You, Too, Can Become Financially Independent. Here's How
WHY YOU SHOULD CARE
Because it’s never too soon to start saving.
By Blaire Briody
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When Marissa Connell graduated from Loyola University Chicago, she knew that starting her post-graduate life would come with financial challenges. She planned to stay in Chicago at a time when the rising cost of living proved prohibitive for many recent grads. According to the 2018 Apartment List Nation Trend Report:
The average rent for a one bedroom apartment in Chicago is $1,080.
Plus, with nearly $30,000 in student loans, Connell was on the clock to find a job that could also cover repayments — which is no easy task for a new grad with minimal work experience. Connell also did not want to risk racking up even more debt while waiting to land a high-paying job. Thus, she got a job at a pizza restaurant and moved in with her boyfriend’s parents to begin saving money. She also found a paid internship in her chosen field — marketing — to gain experience that would help her land a more secure role later on. Connell set a target and began squirreling away 10 percent of her income to get to a place where she could pay her own way and not be dependent on loans.
“I was saving so that in one year, I would have enough money to put down a deposit on an apartment to rent, with quite a bit extra,” Connell says.
The first thing to do, no matter what you’re making, is save a little bit right off the top.
Judy McNary, author
Judy McNary, author of Coin: The Irreverent Yet Practical Guide to Money Management for Recent College Graduates, says Connell’s approach was a solid start to achieving financial independence.
“The first thing to do, no matter what you’re making, is save a little bit right off the top,” she says, noting it’s less about the amount you save and more about forming a habit.
And while you might start small, the ultimate goal, according to Mical Jeanlys, General Manager of the Chase Slate credit card, is to get to a point where you can save 15 percent or more of your income each month, with a goal of creating an emergency fund should anything go wrong. “Consider setting up a direct deposit into your savings account to make the process as seamless as possible,” she says.
“[To build an emergency fund], start by determining how much you really need to get through a crisis and start putting away a little at a time to save toward that goal,” Jeanlys recommends. And if nothing goes wrong, that money can one day go toward a down payment.
Of course, saving is much easier said than done, but experts have a rule of thumb they recommend young adults follow to save money: 50/30/20. The rule suggests that each time you receive a paycheck, you should put aside 50 percent for essentials, 30 percent for things you want (but could live without) and 20 percent for savings and debt repayments.
In the short term, this technique helps you build savings to fall back on when times get tough. In the long term, it helps develop healthy savings habits that can set you up for a secure future. After all, the goal is not just to become financially independent today but to sustain this independence for years to come.
Between rent, loans and basic necessities, balancing your finances can seem like a lot. But with a few simple steps and some practice, the dollars you save will start to add up.
Just look at Marissa Connell. Within her first year after graduating college, she secured a full-time job with great benefits, moved into her very own place and began saving for her future. She’s been financially independent ever since.
- Blaire Briody, OZY Author Contact Blaire Briody