When to Claim Your Financial Independence

Declare your financial independence

It’s great to be able to rely on mom and dad, but after you graduate from college, it’s time to stop—at least financially. Learn how (and why) to stand on your own two feet and become financially independent.

Podcast transcript

[MUSIC]

PETE: You’re listening to How Not to Move Back in With Your Parents here on the IU MoneySmarts radio network. I am your host Pete the Planner. Your co-host is Alex. Hello.

ALEX: An almost graduate.

PETE: I already graduated, like several years ago. You. You?

ALEX: It’s not all about you, you know.

PETE: [LAUGH] That’s not true. So, you’re about to graduate, man.

ALEX: Yeah.

PETE:Like, you’re right there. It’s like I can feel it.

ALEX: It’s weird.

PETE: It is weird.

ALEX: It is really weird.

PETE: Cap and gown rental, that’s a ripoff.

ALEX: Yeah, that’s a pain.

PETE: What a ripoff. My gosh. Why don’t you just get one from eBay?

ALEX: At this point I’m just not gonna worry about being upset about it, to be perfectly honest.

PETE: No, you should. I’m still angry about mine.

ALL: [LAUGH]

ALEX: I think, never mind, cuz I’m not even gonna-

PETE: Yeah, that’s my issues, cuz it was so long ago. So Alex, for four semesters we’ve done this podcast. We try to prepare college students for life in college financially and we try to prepare people for graduation. This week I wanna talk about something that is really important and slightly uncomfortable. And to do that, I bring the queen of uncomfortable conversations, Morgan McMillan, coordinator at Department of Financial Literacy at IU onto the program. Hello.

MORGAN: Hello.

PETE: Do you like being, what did I say? The queen of uncomfortable conversations, what did I say?

MORGAN: Awkward turtle, yeah.

PETE: Yeah, here we go.

ALEX: Awkward turtle.

PETE: Today we’re talking about cutting yourself off from your parents. You being the catalyst of the break. And this, Alex, is not adversarial. It is not unappreciative. It’s just the reality that man you’re an adult. Get out, right? So-

ALEX: People view it as uncomfortable but the word that came to my mind, was necessary evil. But it’s not even that evil. It’s just a thing that needs to happen.

PETE: I think a good place to start with this conversation is, when your parents, all of our parents, were our age, or the age of graduation is maybe the best way to think of it. Did they get financial assistance from their parents? And from my perspective what I see the answer generally is, no, no, no, no, no, no.

ALEX: Yeah.

PETE: You’re out, see you, bye. Some special circumstances, and by the way those special circumstances will always exist, life’s events have some twists and turns as you may know. Yeah. And you may need to seek assistance from a loved one. But I think it is on you to say moms, dads, I’m done. I’m done and therefore thank you. Worry about retirement.

ALEX: You owe it to them.

PETE: Yeah.

ALEX: Honestly.

PETE: Do you think about, and this isn’t about your parent’s financial situation, Alex, but do you think about the idea that your parents probably should be focusing on retirement?

ALEX: Yeah. I mean, I feel super guilty personally about the student loans and all of the burden. They’ve put four kids through college. My little sister is a freshman at school now also. And it’s like as you get older, you realize more and more how much money goes into it and you have a lot more of an appreciation for what they’ve done for you. So there’s definitely a guilt factor. That starts to kinda rise up in your belly and it definitely has for me.

PETE: For me, Morgan, like as a parent now, I have a 5-year-old and a 2-year-old, what Alex just said is so true that I appreciate what my parents did for me, to put me through college more than ever before. Because I know what my wife and I are doing to fund my kids’ education. How about you? When you cut yourself off, or how the cut-off happened, did you initiate it? You seem as though, knowing you, that’s something that you’re like [SOUND] I’m out I got this.

MORGAN: Some of it and like you said life happens. Right. So I had some things. I went to grad school. Sure. And then I couldn’t afford. I moved to DC and did grad school so I couldn’t afford my own place but yeah life happens. I moved back home after graduation. So I definitely had some support there. And I think I initiated some of it.

PETE: Yeah.

MORGAN: But there were areas I couldn’t do it. So.

PETE: And again, not to have the old guy perspective but that’s kinda how the show works, I’m the old guy. I’m not that old, I mean.

ALEX: Relatively.

PETE: Relatively old, refer to you young lads and lasses. I will tell you this as a parent, I would do anything for my kids, and you feel that way as a parent unless you parent you don’t get that. You don’t get and its like I do dumb staff to my kids right now that’s like, why did I just do that, that don’t even make sense. And financially that’s not gonna change when they’re 22.

ALEX: Right, that’s why it’s on us. That’s why it has to be on you.

PETE: It has to.

ALEX: And that’s a weird thing where kids start taking advantage of their parents and it gets pretty sick. And it’s just-

PETE: This is fact Morgan, when you become a parent, you get dumb. Right? So before having children, if I were driving around just on the street and I’d see a pony or something off the side of the road, it’s a horse. What do I care? Hey, hello horse, I’m a grown man, no children, I just drive. The horse is insignificant to me in my life. I have kids now. I drive by a horse, I go, pony! Yeah! And they clap, and I think, I’m going to go home and talk about this for three hours.

MORGAN: [LAUGH]

PETE: That’s dumb. That doesn’t even make sense. It’s because your judgment is clouded. So Alex, what we’re gonna do now, and Morgan, what we’re gonna do now is we’re gonna lay out some steps of how to cut yourself off from your parents even if it means that you’re living with them for a couple months post graduation which I’m totally cool with, right? So, we gotta start with there has to be a time, a date, when it’s like, I’m done.

ALEX: Right.

PETE: Right? So Alex, we’re gonna go to you because you are moving back with your parents for a couple of months, primarily so you can focus on student loan debt.

ALEX: Yeah, that’s the plan right now, get all the expenses laid out. I have as we’ve talked about earlier this season a very aggressive plan for my student loans to get those paid off I’m gonna start working right away and just attack the student loans as much as possible in that three month period to maybe even set myself up for just momentum and start getting that down.

PETE: So the goal is to pick a date to get out.

ALEX: Yeah so for me I haven’t set a date yet so this is good for me. So let’s see graduating on-

PETE: Ooh this is getting exciting.

ALEX: Graduating on May 9th then I’m going to Europe as we talked about for.

PETE: Which you saved, your butt off to be able to do that. Yeah, I’ve been saving for that trip-

PETE: For years.

ALEX: Since the very beginning of college. Yeah. I’ve had a dedicated savings account. So that’s all cash. Nothing wrong with that. I know I’ll have, luckily, thankfully I’ll have some money left over as well as a cushion.

PETE: Sure.

ALEX: So I’ll get home from that at the very end of June. So July is when I start working and when I’ll legitimately be living at home.

PETE: Yeah.

ALEX: So, I mean, July, August, end of September, early October would be the goal.

PETE: Morgan, when you cut yourself off from your parents officially, was it a declarative statement like, I want you to know. I just made my chair go down.

MORGAN: [LAUGH]

PETE: I about fell out of my chair. Just so you know, listener, I’m a professional broadcaster. I really am. That’s what I do and I about just fell off my chair, into the microphone. Morgan, did you officially cut yourself off from your parents in a way that you’re like, hey, thank you, I’m out?

MORGAN: I tried. I tried.

PETE: Okay. What does that mean?

MORGAN: I set a goal for myself. I said six months. Cuz I couldn’t stand living at home more than six months and it didn’t work out. Mostly because I wasn’t making enough income.

PETE: Okay. But when you were living at home and whatever money you were making.

MORGAN: Right.

PETE: It was going towards your goals, not towards stuff. Or was it stuff? Well and that’s where I would say I initiated it, because I picked some bills, and I said these are the bills I’m going to cut myself off from. Or I’m going to I help you pay this so I build up that accountability.

MORGAN: So what finally happened is kind of gradually happened and then you were off, or?

MORGAN: Yeah, I think it gradually happened. I picked a couple bills and started with those. Started with what I could manage, and then over time when I started to understand what it would look like when I got my own place it was trying to budget for that, and then start to detach one by one.

PETE: Not to make this morbid, and this will be morbid for about five seconds. But if this were 720 AD you’d be dead by now. You are a full, functioning, that’s my word, adult. There’s no reason to be financially dependent on another adult. It doesn’t make sense to me. Alex, well here’s what I’m asking you to do. I want you do visualize, not right now. You can do it right now, I don’t really care. I want you to visualize the next several months, what that conversation and process will look like. It could be like thank you, I’ll get him a Hallmark card. I don’t care, it’s 3 extra bucks or what is it, $11 now. I don’t know how much a card is, I don’t, I’m not nice, I don’t send people cards. Get a card, thank you, I’m done, peace, I’m out. Send him a fruit basket. I don’t know. What are you gonna do?

ALEX: I could probably do something funny. Maybe I’ll do something to, nah. I could really do something that would pretend to stress him out really bad. Like I messed up.

PETE: Yeah, practical jokes are always fun.

ALEX: So like, I’m moving out.

PETE: Yeah.

ALEX: But that’d be mean I don’t know.

PETE: Probably, they just served you for 22 years.

ALEX: Honestly my parents just became empty nesters and they are all about it so they’re probably counting down the days.

PETE: Yeah.

ALEX: They’re probably just being nice that I can stay home.

PETE: I think, okay, I’ll do the takeaways today. You always do the takeaways. I’ll do them today. Here’s what I think. It is a awesome move to make it a big deal. Like do it. The idea that you can visualize over the next several months or couple years if you’re still an undergrad, to say on August 15 of the year I graduate I’m gonna send him a card or hand him a card and say, thank you. You might cry, got a little dust in your eyes and some tears may come up. Thank you, I’m out. You can move on with your like financially cuz I’ve cut myself off. And I tell you this is not about me although Alex you like to point out, I do like it to be about me.

ALEX: [LAUGH]

PETE: I made it a point when I graduated to not accept a penny of support from the actual day I graduated. And just because I don’t know, that’s the way I think. It doesn’t have to be that way for everyone, even if it’s a year later or three months later or six months, there has to be an end date, right?

ALEX: Yeah, it has to be.

PETE: Anything else? Have you got anything? Morgan anything else from you on that?

MORGAN: No, I don’t think so.

PETE: Al?

MORGAN: Be practical.

ALEX: Yeah, be practical and purpose driven with your time at home. There has to be a goal-

PETE: Totally.

ALEX: You need to be preparing for the day you’re gonna leave, since you you have that day. Be looking for apartments, place to stay, roommates. Make sure your job is lined up, be setting aside that extra money you have for a specific purpose.

PETE: Let me throw some guilt into the equation here, lets say, you’re living with your parents and you’re not really challenging yourself to do well you’re not saving money or paying off debt. You go out to lunch every day at work you have like a $10 lunch you have like an RBs roast beef sandwich jammed up into you face hole. When you’re chewing on that roast beef here’s what I want you to think about. You were eating your parents roast beef. At that moment in time because your parents are funding your lifestyle and you’re just choosing to live for free, at that point in time you value that sandwich in your face much more than you value what they’re doing for you. Let guilt lead the way.

ALEX: That’s one less sandwich that your parents could be eating in their retirement.

PETE: Beef sandwiches are delicious.

MORGAN: Wow.

PETE: So this is the last show of the semester, I believe. Alex, you’re graduating.

ALEX: Yep.

PETE: You got a job-

ALEX: Yep.

PETE: You got a job back in, early December, or late November?

ALEX: It was late November, it was before December.

PETE: Late November it was, it was round about Thanksgiving, we were texting about this, where will you be working?

ALEX: I will be working for you!

PETE: Yeah, that’s right! You are the Director of e-Learning for a Pete the Planner. Yeah.

MORGAN: Congratulations!

ALEX: Thank you very much, I appreciate that.

PETE: Pretty solid gig. Here’s the thing, I know your boss. He’s handsome, he’s a good looking kid. So, yeah, congrats in your gig. And I think what’s interesting about this is we’ve known each other for the last few years. That was never the plan?

ALEX: No, not at all. It came out of nowhere.

PETE: It came out of nowhere but it made sense for everybody involved. So, that’s good. You will be developing financial curriculum. Going forward, for students, for people in the workforce, for everyone in between. So congrats on your gig.

ALEX: Thank you. It’s pretty crazy cuz we started this podcast after I interned for you during my sophomore year of college, and then It’s kind of led through. I started to do more financial work and now financial work is gonna be what I’m doing in the real world.

PETE: I know. That’s awesome. Good, excellent. Go get me some coffee. I’m kidding.

ALEX: [LAUGH]

PETE: All right. So this has been another semester, the fourth season of How Not to Move Back in With Your Parents. Of course, I always wanna thank a bunch of people. Morgan, thank you for being on the show and for being part of this. Of course Phil Schuman, director of financial literacy. Jack Tharpe who was the director of financial literacy, who’s retired this past year. So thanks to him as always. Of course all the administration at IU for letting us do this. And hey, you’ve got a summer coming up. You’re got some choices, right? You can earn some money and use that money to go to tuition next year. That’s what we want. We want summer funds to go towards tuition. We want the money you earned during the school year to go towards lifestyle. Remember, summer funds. Tuition. Work during the school year goes towards lifestyle. You can do this. You’re gonna probably have some student loan debt when you graduate.