Graduating? Here’s How To Become Financially Independent.

Graduating? Here’s How To Become Financially Independent.

If you’re embarking on that walk across the graduation stage to get your degree — congratulations! Whether you’re headed toward the job market, more training or some other avenue, financial independence is closer than it was before. Not all college grads achieve it right away — Zillow reports an “explosion” in the number living with parents — but it’s something to aim for. Here’s how to get there.

Make that money

Before you throw out some statistic about how hard it is for college grads to get a job in their field of study, remember that there are other jobs out there. “The number one thing to do when you graduate is to develop some stream of income,” says Stefanie O’Connell, author of The Broke And Beautiful Life. She regrets that most grads think they need to have a career-oriented position as their first job. Pick up a side hustle or a shift at your favorite restaurant. It can be anything — if you want to be financially independent, you need your own money. Period.

Keep on living the college life

No, I’m not talking about a diet of ramen and a day that ends at 4 a.m. — I’m saying don’t rush to get land your own digs. The average rent on a one bedroom apartment in a city is $1,199.16 per month and $948.05 per month outside of a city. Living with a roommate can lessen the burden on your wallet and help free up cash to put towards your student loans or an emergency fund.

Sophia Bera, CFP and founder of Gen Y Planning, says getting financial independence also doesn’t mean rushing out and buying a brand new car with your first paycheck. Used is fine. Public transportation, if available, may be even better. “Your two big costs will be housing and transportation, so do your best to try and keep those two expenses low.”

Create your credit

The best time to start building your credit is right after you graduate, says O’Connell. “Companies view new graduates as credit worthy.” The most efficient way to build credit quickly is to open a credit card and pay it off on time and in full each month. If you find you can’t get a card on your own, consider a secured card (which requires you to make a deposit with the issuing bank). If a parent is willing to add you to their card as an authorized user that can help build credit as well. Work out an agreement to pay for your shares of the bills in full and on time. Having good credit is essential to becoming independent says O’Connell. “If you want to rent your own place, you are going to need some credit to qualify, and [although this may be unavoidable in the short term] if you want to be financially independent you don’t want your parents co-signing your lease.”

You’re never too young to start

Saving, that is. Once you’ve established an income, start building a savings buffer in a liquid savings account. Automatically transfer a small sum from checking to savings every time you get paid or ask your employer if that’s something that can be done for you (a solution known as “paycheck splitting”). An alternative: Sign up for an app like Digit that will save for you. It’s free for a short trial period then $2.99 a month. Once you land your first job, familiarize yourself with your company benefits. Does your company offer a match on your 401(k) or something similar? If so, Bera says to try to take full advantage of it because the match is essentially free money. Your aim is to put 15 percent of your income (including matching dollars) away for retirement. If student debt is standing in your way, look at income-based repayment solutions that can ease the burden.

With Hattie Burgher

Articles
Getting Creative With Your Credit
Getting Creative With Your Credit

You know by now just how impactful a credit score is on your life. If you want a mortgage at a competitive interest rate, you bet...

Read More

Home Knowledge
Home Knowledge

If you’re hunting for a home for the first time, there are a million (and one) things to consider. However, in the interest of ma...

Read More

Keep Your Kids Safe
Keep Your Kids Safe

You might think that children with zero digital presence are safe from scammers, but (sadly) you’d be wrong. According to a study...

Read More

Hard Hunting
Hard Hunting

The housing market is tough right now. If you’re a buyer, you already know this. Mortgage rates and housing prices are on the ris...

Read More

Small Matters
Small Matters

We talk a lot about credit scores around here, and for good reason: Those three digits impact your financial life in many, importa...

Read More

Take a Better Look
Take a Better Look

Half a year ago, credit reporting agency Equifax informed consumers that its data had been breached. As a result, more than 145 m...

Read More

Credit Scores: The Secret to Lasting Love?
Credit Scores: The Secret to Lasting Love?

Looking to do something romantic for your significant other this Valentine’s Day? Forget the box of chocolates and roses (okay, m...

Read More

What You Need to Know About Early Tax Refund Services
What You Need to Know About Early Tax Refund Services

Would you rather wait three weeks to receive $3,000 — or receive some of that money now? It’s the financial version of the “marsh...

Read More

How To Protect Your Credit Post-Breach
How To Protect Your Credit Post-Breach

The Equifax data breach, now infamous in both the headlines and the minds of many consumers, originally cited 143 million as the ...

Read More

Website Terms of Service

Please read these "Website Terms of Service" carefully before using SavvyMoney Checkup ("site", "website"). Accessing this site, or making this site available to any third party, indicates that you have read and accept these terms.

  1. Materials. Materials in this site are copyrighted and all rights are reserved. Text, graphics, databases, HTML code, and other intellectual property are protected by US and International Copyright Laws, and may not be copied, reprinted, published, reengineered, translated, hosted, or otherwise distributed by any means without explicit permission.
  2. Links to Third-Party Sites. Linked, third-party sites from website are not under the control of the Licensor. The Licensor is not responsible for the contents of any linked site or any link contained in a linked site, or any changes or updates to such sites.
  3. Confidentiality of Codes, Passwords and Information. Licensee agrees to treat as strictly private and confidential any username, password, user ID, and all information to which you have access through password-protected areas of website.
  4. Maintenance. Licensor shall provide Licensee any new, corrected or enhanced version of the site as it becomes available. Such enhancement shall include all modifications to the site which increase the speed, efficiency or ease of use of the site, or add additional capabilities or functionality to the site, but shall not include any substantially new or rewritten version of the site.
  5. Limitation of Liability. Licensor shall not be responsible for, and shall not pay, any amount of incidental, consequential, or other indirect damages, whether based on lost revenue or otherwise, regardless of whether Licensor was advised of the possibility of such losses in advance. In no event shall Licensor's liability exceed the amount of license fees paid by Licensee, regardless of whether Licensee's claim is based on contract, tort, strict liability, product liability or otherwise.