{"id":3187,"date":"2025-05-26T06:00:00","date_gmt":"2025-05-26T13:00:00","guid":{"rendered":"https:\/\/www.simplifimoney.com\/blog\/?p=1434"},"modified":"2025-06-15T07:41:31","modified_gmt":"2025-06-15T14:41:31","slug":"7-steps-from-college-to-financial-independence","status":"publish","type":"post","link":"https:\/\/www.quicken.com\/blog\/7-steps-from-college-to-financial-independence\/","title":{"rendered":"7 Steps from College to Financial Independence"},"content":{"rendered":"\n

Graduating from college is a major milestone on the road to financial independence. It sets you up for a potential lifetime of success by raising your expected salary by about $20,000 per year<\/a> over a high school diploma, and that\u2019s only the beginning.<\/p>\n\n\n\n

The steps you take today can also set you on a long-term path toward wealth and financial independence \u2014 real independence, with the money you need to do what you want to do and the time to do it, free from the daily grind.<\/p>\n\n\n\n

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See how Quicken helps you build your financial independence.
\n Continue \u2192<\/a><\/p>\n<\/div>\n\n\n\n

Step 1. Forge a path to financial independence.<\/h2>\n\n\n\n

When you enter the workforce after college, your financial situation changes dramatically. With a full-time job and a college education, you\u2019ll be flooded with offers for credit cards and personal loans, giving you far more purchasing power than you\u2019ve ever had before. <\/p>\n\n\n\n

It\u2019s important to use that power wisely.<\/p>\n\n\n\n

What\u2019s the first step? Decide on the future you want and build that future into your financial plan, starting with a simple, manageable budget.<\/p>\n\n\n\n

If the word \u201cbudget\u201d makes you cringe, you\u2019re not alone. But budgeting doesn\u2019t mean you have to scrimp and save every dime or deprive yourself of the things you love. Far from it.<\/p>\n\n\n\n

Real budgeting<\/a> \u2014 the kind of budgeting that can get you where you want to go \u2014 is about planning your future while making sure you have what you need to enjoy life today.<\/p>\n\n\n\n

That means building a comprehensive financial plan \u2014 one that includes managing your debt, growing your savings, paying your bills, and still having plenty of fun along the way.<\/p>\n\n\n\n

Step 2. Separate what you want from what you need.<\/h2>\n\n\n\n

As you build your plan for financial freedom, the first step is to separate the things you want from the things you need. Start by making a list of all your monthly bills, and be sure to include things like insurance that you might pay for quarterly or even annually instead of monthly. <\/p>\n\n\n\n

Then, add your other expenses, like groceries or dry cleaning. They aren\u2019t technically bills, but you still need them, so they need to be in your budget. Finally, include any loan or debt payments, such as a car loan, student loans, or credit card payments.<\/p>\n\n\n\n

On the \u201cwants\u201d side of that balance, make a list of things like Netflix and takeout that you really enjoy and want to be sure to keep.<\/p>\n\n\n\n

Remember, everyone\u2019s budget categories<\/a> are different \u2014 be sure to account for all of yours! <\/p>\n\n\n\n

A personal finance app like Simplifi can do this for you. It sets aside enough for your bills every month so you can see what\u2019s left in your spending plan.<\/p>\n\n\n\n

Add things like groceries as planned spending, and include loan payments or saving plans as goals you want to contribute to each month.<\/p>\n\n\n\n

Once you\u2019ve added your goals, whatever you have left is yours to spend however you want, knowing your financial future is solidly on track.<\/p>\n\n\n\n

Step 3. Free yourself from expensive loans fast.<\/h2>\n\n\n\n

A basic budget needs to start by covering your expenses, which includes making the minimum payments on any loans or debt you might be carrying.<\/p>\n\n\n\n

Once those are covered, the next step is to get out from under your most expensive debt.<\/p>\n\n\n\n

What\u2019s expensive debt? It\u2019s any debt with a high interest rate. <\/p>\n\n\n\n

Credit cards are a classic example. Even cards that start out with an introductory rate of 0% have a much higher rate that kicks in down the road. If you don\u2019t pay the card off before that initial time period ends, you\u2019ll suddenly be responsible for a lot of extra interest.<\/p>\n\n\n\n

If you\u2019re carrying credit card debt, pay that down<\/a> as quickly as possible. On top of making the minimum payments, contribute as much extra as you reasonably can every month. <\/p>\n\n\n\n

The key word here is \u201creasonably.\u201d If you try to put so much toward your credit card debt every month that there\u2019s nothing left for a celebratory cup of coffee, chances are good you won\u2019t stick to it very long.<\/p>\n\n\n\n

Instead, make a plan! Decide how much you want to contribute toward your credit card debt every month, and then make those payments with confidence, knowing you still have some money left to spend on whatever you want.<\/p>\n\n\n\n

If you\u2019re using Simplifi to manage your finances, set up a savings goal<\/a> for those credit card contributions. Track your progress and celebrate your wins each month as you take another chunk out of that debt!<\/p>\n\n\n\n

Step 4. Plan to retire on your own terms.<\/h2>\n\n\n\n

Once you\u2019ve paid down your high-interest debt, it\u2019s time to start saving for retirement. Why? Because the best way to retire on your own terms<\/a> is to start working on it early. It all comes down to the power of compounding interest.<\/p>\n\n\n\n

Here\u2019s an example:<\/p>\n\n\n\n

Let\u2019s say you start contributing $100 each month to your retirement account when you\u2019re 35 years old. At an average annual return of 6.5%, you\u2019ll have over $110,000 by the time you\u2019re 65. That\u2019s not bad, but it gets even better.<\/p>\n\n\n\n

Now, let\u2019s say you start putting that same $100 toward your retirement every month when you\u2019re only 20. By the time you\u2019re 65, you\u2019ll have almost $323,000.<\/p>\n\n\n\n

Many employers also offer to match your retirement contributions up to a certain amount. That can turn your $100 contributions into $200, giving you over $645,000 if you start when you\u2019re 20.<\/p>\n\n\n\n

Plus, as you move up in your job, you\u2019ll be able to contribute even more, putting the dream of being a millionaire easily within reach. The sooner you start, the sooner you\u2019ll get there.<\/p>\n\n\n\n

If you have to choose between contributing $100 each month to your retirement or paying off a low-interest loan early, it\u2019s often better to make your retirement contributions a priority and pay off that inexpensive debt over time.<\/p>\n\n\n\n

Do you have enough in your budget to max out your employer\u2019s retirement contributions and still pay off that credit card soon? Great! Do both!<\/p>\n\n\n\n

Simplifi lets you set up as many goals as you need to track all your monthly contributions and make sure your plans stay on target.<\/p>\n\n\n\n

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See how Quicken can help you build a safety net.
\n Continue \u2192<\/a><\/p>\n<\/div>\n\n\n\n

Step 5. Build yourself a safety net.<\/h2>\n\n\n\n

Once you\u2019re paying down any expensive debt aggressively (like those credit cards), and you\u2019re contributing to your retirement every month, it\u2019s time to work on building a short-term safety net.<\/p>\n\n\n\n

Ideally, it\u2019s a good idea to save up enough money over time to pay your expenses for 3 to 6 months. It\u2019s often called an emergency fund<\/a>, but it\u2019s great for more than emergencies.<\/p>\n\n\n\n

For example, if you need to buy a new car, you can use some of those savings for a significant down payment to help you get a better interest rate. You can also use it to meet any unexpected expenses without having to take out a high-interest loan. <\/p>\n\n\n\n

It might sound intimidating to try to save that much money, but small amounts add up over time. Create an emergency fund as part of your financial plan and contribute to it each month.<\/p>\n\n\n\n

If you\u2019re using Simplifi, add that fund as another savings goal to track your progress \u2014 so you can always see (and celebrate!) how far you\u2019ve come on your debt payments, your retirement, and your emergency savings.<\/p>\n\n\n\n

Step 6. Beat these benchmarks.<\/h2>\n\n\n\n

Another benefit of paying down your high-interest debt is that it can help raise your credit score. How? By reducing your total debt and building a positive credit history.<\/p>\n\n\n\n

Your credit score is one of three key benchmarks that can help you track your progress as you work toward the future:<\/p>\n\n\n\n

    \n
  1. Your credit score<\/li>\n\n\n\n
  2. Your debt-to-income ratio<\/li>\n\n\n\n
  3. Your emergency fund<\/li>\n<\/ol>\n\n\n\n

    1. Your credit score<\/h3>\n\n\n\n

    A score of 670 (out of a possible 800) is considered good. A score of 740 or higher is excellent. If you don\u2019t know your score, you can find it in Quicken Simplifi<\/a>.<\/p>\n\n\n\n

    Your credit score is important because a good score can lower the rate of any money you need to borrow, from a car loan to a new home, so you\u2019ll pay less in interest.<\/p>\n\n\n\n

    Building up your credit history can take time, but there are several things you can do to boost your score<\/a>. <\/p>\n\n\n\n

    2. Your debt-to-income ratio<\/h3>\n\n\n\n

    Your debt-to-income ratio is the total amount you\u2019re spending on loan payments every month, divided by your gross monthly income. <\/p>\n\n\n\n

    For example, if you spend $1000 per month on loan payments and your gross monthly income is $5,000, your debt-to-income ratio is $1,000\/$5,000 or 20%.<\/p>\n\n\n\n

    A low debt-to-income ratio is another factor that can lower your interest rate when you borrow money. In other words, you want your credit score to be high, but you want your debt-to-income ratio to be low.<\/p>\n\n\n\n

    A debt-to-income ratio of 43% is the highest ratio you can usually have and still get a qualified mortgage<\/a>. A rate below 10% is considered excellent.<\/p>\n\n\n\n

    3. Your emergency fund<\/h3>\n\n\n\n

    For your emergency fund, work on building up enough savings to pay your expenses for 3 to 6 months. That means short-term savings, not your retirement fund. <\/p>\n\n\n\n

    Short-term savings include funds you have in a checking or savings account, for example, so you can access that money when you need to.<\/p>\n\n\n\n

    You\u2019ll also want to build your retirement savings, but it can cost you a lot to pull from those savings early. That\u2019s why they aren\u2019t considered part of your short-term emergency fund.<\/p>\n\n\n\n

    Step 7. Don\u2019t leave free money on the table.<\/h2>\n\n\n\n

    Many jobs entitle you to a wide array of employee benefits \u2014 including things you might not even know about. Make sure you explore what those are so you aren\u2019t missing out on opportunities.<\/p>\n\n\n\n

    In most organizations, representatives from the human resources department are happy to meet with you to discuss and explain the benefits you might have available.<\/p>\n\n\n\n

    In addition, some benefits save you money even if they aren\u2019t completely free. Insurance offered through your employer is usually less expensive than buying it separately, and you may qualify for things like discounted gym memberships or career development courses. <\/p>\n\n\n\n

    Every dollar you save is another dollar you can put toward your long-term financial plan.<\/p>\n\n\n\n

    The gift of financial management<\/h2>\n\n\n\n

    When it comes to financial management, the key is to keep up with every purchase\u2014from tacos at the food truck to gas at the pump\u2014as well as loans and investments.<\/p>\n\n\n\n

    A comprehensive finance app like Quicken Simplifi downloads those balances and transactions automatically, making it a great way to keep up with everything \u2014 spending, savings, loans, credit cards, investments, and more.<\/p>\n\n\n\n

    \n

    See how Quicken helps you manage your money.
    \n     Continue \u2192<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    Whether you\u2019re a new or recent graduate, these 7 steps and benchmarks can lay the path from wherever you are today to financial independence.<\/p>\n","protected":false},"author":59,"featured_media":7559,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_robots_primary_cat":"none","_seopress_titles_title":"7 Steps from College to Financial Independence | Quicken","_seopress_titles_desc":"Whether you\u2019re a new or recent graduate, these 7 steps and benchmarks can lay the path from wherever you are today to financial independence.","_seopress_robots_index":"","inline_featured_image":false,"footnotes":""},"categories":[108,69],"tags":[],"class_list":["post-3187","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budgeting-savings","category-personal-finance"],"acf":[],"jetpack_featured_media_url":"https:\/\/www.quicken.com\/blog\/wp-content\/uploads\/2024\/04\/two-business-colleagues-walking-in-office-lobby.png","_links":{"self":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/3187","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/comments?post=3187"}],"version-history":[{"count":9,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/3187\/revisions"}],"predecessor-version":[{"id":8786,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/3187\/revisions\/8786"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/media\/7559"}],"wp:attachment":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/media?parent=3187"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/categories?post=3187"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/tags?post=3187"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}