Financial Independence Is Attainable For Young People
Don’t get caught up in “keeping up with the Joneses”. Becoming concerned with such individuals, and how they live, can get you stuck in “wage slavery” for decades. Part of it starts with college. While getting a degree is still a wise choice, today, young adults are advised to go after something specific with a long-term plan defining their moves.
That being said, just because you have debt doesn’t mean you’ll be financially dependent; but it’s better to avoid debt if possible, or only get involved with “good debt”, than to have this specter loom over your finances perpetually. For financial independence, you need to bring in more than you spend, and in this writing we’ll cover a few strategies to help you do that, including:
- Live Within Your Means
- Avoid Sustaining New Debt As Possible
- Pay Off Existing Debt, Consolidate If Appropriate
- Consider Low-Level Investments As You Can Afford Them
- Buy Used As Often As Possible, And Avoid Financing When You Can
1. Live Within Your Means
Consumerism teaches people to live outside their means through rental, finance, and interest applied to loans. Avoid that sort of thing as best you can. If you can’t pay in cash and own something outright, don’t buy it.
2. Avoid Sustaining New Debt As Possible
There is “good debt”. A mortgage is “good debt” because you incrementally build equity by making your monthly payments on time. That said, the shorter the mortgage, the better. If you can buy a property outright, do so.
Most in their twenties can’t; however it’s not a bad idea to save up $20k and buy a lackluster property to live in rather than an apartment, then sell that property when you upgrade in life. Regardless how you do it, avoiding new debt will help you retain financial independence better.
3. Pay Off Existing Debt, Consolidate If Appropriate
Credit card debt averages a few thousand dollars per person in the United States. Devote time to paying that off. College debt is a bigger problem and can last longer. So can vehicular debt from financing your car.
If you can’t pay off debt directly, then consolidating all debt into a single monthly payment can at minimum reduce the amount of interest you pay in the long run, helping you get out from under the debt thumb quicker.
4. Consider Low-Level Investments As You Can Afford Them
There are opportunities to invest at the $100 or $1,000 level. Careful study and consultation as you consider such options can produce positive outcomes; if you’ve got cash to burn, investment can produce returns when done correctly–but don’t invest if this is “outside your means”. Wait till you can afford it.
5. Buy Used As Often As Possible, And Avoid Financing When You Can
A used car that costs you $5k will end up providing you about the same level of use a new car at $30k does, you just pay for repairs piecemeal over the long run. If you own the vehicle outright, you avoid interest payments. It’s better to buy three “beater” cars for $1,500 a piece over the course of five years, then finance one “new” vehicle over the same time period.
It’s not as convenient, or as stylish, but you’ll save money and see better ROI, or Return On Investment, than if you buy new. The moment a new car is driven off the lot, it depreciates; and that only compounds with time. Used cars are more likely to have value defined by the amount of use you get out of them before you have to acquire another vehicle. For young people, going used is a lot wiser.
Being Debt Free And Financially Independent From A Young Age
Living beneath your means, avoiding new “negative” debt, paying off what you owe, properly investing, and steering clear of financing options represent some solid means by which you can attain and maintain financial security from your twenties and onward.
Different steps work better for different individuals, but these basic steps tend to apply to most people; so take them into consideration as you go about profitably managing your financial profile.
