In my field I meet a lot of young people who haven’t learned the fundamentals of being independent. I’ve met more than a few who have never cooked a meal, even for themselves. I’ve even taught a few college seniors how to make dishes as simple as spaghetti.
The biggest and most important gap is in financial knowledge. Many college students arrive on my doorstep having already made a hash of their finances. Ever get one those “free” credit cards upon landing in college and use it for an emergency, like pizza and beer kegs? I’ve had to teach more than a few business administration majors the basics of interest expense and even how to balance a checkbook. I love teaching people how to become financially fit and for most, the desire to learn is overwhelming.
Most of these students have had the same experience I did—my father never talked to me about money. Without any guidance, I spent too much and saved too little. It wasn’t until my late twenties, when I was thinking about getting married and settling down, that I realized how much debt I had accumulated. I didn’t want to start a family in a financial hole. I finally buckled down, got our student loans and all other debts paid off, and started investing for our future.
Why parents and their children don’t talk about money and how it works is a mystery. In my case, my father was frugal, but by the way he talked about money I assumed he wasn’t very good at managing it, so I didn’t quite see that as an object lesson. When you’re young, the answer to having too little money is to figure out how to make more. My father worked in the public sector, as a game warden, so he never made a lot of money.
Not until many years later, when he was retired and announced that he was buying a second home, did I discover the reason for his frugality—he had been socking money away for retirement. Not only had he been good at managing his money, he was great at it.
Declaring Your Un-Dependence
Becoming independent means becoming un-dependent on credit cards and other borrowings (car loans, for example) to support the lifestyle you think you deserve or aspire to. It’s hard to get a degree these days without ending up in debt, but the money you borrowed to get your education was an investment in your life, at a very low interest rate, that will pay off for years to come.
The money you borrow to buy a shiny new set of wheels automatically makes you dependent on your future income. If a solid opportunity comes along that requires you to move, or maybe take a pay cut in exchange for ownership in a business, or take a year off to travel around the world, you might discover you’ve bought yourself a shiny pair of handcuffs.
If you’ve crunched the numbers and you think you can handle a six-year car loan, do yourself a favor and buy a used car for cash, then each month bank the money you would have paid to the finance company. A used car, if cared for, loses very little in value and you will probably be able to sell it for close to what you paid. After a five or six years of saving the car payments you didn’t have to make you’ll have enough money set aside to buy that shiny new car for cash and be truly independent.
Being un-dependent gives you the opportunity to help those you love. Around the time I began to make some real money and had sorted out my finances, I went to visit my mother on her birthday. She’d been having a hard time and had fallen two months behind in her rent. She was in real danger of being evicted. I went to her landlord, got her caught up, and put the receipt in a birthday card.
My mother burst into tears when she opened it, and so did I. I had never felt as independent as I did in that moment, but also so grateful that I could give back for all the sacrifices I knew she’d made for me. I’d have felt terrible if, instead, all my spare cash was going to support a fancy car or a credit card bill for expensive toys and nights on the town.
A Real Confidence Killer
Being financially independent also protects you from having to borrow from friends and family to support yourself. It’s a confidence killer to have to admit to those who know you well that you messed up. And once you’ve borrowed the money, you will discover that Thanksgiving and Christmas just aren’t the same, especially if you haven’t been able to pay back the loans. You’ll find yourself avoiding those to whom you owe money, and when you can’t avoid them, you’ll feel you have to hide that new tablet computer and park that new car around the corner.
The reverse is also true. If a close friend or relative asks to borrow money from you, don’t ruin an important relationship by saddling them with an obligation they might not be able to handle. I’ve learned the hard way and you probably will also. Instead of lending money, I figure out how much I can afford to lose and I make it a gift instead. I feel better, the borrower has no obligation, and there’s no reason for anyone to feel slighted or disrespected.
Sleep Like a Baby
Being financially sound and independent helps you sleep at night, gives you the freedom to leave a bad job that pays well to take a great job doing something you love that might pay less. It also could affect your ability to get a great job in the first place. Many firms will order a credit check on you when they’re considering you as a job candidate. They want to avoid hiring people who are struggling to make ends meet. People under financial pressure tend to make poor choices, are distracted from their work responsibilities and, in some cases, take risks they wouldn’t otherwise consider.
At Vector, we consider knowing how to manage your finances so important that we’ve incorporated courses into our orientation program on how money works, how to manage yours, how to save, how to raise your credit score, and all the basics that go into living an un-dependent financial life. If you feel confused or overwhelmed by your financial circumstances and your company does not offer a course, find one you can take on your own, buy some books, and learn while you’re young what so many older people wish they had known when they were your age.
And, yes, there are more important things in life than money. The problem is they all cost money.
Find out more about gaining your un-dependence in John Wasserman's book, No Shorts, Flip Flops, or Sunglasses: How to Get and Make the Most of Your First Real Job.
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by John Wasserman
About the Author
Proceeds benefit Children's Dyslexia Centers