According to a survey of 1,000 students from the University of Arizona, about half still relied on their parents for some degree of financial support in the two years after graduation. That means that the other half were at least somewhat financially independent, and 300 of those considered themselves fully independent. You, too, can reach that pinnacle. Here are some tips to get you there.
Get a Job — Or Jobs
It might sound like a no-brainer, but you need income to live independently. Only 49 percent of the students in the University of Arizona study reported working full time, so you might even want to take on multiple part-time jobs if one doesn’t provide enough hours for a full-time commitment.
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Put a Roof Over Your Head
Renting a home or apartment requires cash up front. You’ll need a security deposit and your first month’s rent at a minimum. Saving that money might mean living at home for a little while after you secure a job.
Even when you are able to sign a lease, remember that the less your rent takes up of your monthly income, the more likely you’ll be able to save money. Opting for a smaller place could mean the ability to save a six-month cushion, set aside money for a down payment on a house or maybe even invest a little.
Live Within Your Income
You’re likely to earn more the longer you work for any employer because you’ll probably get raises, but for now, set a budget based on your current take-home pay (that’s the money you walk away with after taxes). Make sure that your income exceeds all your expenses with some room for saving, too, and then live within it. Identify the “extras” (for example, a pricey cable package, eating out or expensive tech purchases), and put the money you would have spent on them into savings instead.
Pay Down Debt
Debt can derail financial independence, and many graduates begin with a whole lot of it in the form of student loans. If you find yourself in this predicament, here’s some good news: You’re not stuck with the repayment plan you first selected.
Most federal student loans qualify for a graduated repayment plan, allowing you to pay back less now and more later. Your payments will increase as time goes by, as you presumably earn more. The Revised Pay as You Earn Repayment Plan (REPAYE) limits your payments to 10 percent of your discretionary income. You can look into your options on the Federal Student Aid website.
You’re not locked in if you took out private student loans, either. If you have more than one, you might look into consolidating them. Depending on how many payments you’ve already made toward your initial loans, your outstanding balances may be lower. This could result in lower payments as you get on your financial feet, since you’re borrowing less this time around. You can also refinance private loans if you find a more favorable interest rate and terms.