Happy 4th July to all. What is the reason behind the Americans celebrating 4th of July? 200 years ago, we had become independent and that wasn’t any small feat. The same can be said about the present day millennials who are just starting out their financial journey. As per a report by Sun Trust Banks, one among four people within the age of 21 and 34 are still getting immense support from their parents. Usually, this financial assistance comes in the form of someone else paying their mobile phone bills, medical bills, car insurance premiums, household expenses and even mortgage payments!
If this is the extent of financial dependence among American millennials, how are they ever going to seek financial independence? Now that we stand on 4th of July which marks the American Independence Day, how about making it a day for financial independence? Here are few tips to consider.
#1: Trigger off your debt
Either pay down or debt or implement a plan following which you can eventually start getting debt free. The younger generation who graduate fresh out of college and who get their first paycheck are immensely impulsive about their purchases. They go out in the market to buy a car, without even wondering how huge the car monthly payments can be. There are in fact too many people who tend to buy a brand new car soon after grabbing a job. Trigger off your bad debt first and then take care of your good debts.
#2: Adopt a do-or-die strategy for saving
Start living within your means and evaluate your monthly take-home pay and other monthly expenses so that you can find enough space for building a rainy day fund. Too many Americans are very badly prepared for a sudden expense. In fact, you will be surprised to know that around 68 million US adults have 0 dollars saved in their emergency funds. For young adults without families, having an emergency fund is extremely necessary as you never know what the future has in store for you.
#3: Keep a close watch on your retirement savings
Remember that it’s never too early to start planning your retirement and once you start taking this noble step, you’ll thank yourself later on. If your company has either a 401(k) or an IRA, you should contribute towards these employer-sponsored funds. There’s nothing better than familiar matched contributions from your employer as this is the best thing you could ask from your employer. Therefore, make sure you contribute a part of your monthly take-home pay towards your retirement so that you can spend your golden years in peace.
#4: Stop living a lifestyle that’s not yours
1 among 8 Americans is willing to take on $1000 on debt in order to be able to lead an extravagant lifestyle and match up to the lifestyle of someone else. When you earn more, your expenses tend to soar higher which poses a deeper risk of delving into high interest debt. Unless you can differentiate between needs and wants and stick to your needs while delaying your wants, you will never be able to become financially independent. Don’t think of keeping up with your peers as that is what is pushing you towards debt.
At the end of the day, if you want to make 4th of July memorable by making it the day of your financial independence, you’ve got to choose the path of control and resistance. Take the best steps as mentioned above in order to be able to achieve your goal of monetary independence by the time you become a senior.