There comes a time in every person’s life when they must face up to the fact they’re responsible for their own financial lives. You have to break free from your parents or your bad habits and start living like an adult. It comes for us all, my friends.
Accepting financial responsibility for yourself can be an exciting and rewarding thing, though. It certainly doesn’t have to be doom and gloom!
I have always been a really independent person. I like figuring things out on my own and handling my own affairs. For someone like me, accepting financial responsibility was a great thing. It meant more control over my money and having a better understanding of myself as well as my finances.
What Does it Mean to be Financially Responsible?
So what exactly am I defining as financial responsibility? Being an independent adult who’s responsible for their own finances means a few things:
- You have your own stream of income you generate for yourself
- You manage your own bank accounts, credit cards, debts and investments
- You set and manage your own budget
- You pay all your own bills
There are other things to it, but these are the cardinal rules. A financially responsible adult is a financially independent one. Sure, we all may get a little something from our parents at our birthdays or the holidays, but the independent among us aren’t getting a monthly stipend from the bank of Mom and Dad.
Similarly, financially responsible adults don’t rely on gifts or loans from parents to make ends meet. Your job should pay for your rent, your transportation, your food, your bills, and your fun. If it’s not, you may need to make some reductions in your spending so you can be the one handling all that.
It’s fine to ask family for a loan once in a while if there’s a crisis, but if your parents pay your rent every month, you’re not financially responsible for yourself.
Like I said, I find managing all of those things exciting and fun. I like earning my own money and spending it how and when I want. I like knowing I can, and in fact AM, taking care of myself. Being financially responsible for yourself provides a level of freedom that reliance on others doesn’t. Just like how debt limits you, being financially beholden to someone else for your spending money limits you.
If you’re already responsible for your own money and can check off the four things listed above, congrats! You’re at baller status. If you’re not, don’t worry. You can reach it easily enough.
How to Become Financially Responsible
If you have a job already, set yourself a budget. From budgets come all good things! Take stock of how much you earn and what your monthly expenses are. Once you have these basic facts, you can see how much you may be taking from other people, and how you can carve that amount out of your spending elsewhere.
Get to really understand how to pay all your bills. Write down when every bill or credit card is due in your calendar. Take a look at the interest rates on any credit cards so you know how much you’re being charged each month.
If your parents are paying for credit cards, that’s a great place to start learning how to be a financially responsible adult. Have your parents stop making payments and begin making them yourself. This will force you to consider the amount of money you spend on the card each month, and will get you into the habit of making regular monthly payments.
Familiarize yourself with your finances. If you know your mom opened up an IRA for you three years ago, you need to get that account information today. Ask your parents what or if they have any accounts in your name. Make sure you understand exactly what they are and how they work before you assume custody of them.
If you have a trust fund in your name, but can’t be trusted not to spend it all on lattes and vacations, let your parents hold onto it a little longer. You don’t want to ruin anything in the name of becoming independent.
Take it One Step at a Time
Every other month, transfer another responsibility over to yourself from your parents. Start with the credit card and then move to the phone bill. Then take over the car insurance payments.
You don’t have to jump in all at once. You’ll probably stress yourself out and blow your budget at the same time. Learn how to adjust your budget for each new expense and take your time with it. Learning and setting good money habits is more important than assuming responsibility.
When you’re just starting out, all of these things can seem overwhelming. Take it one step at a time! It takes time to learn about money and even more time to learn to use it well. Read up on each new responsibility you acquire. Invest time in understanding your situation and how to make it better. That’s a true financially responsible adult!
Do you consider yourself financially responsible? If so, when did you reach that status? If not, do you want to be responsible for your money?