly Perez

Financial independence is a rite of passage for 20-somethings. Yet, between student loans, expensive urban housing markets and pressure to start saving early for retirement, those first paychecks are in high demand and there’s little room for error. Managing your finances as an adult should be viewed as an opportunity to create financial security for your future. All you need is a little know-how to keep financial stress at bay. Here are five steps toward achieving financial independence:

Remember budgeting 101. If you want to get out of mom and dad’s basement, take a piece of their advice: Create a budget. Although you may feel that it is unnecessary, budgeting is essential for long-term financial health. No matter how much money you have, you can’t make the best use of it if you’re not aware of where it goes. You can easily spend hundreds of dollars a month on nonessentials such as fast food or pricey entertainment. That’s not to say that you shouldn’t enjoy these things, but spend in moderation and make thoughtful decisions about where you want your money to go. Put your mobile device or smartphone to good use, and take advantage of free personal finance sites and apps to help you track spending, establish a budget and manage your credit at home and on the go.

Ditch the debt. Many 20-somethings graduate college with a degree and debt from student loans and credit cards. While it’s advantageous to pay off all forms of debt, credit cards should be at the top of the list so you can avoid high-interest debt. Millennials should focus on clearing their credit cards first, and then use all the money they’ve freed up to ditch student loans and car payments. It’s best to avoid credit card debt altogether, but do keep the plastic in your wallet for the times you might really need it like an emergency.

Make savings a priority. When you’re in your 20s, it’s hard to find the balance between living in the moment and planning for the future. However, the same rule that you were taught when you were 5 years old still applies today: save, save and save – even if it’s just a few pennies at a time. Saving can be especially difficult when you’re getting established in your career, paying down debt and planning for major purchases such as a home or car. The trick is to set aside that savings into your budget before you get accustomed to spending it every month.

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