How to Reach Financial Independence Early in 8 Steps (2024)

When you move into a new place, rent and utilities are now your responsibility. The bills will be in your name and sent to your new address. That’s why you’ll need to have your own checking account.

Having a personal checking account allows you to pay bills online or via paper checks. The account can also help you manage your spending. By setting up automatic payments for recurring bills and account alerts, you can help guard against overdrafts, unusual activity and fraud.

Additionally, checking accounts often come with online banking and mobile banking apps that give you easy access to your accounts and help you perform everyday tasks, such as depositing checks or transferring funds. And digital tools can give you guidance on how to budget your money.

A good way to begin is to set some spending guidelines. One traditional method is the 50/30/20 rule for after-tax income. It breaks down like this:

A good credit scorecan help you with renting an apartment, landing a job, getting favorable loan rates and a lot more. Because a longer credit historygenerally works in your favor, it’s good to start building credit early. Ideally, you want to have your own card so that you can control purchases and payments.

If you don’t have a credit card, consider applying for a secured card, which uses a security deposit as collateral. This canhelp you build credit. Sharing a card with your parents is another option. When you’re a joint cardholder, the card becomes part of your credit history. If you’re an authorized user, the card may or may not be reported on your history—it depends on the issuer. If your parents have good credit habits, this can help you qualify for your own card.

Once you get a card, use it thoughtfully. Credit card debtcan put the brakes on any financial momentum you might be gathering. Ideally, you should pay off the full amount each month. If you do carry a balance, pay as much above the minimum payment as possible. And make sure you pay on time—that’s the single most important factor in building a good credit score.

You have a few options for health care coverage when you’re starting out. If you’re under 26, you can stay on your parents’ plan, which gives you the chance to learn theins and outs of health insurancewithout pressure to take immediate action. You may also be able to get health insurance through your employer (you’ll likely need to pay a share of the cost). Other options include coverage through a spouse or buying insurance through a government exchange—either your state’s or the federal government’s.

Before you make a choice, make sure you understand what your monthly premium will be and what the plan covers, so that you can estimate additional costs.

A true mark of financial independence these days is having your own phone plan. Begin by taking a look at your parents’ most recent phone bill. That will give you an idea of what your share is. If you’re happy with your device and calling plan, you might be able to transfer your existing phone to a new plan with the same company. If not, you’ll need to figure out roughly how much you can afford for a new smartphone and calling plan, which are often bundled together. You’ll pay for the phone over a 24- to 48-month period, in many cases interest-free, as part of your wireless bill.

If you’ve been piggybacking on your parents’ TV or music streaming services, now’s the time to stop. It’s an easy way to signal your financial independence—and your parents will be happy not to pay for channels they don’t use.

Simply pick the streaming services you use most and establish your own account by going directly to the provider. Setting up automatic payment withdrawals from your bank account can ensure you always pay on time and there’s no interruption to your service.