As millennials, we want to do it all, be it all and see it all. But there’s one big thing holding many of us back from achieving our version of the American dream — financial independence.
In fact, according to ABODO’s analysis of U.S. Census data more than one-third of millennials have yet to leave the nest. And the proportion of older millennials — ages 25 to 34 — who are living with their parents has reached 19 percent, the highest point ever, according to the Associated Press. Why the high numbers of millennials residing in their childhood basements? Economic necessity.
The good news? Your circumstances right now don’t have to determine your possibilities for the future. Here are 8 strategies for achieving financial independence and moving on out of that musty basement:
Know where you stand today
It’s time to have a heart-to-heart with yourself about your current financial situation. When I first started on my journey to financial freedom, the first thing I did was review my bank statements from the previous 90 days. I was shocked to find out that $20 here or $50 there added up to hundreds of dollars each month spent on things I didn’t need.
Apart from coming to terms with your spending habits, it’s important to calculate your total debt number. Try creating a simple spreadsheet to list all your student loans and credit cards. Good ole fashioned pen and paper will work just fine as well.
The purpose of this exercise isn’t to throw yourself a pity party but rather to lay the groundwork for getting to where you need to be.
Beef up your financial knowledge
It can be really overwhelming to start learning everything there is to know about personal finance. However, online bank accounts like Chime can help you make proactive money decisions.
Start with the basics such as understanding how to create a budget, manage debt, save for retirement and invest for the future. When you’re just starting out, it’s important to do your own research but remember there’s no shame in asking for help from a financial expert. You can search for a fee-based financial advisor here.
Armed with some financial knowledge, it’s now time to set your plan into motion. Choose one big picture goal that you’d like to achieve over the next 12-24 months. For example, moving out of your parents’ house.
The cost to move out will likely be several thousand dollars including a security deposit on an apartment, first month’s rent and buying furniture. Once you’ve come up with the amount of money you’ll need, divide this up into months. Monthly savings goals are a lot more manageable and you can give yourself a small reward each time you achieve them — #winning.
You can use this same approach to figure out your monthly expenses when you move out.
Automate your savings
Having a plan means very little if it’s hard to execute. One of the easiest ways to save money is to take the guesswork out of the equation completely. Chime makes it easy for you to achieve this goal through automation. With a Chime account you can save when you get paid¹ by automatically directing a percentage of every paycheck into your savings account.
As a bonus, if you use your Chime card to make purchases, Chime will round up each purchase you make to the nearest dollar, and transfer the roundup amount from your Checking Account to your Savings Account².
Get aggressive with paying off debt
There are so many advantages to eliminating your debt sooner rather than later. Apart from achieving financial zen and saving on ridiculously high-interest costs, getting rid of debt frees up your income. Imagine a life without payments — the possibilities are endless!
There are lots of ways to pay down debt quickly such taking on a side hustle or two, dramatically reducing your expenses or considering tools such as credit card balance transfers.
Go on a fiscal fast.
You could also try out a fiscal fast. This is like going on a diet but for your finances. The idea of a fiscal fast is to completely eliminate all non-essential spending – like coffee runs – for a specific period of time. Short fasts last only a few days whereas more extreme ones can last an entire month. Along with jump-starting your savings goals, fiscal fasts also teach you to be financially disciplined and even creative.
The key to success is to transfer all the money you would have spent during the weekend or month into a savings account. I’ve done five fiscal fasts in the past year or so. Each time I’ve saved between $250 and $300. This helped me get rid of my credit card debt a lot quicker.
Invest in yourself.
You are your biggest asset. Take the time to invest in your personal and professional development and watch the returns roll in. You might choose to start with investing in your career or professional advancement by learning new skills, participating in training sessions, or taking a new course. These steps can set you up for your next promotion and possibly even a raise.
There’s also huge potential in exploring your creative side. Lifehack notes, “creativity, in any form, helps us to grow personally and professionally, to view problems and solutions in different ways and to utilize other parts of our mind that may have been previously untapped.”
Throughout this journey, don’t neglect self-care like eating well-balanced meals and exercising. Remember, health is wealth.
Check your thoughts regularly.
You might be surprised by what positive thinking and even meditation can do for developing good financial habits. These tools can help you stick to your goals, bounce back from setbacks and reduce anxiety when it comes to your finances. Now, it’s time to go and do! Start implementing even one of these strategies per week and start writing your financial independence story today.
This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.