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Gaining financial independence in the 21st century: The first five moves to make

May 16, 2024 | 3 min read

Whether you’ve just gotten your first place or been out on your own for a while, making sure you have enough money to pay your expenses — on your own — can be quite daunting. But achieving financial freedom these days is very doable. Start by taking these steps toward financial independence.  

Ready to achieve financial freedom? Start by doing these five things. 

Living on your own definitely qualifies as next-level responsibility. But we know you are up for the challenge. These tips will help you along the way.  

1. Assess your financial situation. This is a critical first step on your journey toward financial security. Begin by evaluating your income, understanding not just the amount but also its stability and potential for growth. Then, examine your expenses to gain a clear picture of where your money is going. Identify any financial dependencies, such as debts or financial support to family members. Next, factor in your current financial obligations and responsibilities, such as rent, bills and loan repayments. Finally, set realistic financial goals that align with your aspirations for financial independence. For example, you could make a goal to save $10 a week in an emergency fund or make a goal to start a side hustle like freelancing or selling things online. Having clear objectives will guide your financial decisions and provide motivation along the way.

2. Create a budget and track expenses. These are indispensable tools for achieving financial freedom. Start by developing a budget that accurately reflects your income and expenses, being sure to account for essentials like rent, bills and groceries, as well as debts like student loans or car payments. Once your budget is in place, diligently track your spending to identify areas where you can make improvements. (Pro tip: Use a budgeting worksheet to make this part easier.) Analyze your expenses and identify discretionary spending that can be reduced or eliminated. By prioritizing essential expenses and consciously curbing unnecessary spending, you can free up money to invest, save or pay off debt, bringing you closer to your financial independence goals.

3. Build an emergency fund. Potholes on the road to financial security are inevitable so you must start saving now for unexpected expenses. Aim to accumulate a financial cushion equal to three to six months of your living expenses. To make saving easier, set up regular contributions to your emergency fund with automatic transfers from your paycheck or bank account. Disciplined financial planning helps you gradually build a much-needed safety net. 

4. Build your credit. The importance of good credit cannot be understated — and that starts with building credit in the first place. Start by choosing the right credit card and using it responsibly to build a positive credit history. This means making on-time payments and keeping your credit utilization low (ideally below 30% of your available limit). Responsible credit usage demonstrates your financial reliability to lenders and improves your credit score. Also, don’t forget to monitor your credit report regularly to ensure accuracy and quickly identify any errors or discrepancies that may negatively impact your score. You want to avoid a situation where you need to rebuild your credit.

5. Increase your income potential. More money always helps. And since it doesn’t grow on trees, start by making a point of investing in personal development that will help drive advancement opportunities. This can involve pursuing additional certifications, attending workshops or seminars or seeking mentorship to boost your skills and knowledge. If necessary, consider exploring part-time jobs or freelance opportunities that can supplement your income. These side ventures can provide an additional stream of revenue while allowing you to diversify your skill set. Lastly, focus on developing skills and expertise that align with higher-paying job opportunities in your field. By continuously improving your skills and staying updated on industry trends, you can position yourself for higher-paying roles and unlock new income possibilities.  

Your financial independence starts now 

Becoming financially self-sufficient is easier than you think. By assessing your situation, making a budget, creating an emergency fund, building your credit and increasing your income potential, financial independence is well within reach.  

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