Own Your Own Money This July 4th: How Much Does Independence Cost?

Alexa von Tobel

Dear LearnVesters,

July 4th is a day to think about national independence, but we’ve decided to take this a step further: What’s the cost of personal independence?

Financial independence means:

  • Autonomy.
  • Not being tied to any other person because of your finances: Money is not a reason to stay in a bad relationship, since no one holds your purse strings but you.
  • The freedom not to accept a job offer you hate, and stick it out for something more up your alley.
  • The money to get up and leave a bad situation.
  • Being able to do what you want, to dictate your own life: You can up and travel around Asia for a month if you’re in a place where you have to get away from everything else.
  • Not every purchase is life or death; a nice dinner with friends won’t sink you into debt, and buying a dress that makes you feel confident won’t make you miss rent.

So, what’s the roadmap? Here’s how we break it down. The goal is that, by age 30, you’ll have these 6 things in place. Before you get too anxious, remember that LearnVest is here to help you achieve these goals:

1. A Credit Card in Our Own Name

You need a credit card in your own name to build your credit score, which is an absolute necessity. It needs to be in your own name so that you’re not dependent on anyone else!

2. A Credit Score of 760 (Or Close!).

Your goal is to work toward a credit score above 760; the best way to do this is by paying all of your bills in full every month. (Here are 9 more ways to see an immediate credit score improvement.)

3. A Sizeable IRA

On the order of about $15,000 or more. Here’s how we figure: The goal we would love you to achieve is to max out your retirement account every year (contributing $5,000 per year). The ability to do so will vary greatly depending on your life situation, but contributing even $3,000 per year starting at age 25 should leave you with about $15,000 in your account, depending on the market. Remember that the earlier you deposit your money into an IRA, the more potential it has to grow. Feel like you can contribute more than that? Great! Do it. Feel like you can’t even get close? Email me directly at alexa@learnvest.com to be signed up for our free upcoming bootcamp (“I Need To Cut My Costs” Bootcamp).

4. A Decked-Out Emergency Fund

Your emergency fund should cover six to nine months of living expenses. So, if you can live conservatively on about $2,000 per month, you should plan to have close to $18,000 tucked away. If you’re not there yet, reading the LV Daily, following our checklists and joining our bootcamps will help you get there. We’re here to help. After all, this money isn’t for a rainy day—it’s for a monsoon.

5. No More Bad Debt

Credit card debt is bad debt. By age 30, your goal is to have zero credit card debt. This is your first priority!!

6. An Extra Savings Account

This is money for your future. It could be for a home, a wedding, future children, or anything else important to you. Since these are all big-ticket items, plan to have multiple thousands of dollars in it—that’s your goal.

When your finances are in order—which they will be if LearnVest has anything to do with it—you’ll have the freedom to go where you want, do what you love, and be who you are.

Happy Independence Day!



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  • Alexa

    I hope everyone has a fantastic Holiday! -Alexa

    • Selena

      Thanks, Alexa! This was a great post.

      • Alexa

        My pleasure Selena…that's why we are here!

  • Cmorg

    Thanks Alexa! I'm still working on 4 & 6 after buying a home (hello drain of savings!) LearnVest is really helping me with the planning though. Happy 4th of July

    • Alexa

      Awesome- congrats on buying a home! I hope you are nice and settled. If you have any helpful tips that help you figure out your savings goals, let us know! We are working on detailed content to help people better save for specific things like – having children, saving for a house, saving for a trip – etc. All the best and keep it up.

  • kodemonki

    Being able to travel around Asia for a month has a lot to do with a flexible job – or being able to find another one, not just the money.

    • Alexa

      agreed. I wish I had traveled more before I started LearnVest as I am certainly not able to go backpacking through Europe now!! :-)

  • fatma

    I loved your tips. I have read before about saving for retirement and emergency but this is the first time I read about an extra saving account. I am thinking how can I build this extra saving account? I mean how much should I take from my salary to this account?

    • Alexa

      Hey Fatma! Thanks so much for writing. To help clarify — you should have:
      1.) an emergency fund (of at least 6-9 months of your monthly expenses)
      2.) a retirement account
      3.) AND THEN (if you can keep saving more) an extra savings account for shorter term needs and big purchases (like trips, a wedding, a car, a house, or for kids).

      The percentage of your salary will depend on how much more you can save!

      Does this make sense?

  • Catholic School Teacher

    I love this! I have 1, 2, and 5 covered. However, I am curious about the salary of this woman/man in order to reach 3 and 4. As a teacher in a Catholic school, I earn a small salary but consider myself to be frugal (not cheap). I have started on 3 and 4, but I am skeptical about reaching your goals (especially since the school does not match 403 b contributions). Do you have a percentage of income you could recommend instead of dollar amount? I think that would be helpful for the readers who are on the lower end of the pay scale. Thanks!

    • http://twitter.com/amkade Allison Kade

      Hi Catholic School Teacher,

      The reason we provided an actual number amount for those instead of percentage of salary is because that's the government's maximum amount for an IRA (and we would love for you to max out your IRA–which is independent of whether or not your employer matches your contributions). Although we understand that it's very difficult for many people to contribute this amount every year, the hard truth is that retirement costs a whole lot of money!

      That said, a good starting goal is to make sure that you contribute SOMETHING to your IRA every month. Even contributing, say, $50 per month can go a significant way toward building that retirement nest egg!

      Best of luck,
      Allison Kade