What Does Financially Independent Mean?

What Does Financially Independent Mean?

Financial Independence Explained

By Miriam Caldwell  Updated on July 1, 2022

For most people, it is hard to reach financial independence without a job that allows them to be self-sufficient. But it's taking young people longer to reach this milestone than it did in the past. Forty years ago, most people were able to get a job that made them financially independent in their 20s. Today, according to a study from the Georgetown University Center on Education and the Workforce (CEW), it takes most young adults until their 30th birthday to get a job that allows them to support themselves fully.1

Even if you are still searching for a job that allows you to be economically self-sufficient, you can still take steps to work towards becoming financially independent. Learn more about financial independence and how you can take steps to get there more quickly.

Key Takeaways

To be financially independent, you must have enough income to cover your own bills and expenses.

Many young adults struggle to be financially independent of their parents due to the rising cost of living.

To work towards financial independence, begin saving to move out on your own, pay down debt, and manage your money with a budget.

Being financially independent also means planning for the future. Invest for retirement, build an emergency fund, and work toward other long-term financial goals.

What Does It Mean To Be Financially Independent?

If you are financially independent, you are responsible for your own expenses. You no longer rely on a parent, guardian, or another family member to provide money for you or cover your bills. You are paying your daily expenses and planning for the future, and you are able to meet your basic needs.

Reaching financial independence will take longer for some than for others. It will also depend on your own lifestyle and needs. For example, if you need to pay for college or graduate school, you may consider living at home for a while to save money. In this case, financial independence would be a few years away.

Note:  Financial independence can also be the point where you no longer need to work in order to cover your daily expenses. For most people, this won't occur until retirement.

When To Become Financially Independent

Working towards financial independence may mean different things depending on the cultural and social environment that you grew up in. Some families may expect adult children to fully support themselves beginning at age 18. For others, it may be expected that adult children will continue to live at home or receive assistance from their parents, even once they are working full-time.

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https://www.thebalancemoney.com/when-should-i-become-financially-independent-2385820