But becoming independent takes time.
Some young adults remain on their parents’ phone plans or continue to share a joint bank account well into their 20s. But experts say having autonomy over your bills, banking and debt early on can help build financial confidence for years to come.
Being aware of the changes that come with adulthood is the first step, said Laura Whiteland, certified financial planner and owner of Inclusive Financial Planning.
“It is kind of a light-switch moment where everything is very suddenly your responsibility,” she said. “Even if (your parents) are supporting you or helping you … you are the one that is responsible.”
How to become financially independent— the first steps
Whiteland said a good first step to becoming financially independent is setting up a bank account that’s separate from your parents’.
Then start tracking the bills your parents have been footing for you.
“With kids, they don’t even realize what their parents are paying for and all these things they actually have to do to start adulting,” said Brooke Dean, a Calgary-based senior wealth manager with BMD Financial Ltd.
Dean suggested taking up smaller expenses,like a phone bill, at first and then moving onto bigger ones, like an auto loan or tuition.
A separate credit card is crucial in the early years to start building your own credit, Dean said. It can be a student credit card with a low limit or even a prepaid card.
“A lot of people don’t even realize till their late twenties, ‘Oh, I don’t have my own credit or my own credit limit because I’ve been using my parents,’” Dean said.
Eventually, Dean said it’s better to take over student loans that your parents may have co-signed with you and learn about the investments earmarked for you, such as registered education savings.
“If your parents have RESPs set up with you, you should have a good idea of what’s in there and how much is that actually going to support school-wise,” she said.
Taking on financial obligations you can afford
But taking on financial obligations comes down to whether you can afford it, said Wendy Brookhouse, a Halifax-based certified financial planner and founder of Black Star Wealth.
“It depends on what your financial capacity is,” she said. “What are the things you want to gain confidence in, and it could be gradual so that you take something on, get used to it, then take on the next one.”
For Whiteland, taking autonomy over her own finances started as soon as she got a job as a teenager.
“The second you have your own money coming in … you are responsible for everything you’re deciding,” she recalled.
