From education fees to first cars and beyond, many parents support their children financially through several key stages in life. There comes a time for all of us, however, when we need to step away and become independent – but it’s not always that simple.
It’s estimated that the ‘bank of mum and dad’ handed out £6.3bn in property loans last year, and that’s not to mention weddings. While their help is almost always appreciated and often very necessary, it can feel empowered to live by your own means.
Here are five steps to becoming financially independent from your parents.
Set short and long-term goals
Setting goals is the cornerstone of all financial planning. Think about what your vision of independence looks like; is it moving out? How about taking over your own bills, or paying back what you owe?
It’s important to realise that it won’t happen overnight and saving takes time. Tackle small goals first, such as your mobile phone contract, and build from there.
Create a realistic budget
With your goals in mind, it’s time to start tracking your finances. Make a list of your monthly outgoings including rent, bills, fuel, food and entertainment, and work out how much your parents currently cover. This will give you an idea of how much money you need to raise to become independent.
Many banks now offer budgeting features in their mobile apps to make this process quick and easy.
Spend within your means
It goes without saying that a huge factor in financial independence is spending responsibly. Creating your budget should have helped you spot some quick wins such as cancelling unused subscriptions, but you may have to get more creative to cut back in other areas.
Adjusting to a slightly lower standard of living will stand you in good stead for the future as you take on additional responsibilities such as a mortgage and children.
Increase your income
Are you still coming up short? Don’t worry – 40% of us blame low income for lack of savings. Earning a promotion is perhaps the most ideal method of bringing more money in, but you could also sell unwanted items or set up a side hustle offering products or services online.
If you need a cash boost there are plenty of alternative financial routes out there that don’t involve relying on your parents. Be wary of quick loans, however, as the interest you repay can be extremely high and could lead to further financial problems.
Talk to your parents
The final and possibly most important step is to be open with your parents about your plans. They’ll no doubt appreciate the extra cash, but can also hold you accountable and help you stick to your new way of life.
If you still live at home, consider setting yourself rent and bill obligations and see how you get on.
Are you on the road to financial independence? Follow these five steps to start making your money go further.