Good Morning Green Panda Friends. I hope you all had a really great weekend.  Today we are continuing on with our budget themed posts with some helpful hints on how to achieve financial independence and financial responsibility.  We have previously discussed how to create our personal budget, how to manage our money so that our bills are paid on time, as well as how to budget in saving for retirement.

If we are young and still in school, living at home, or starting to enter into the workforce there is probably not a lot of room in our budget for extra activities.  If we are moving out of our parents house for the first time we are learning to live on our own and we are also learning to budget for the first time.  If we are starting our careers after college and entering the full time workforce we may be faced with financial independence for the first time in our lives.

Achieving Financial Independence

The key to financial independence is to enjoy life while maintaining our financial responsibilities.  Very often young people who make the transition from a budget loving student to a full time pay check mismanage their money.  It’s not (entirely) our fault, maybe we just never had the opportunity to learn about money.  It’s only normal that we are going to make mistakes but the true sign of financial independence is for us to learn from our mistakes.  I definitely made my share of financial mistakes in my early 20’s from racking up thousands of dollars in debt to spending everything I earned and living from pay check to pay check. These are common mistakes made by young twenty-something’s who are learning to manage our own money for the first time.

Creating and maintaining our monthly budget is about so much more than just paying our bills.  It’s also about making room in our budget for the things we love.  Here are some helpful tips to help us achieve financial independence while making the fewest mistakes possible as we learn to become financially responsible.

Have at least 3 months of rent saved before you move out. This covers our first month’s rent as well as any deposit that we have to make. If we can only afford to pay one of our monthly bills on time it should definitely be our rent.

Always Split Your Bills in Two. If we make payments onto our monthly bills with every biweekly pay check our bill balances will be more manageable.  It’s definitely easier to pay $75 biweekly rather than $150 one shot for our monthly bills.

Save in an Emergency Fund. This is also known as our financial reserve.  We can save cash money in a high interest savings account and then use it any time in case of a financial emergency.  Even saving $10 per pay check can add up to a lot in our emergency savings fund.  This can be used if we ever need to make a last minute trip home for a family emergency etc.

Keep Credit Card Limits Low. Our total available credit should not be more than 30% of our entire annual income (not including our mortgage).  This ensures that even if we max out all of our Credit Cards we can still afford to pay them off and void excessive interest charges.

Photo by Stew Dean

Tahnya Kristina

Tahnya Kristina

Tahnya is 30 years old and lives in Montreal Quebec. She graduated in 2005 from Concordia University, and she currently works for a major International Financial Institution. She recently launched You can follow her on Twitter @TahnyaP.