6 Steps to Achieving Financial Independence

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Many adult children continue to live with their parents without the possibility of an alternative, as many post-college graduates and Millennials have found it difficult to secure the kind of employment they need to move out and begin their lives independently.

According to a recent study by the Pew Research Center, as many as three in 10 young adults return home to the family nest after having left to pursue higher education or work. These young adults have been dubbed "boomerang kids."

According to the research:

  • Three-in-ten young adults ages 25 to 34 live with their parents through their late twenties and early thirties.
  • The portion of Americans living in "multi-generational households" is the highest rate since the 1950s, and has increased notably in the past five years.
  • Nearly four-in-ten adults in that age range say their "current financial situation is linked to their parents' financial situation."
  • 89 percent of those adults however, report helping with household expenses, and 48 percent pay rent to their parents.

For those young adults who are inching their way toward achieving financial independence, it can be difficult to figure out when exactly to move out of mom and pop's house. Here are some guidelines to help you decide when your financial situation is stable enough to leave the nest.

1. Income
Does your income support your entire livelihood? Think about it — you'll need to pay monthly rent, utilities, transportation costs, food costs, home furnishings, possible renovations, lifestyle and recreational activities, as well as other purchases you'll make throughout the year.

In our next few sections you'll get an idea of how much you might need for several of the key costs you'll need to cover when moving out.

2. Monthly rent
The U.S. Housing Department suggests that a person should avoid spending more than 30 percent of their gross salary on rent, a guideline that landlords in major cities have taken to heart and adopted by typically requiring tenants to demonstrate their financial reliability by having an annual income at least 40 times their monthly rent.

According to, by dividing your annual salary by 40, you can determine your monthly rent budget. Since in reality you're only paying 12 of those payments, the formula is overly generous, allowing you enough money to add in transportation, food, and utilities.

Let's say you have a $35K annual salary. 35,000 ÷ 40 = $875. You should be guaranteed to be accepted by a landlord for a monthly rent at or under $875.

Also, typically you pay two months' rent to your landlord from the get-go, one as your first month's rent, and one as your security deposit. If you used a broker, broker fees are also typically at least equivalent to one month's rent.

3. Home checklist
So you've got enough money for rent. But how much will you need to furnish your new digs? This nifty checklist breaks down the necessities by room, such as kitchen, living room, and entrance area. There are also blanks for you to fill in, which you can easily do by printing out the provided worksheet.

4. Food costs
According to research by the analytical data assessing organization, Gallup, in 2012 the average American spent $151 on food per week, with those with a high income spending on average $180. Multiply that by 52 to find out if you can afford these costs.

5. Savings
It's always wise to start funneling money into a savings account when you attain a steady paycheck. You may want to have a lump sum target goal you want to meet by the end of the year or you might want to set aside a portion every week. Consider how much you want to save. Then, draw up a budget plan for how each of your paychecks will be divvied up so you can visualize how your lifestyle will be supported in the near future.

6. Practice it first 
Before moving out for the long haul, take on financial responsibilities like you were paying for your own. Buy all your food, pay all your expenses, and give your parents your share of every bill (which you can request your parents set aside as your starter fund for moving out). This will give you an idea of whether or not you can stay afloat living on your own.

Remember, there are ways to cut your costs dramatically. You can take in a roommate, reduce your spending outside of bare necessities, or even rent a room in someone's house. Depending on how badly you want to be on your own, you can make your situation work. However, in order to live comfortably, you may want to save your nest egg by staying with mom and dad for the time being so that you can live the way you want in the future.

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  • Report this Comment On February 09, 2014, at 6:03 PM, Disgustedman wrote:

    That's why I bought a 24 passenger shuttle bus. I didn't do anything to the outside, so people think it's still a shuttle bus (Run by the local transit system) I have the windows insulated (Blocked in other words) I have taken out the seats (Except for 1 row) and installed a shower, toilet and cooking area.

    My bed is futon and I have everything bolted down in case of an accident. Storage for food and such. Oh, correction, I do have my propane tank on the back, that's the only give away and people don't recognize that it's NOT a transit bus...

    Rents here are $400 and up and that's NOT including utilities which are $50-$150 a month including rent...Good luck getting a decent job unless you're some govt slob....

  • Report this Comment On February 09, 2014, at 6:23 PM, Elaeblue wrote:

    Yes but first they must have a job.. this is where many are unable to do what must be done. Or they have a job but work only 20 hours or so a week. Hint: two of those part time jobs is the same a one full time job - go look!

    Also many parents don't charge anywhere near what the person would need for an apartment.. I only charged my son $300 for everything!

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