8 Money Moves for the Newly Independent

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You're done with college. You have a job. Your mom is hinting that she wants to turn your bedroom into a space for scrapbooking. It's time to set out on your own.

This is an exciting but scary time: You'll have a rent payment and other bills to pay now, and you need to start saving for the future. Now that you've fled the nest, there are some key money tasks that you should tackle. Do these, and you'll be well on your way to financial independence.

1. Start building that emergency fund

Young people living at home aren't too concerned with emergencies wiping out their savings. But once you are out on your own, you are more vulnerable to events that can throw you for a financial loop. Your car might break down and require thousands of dollars in repairs. You may have a medical emergency that's not entirely covered by insurance. You may even find yourself without a job but with bills to pay. This is why it's hugely important to begin putting money aside to cover unexpected events.

Start by working to accumulate three months' worth of living expenses, and then shoot for six. Don't invest this money; you need to be able to access it quickly if there's an emergency. Having this cash on hand could be the difference between continuing to live on your own and crawling back to the Parental Chateau. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

2. Shop around for bank interest rates

Before you went out on your own, you probably didn't think much about banks. You may have put your money in the same place as your parents, or the bank closest to your house. Now it's time to do a little homework to make sure your savings account is doing more than just holding your money.

Interest rates are still low these days, but you can bump up your passive income by shopping around for the best rate. If you are willing to have some money tied up for a while, consider putting some money into certificates of deposit, which offer higher rates.

3. Learn to budget

Being on your own means you have to actually pay attention to your income and spending. This is especially true for young people who may have student loans and aren't earning a lot (yet). It's imperative that you spend less than you earn, and this means paying close attention to your expenses.

You should begin by tracking your expenses each month so you have a good idea of where your money is going. Then, create small budgets for various key categories like groceries, gas, and rent. Your budgets for entertainment and frivolous expenses should be as small as possible. You may be free from Mom and Dad, but you aren't truly financially independent until you're avoiding debt and saving money at a good clip. (See also: Build Your First Budget in 5 Easy Steps)

4. Examine your credit card situation

You may have opened a credit card or two when in college, and perhaps you accumulated some debt. You never stressed about it when you were living at home, and Mom and Dad may have even helped you pay the bills. But now you are on your own, so it's time to get a handle on things. Take a look at how many credit cards you have and their interest rates. If you have piled up some debt, assess which cards carry the largest balances.

You don't necessarily want to close out cards, since that can hurt your credit score. But stop using ones with high interest rates and little other benefit. Come up with a plan to reduce your debt by tackling the highest interest cards first.

Moving forward, you'll want to get in the habit of using credit cards responsibly, avoiding debt, and hopefully earning some rewards along the way. Once you are in the habit of paying off your bill in full every month, examine which cards offer the best benefits, such as cash back or points you can redeem for merchandise retailers or air travel. (See also: Avoid These 6 Mistakes Newbies Make With Their First Credit Cards)

5. Make sure you are properly insured

It's common for young people to remain on their parents' health care plans, but at a certain point you need to get insurance of your own. You also need to obtain things like auto insurance, plus renter's or homeowners insurance. If you have a spouse or dependents, you should look into life insurance as well. This requires some research and discipline so you can find plans that are reasonably priced but also provide an appropriate level of coverage.

If you are employed, you may be able to get subsidized health insurance from your employer. (Be sure to pay attention to the open enrollment dates.) Those without insurance through their job can get it through the marketplace exchanges set up in accordance with the Affordable Care Act.

Choosing to go without health or auto insurance could subject you to penalties from the federal or state government. But more importantly, you place yourself at risk of financial disaster if a bad event takes place. Purchasing proper insurance plans is a key component of sound financial planning.

6. Take advantage of your employer's retirement plan

If you have a full-time job, there's a good chance your company will help you save for retirement by offering a 401(k) or similar plan. These plans allow you to place a portion of your salary into a wide range of mutual funds and other investments, and your employer may match a certain portion of those contributions. Plus, any money you contribute is deducted from your taxable income, so you save money. There is very little downside to opening an account right away, and you should do your best to at least get the full amount of the company match. The earlier you start, the more time your money has to grow.

7. Open a Roth IRA

Even if you take advantage of your employer's retirement plan, it's a good idea to open a separate individual retirement account that offers different tax advantages. With a Roth IRA, you can invest up to $5,500 annually in just about anything you want, and the gains on those investments can be withdrawn tax-free when you retire. A Roth IRA is available to anyone with earned income, so it's a great way to save for retirement if you are self-employed or don't get an employer-sponsored retirement plan. (See also: 5 Retirement Accounts You Don't Need a Ton of Money to Open)

8. Educate yourself about taxes

Guess what? Being financially independent also means you get to do your taxes! The IRS will always get a cut of your money, and it's important to understand how that will impact your take-home pay.

If you are employed full-time, you will likely have taxes taken out of your paycheck, but you need to adjust your withholding so that you're not stuck with a large tax bill or refund. If you are self-employed, you will need to plan to pay taxes on your income, and it may require you to pay taxes quarterly. Perhaps most importantly, you must learn all about the various tax deductions and credits that may be available to you.

If your taxes get too complicated, you can always pay someone to do them for you. But remember that there's a cost to going that route, and handing off your taxes to a professional doesn't mean you should remain ignorant as to what's going on. (See also: 8 Tax Return Mistakes Even Smart People Make)

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