Financial Independence Doesn't Need to Take 37 Years

If you feel that you’re still trying to find your financial footing, it may help to hear that you’re not alone. New research from Northwestern Mutual’s Planning & Progress study finds that more than half of Millennials (53 percent) are not fully financially independent from their parents. Not only that, but the average age Americans now expect to achieve true financial independence is 37.

In the past, achieving financial independence seemed to follow a simple, predictable formula. But in today's complex economy, a unique set of modern economic pressures—from the rising cost of living to managing debt—seems to keep changing the goalposts for your personal financial goals. The rules really have changed—but you can adapt your approach and start taking control.

"This is a massive wake-up call for America," said Jeff Sippel, chief strategy officer at Northwestern Mutual. "We believe true financial independence starts with a comprehensive plan that moves people out of the passenger seat and firmly behind the wheel of their own financial destiny."

Moving from the passenger seat to the driver's seat requires an intentional approach. Read on for more about the steps you can take to build a comprehensive financial plan and achieve your goals.

Why Millennials are struggling to become financially independent

If you count yourself among the 74 million Millennials in the U.S., you are part of the largest living generation. You are outearning the generations that came before you—so why does it feel so challenging to finally step away from your family's financial support?

Rest assured, it isn't from a lack of effort. Record housing costs, crushing student loans, and hidden environmental forces preying on your paycheck continue to fuel the pervasive affordability crisis affecting most Americans. This has made attaining true financial independence a moving target for you and your peers.

The good news is that there are practical steps you can take to regain control and build a secure future on your own terms—and you don’t have to navigate this complex landscape alone. A Northwestern Mutual financial advisor will take the time to get to know you, your current situation, and what matters most to your future. As your trusted partner, they’ll help you build a personalized plan that brings all of your financial pieces together efficiently—and because life happens, your plan is designed to evolve with you. We’ve got you along the way.

How to build a financial plan

An advisor can help you balance competing priorities, empowering you to move out of the passenger seat and confidently take the wheel of your own financial destiny. Here are some basic steps to take to get started.

Create a budget

Creating and following a monthly budget is one of the most effective ways to stay on track toward your financial goals. To construct yours, simply start with your total monthly take-home pay, then subtract your fixed expenses and savings to see exactly what you have left for discretionary spending. By regularly reviewing your habits and adjusting your budget as life changes, you can ensure your overall financial plan stays firmly on track.

Establish a safety net

Setting up an emergency fund is one of the best ways to set yourself up for financial success on your own terms. Make it a priority to stop relying on the “bank of Mom and Dad” by having your own safety net for life's unexpected curveballs. Start small and build your savings up gradually until you have enough to cover six months of expenses.

Manage your debt

It’s likely not a surprise to hear that unmanaged debt is really the killer of any forward momentum in growing your money. While "good" debts like a mortgage can help you reach big milestones, “bad” debts like high-interest credit cards can quickly weigh you down. A comprehensive plan focuses on protecting you from these pitfalls, so what you owe never stands in the way of your secure future.

Save for future goals

As you plan out your near- and long-term goals (which might include getting married, having a baby, buying a house, or even opening your own business) you’ll need to strategically save for these future life milestones. You can start by automating your savings so a portion of your income goes directly into your savings account. Eventually, you may be able accelerate your progress by utilizing high-yield savings accounts for short-term needs and exploring investment options for goals further down the road.

Learn how to invest

While investing might feel like a luxury you can’t afford, it’s a mistake to think you need a lot of money to get started. If you have a 401(k) retirement account through work, then you’ve already dipped your toe in. Investing can be a great first step toward building wealth—and time is your greatest asset. Thanks to the power of compound growth, the money you invest in your 20s and 30s has decades to grow and multiply. Starting now, even with modest monthly contributions, helps build a critical foundation for your long-term independence.

Work with a financial advisor

Working with a Northwestern Mutual financial advisor can be a game changer for achieving your financial goals. Your advisor will get to know you and your unique situation—getting to the heart of what matters to you and what kind of life you want to live. Based on your needs, they’ll provide personalized guidance, helping you create a tailored strategy that stays true to what matters most to you.

And life doesn’t always go the way we plan. Your advisor can be a critical partner in those moments to help you make sure your plan stays on track—no matter what life throws your way.

Partnering with an advisor on a plan can help you work toward the financial independence you’re looking for—and it can help you feel better. In a study led by behavioral research scientist Hal Hershfield, 80 percent of people with a comprehensive financial plan said they could enjoy life more comfortably vs. 63 percent of general consumers.

The right time to get started is right now

With all you have going on, it can feel overwhelming to begin. Your financial advisor will meet you where you are and help you every step of the way to get to where you want to go. With a plan, you can be confident in your decisions. Whether it’s financial independence today or achieving a key savings goal in the future, we’re here to help.

All investments carry some level of risk, including loss of principal invested.