Today on Radical Personal Finance, a 22-year-old new college graduate writes in asking for advice on how she can set up a plan for financial independence. Keelan writes in and says, "I'm a 22-year-old recent college graduate. I've since landed a job and have been working for about four months now.

Here's my current situation. I live at home with my parents, rent-free. I am extremely fortunate to have no debt from college. In fact, I have no debt at all. I work a full-time job and save virtually all of that money. I work a part-time job and use that money as my spending money.

Essentially, I am blessed to have a blank slate coming out of college. The downside of my equation is that my full-time job does not pay particularly well, perhaps about $31,000 a year, and I live in an area with a high cost of living, northern Virginia. Do you have any advice for someone like me who is just getting started in the real world and wants to begin a path to financial independence?" I do realize that a huge step would be to find a better paying job.

I'm working on that. However, what would you suggest that I do in the meantime to add additional income and begin my journey to financial independence? My goal is not to make this all about making more money, but rather to position myself in such a way that I can live the life the way that I want.

Also, I want to be in a position where I can easily provide advice and assistance to those who are less well-off than I am. Thanks in advance for any advice that you can provide. Keelan. Well, Keelan, let's start with the fact that you are in a position already to provide advice and assistance to those who are less well-off, which is probably about 98, 95 plus percent of the world's population.

And I want you to approach your life recognizing that. You are in a remarkable situation and you've done a remarkable job of establishing yourself for a very bright future. So let's talk about some ideas and suggestions that I think will help you. First we need to begin with financial independence.

I'll give you some ideas about how to integrate goals for financial independence with other life goals. And then I'll give you some at the end of the show, some specific suggestions for steps that you can take to move you toward financial independence. First, why do you want to be financially independent?

It's a big question and many people jump into it without actually thinking about it. Why do you want to be financially independent? What is it about the concept of financial independence that you find attractive? What are you working for? Why do you want to be financially independent? You say right here, my goal is not to make this all about making more money.

Well, if the goal is not about making more money, that's pretty much what financial independence means. It means making and accumulating more money. So if it's not all about making and accumulating more money, then why do you want to be financially independent? My guess is if you spend some time thinking about this, there will be a few things that come to your mind.

One reason would be a sense of control, a sense of autonomy, a sense of personal direction and personal freedom. Another aspect would be the meaning of your day-to-day existence, the ability to do things that you think are important because you think they're important. These are the common themes of why people want to be financially independent.

So it's important to recognize that financial independence is not going to make you happy. Financial independence is not really going to do much to change your life unless you're doing something before financial independence that you don't want to be doing and you're trying to work towards something after financial independence that you do.

In which case, why wait for financial independence to do that? How is financial independence and the quality of your life, how do these things work together? How are they integrated? So first let's talk about what you can do that's outside of financial independence and then I'll give you some specific steps that will move you toward financial independence.

But let's put this in the right order because you don't need to be financially independent to be happy. You don't need to have a million dollars in the bank to be able to do what you want. In fact, there are some very simple steps that you can make that will start to build a life that will give you these things while you also work on higher pay, saving money, becoming rich, etc.

Number one, the biggest thing that will determine your level of happiness is the quality of the relationships in your life. These are also at a young age some of the most important decisions that you'll make. The first obvious example is the relationship with your immediate family, you're living with your parents.

The quality of that relationship will have a big impact on the quality of your life. So give time and attention to it. The biggest relationship that will chart the course for the happiness that you experience in life and for your freedom and for your independence is who you choose to marry, your marriage relationship.

The person that you choose to marry will make a bigger impact on your happiness than almost any other factor in your life. So before you start thinking about money, you should spend a significant amount of time thinking about how will you meet and marry the husband of your dreams.

Married people are richer than non-married people and married people are happier than non-married people. So you should be spending time thinking about how to become happily married. There are two things that you have to consider in order to be able to do this. The first most important thing is to become the kind of person that would attract the type of man that you'll marry.

That's the fundamental way that you'll be able to attract to yourself an appropriate husband who will enhance your happiness. You have to become the kind of person that will attract the type of man that you want to marry and then you have to be in the types of places that that man would be so that you can meet.

Now most people don't start giving financial advice by giving marriage advice and that's where I think most of financial advice is pretty wrong headed. If you have done like I did and you've worked in the context of financial planning, you'll quickly realize that money is often not at the core of many problems.

Relationship problems are often at the core of life problems. And so don't start with focusing on money, start by focusing on quality relationships. If you want to set out a plan for financial independence, make sure that you don't run past the importance of relationships too quickly. One thing that should be obvious for you is if you are going to become the kind of person that would attract the type of man that you would want to marry, if you're going to do it, you have to be able to identify the type of man that you would want to marry.

And so you should spend time thinking about that now. You should spend time making a list of the character qualities and the attributes of that person that are important to you. That's an important place to start. Unfortunately the way that most people, especially most 22-year-olds, approach this problem is completely wrong headed.

They don't give any time to it. They don't give any thought to it. They approach their life and say, "Well, I'll just fall in love at some point in time." What they do is they experience an intense feeling of emotional attraction to another person, but there's no underlying substance to the relationship.

There's no thought. There's no planning. And yes, in every sociological study I've ever seen, married people are happier than unmarried people, but common life experience would indicate that there are a lot of people who are unhappily married. And so the way that you avoid being unhappily married is, one way, is by being very clear on the type of person that you would like to be married to.

That will then drive you to say, "What type of person do I need to be in order to be attractive to the type of person that I want to be married to?" Much more important than saving money, much more important than putting money in a Roth IRA, and much more valuable to your financial independence.

Now you ask the question, "I'm 22 years old. Should I do this now or should I do this later?" The answer is you should do it now. Don't get married too soon, but when you find the person that you want to marry, marry right away. You definitely don't want to run into a relationship that will affect the rest of your life very quickly, without forethought, without planning, without consideration.

But on the flip side, there's no reason to defer for many years down the road. Especially there's no financial reason to defer for many years down the road. Married people are much better off financially for many reasons. They earn more money and they have more money, but just the simplest obvious reason is they can pool their talents and their resources and their incomes and their expenses can go down.

It's cheaper. It's not double to put two people together in a household. And so you have measurably better economic potential as a married couple than you do as an individual. So you want to make sure that you're prepared for that. So ask yourself how you can build and develop and maintain quality relationships, starting first with your family members that are nearby already, and then also thinking very carefully about how you will meet and marry the husband of your dreams.

Number two, you should carefully and intentionally choose your geography. Before you think about saving money, choose where you're going to live. Before you think about becoming financially independent, choose where you want to be. Because your decisions surrounding geography will drive the lifestyle that you live. If you want to be in a big city, go to a big city now.

If you want to be in a country, in the country, consider going to the country now. If you want to be in the mountains, go to the mountains now. If you want to go to the ocean, go to the ocean now. This is the time in which it will be cheaper and easier and simpler for you to establish yourself in a geographic location than ever it will be in the future.

So carefully consider your geography. This will have to do with your career, which we'll talk about in a moment. It'll also have to do with simple things like the tax system under which you live, the economic future of the location that you're in. And it will relate heavily to thing number one, who are you going to marry and how are you going to meet them?

If you marry and meet and marry somebody in the town that you're in now and you want to be in a different town, that could very quickly bring in a source of stress. If you want to live in a different town, you might consider going to a different town before establishing your social circle.

Choose the geography that you're going to live in and design it around the lifestyle that you want. If you know anything that's important to you in the lifestyle that you desire to live, choose it now and move there because the place that you live will make a big impact on your life.

Design it now and go intentionally. First career choice, your careful choosing, selection and design of an appropriate career will make a huge impact on your level of happiness. I don't know which of these three things is more important than another. I don't know if your career makes a bigger difference in your level of happiness and your level of satisfaction than does the person that you're married to.

I don't know if your geography makes a bigger difference than your career. I really don't. I just know that all three of these are very important factors. If I were to rank them, I would say that probably the number one most important thing is the quality of your relationship, especially your marriage relationship.

Number two is the appropriateness of your career for yourself and number three would be geography. That would be my guess on the ordering. But I think that you should choose geography in some ways before you choose career because there are many careers that you can do in certain types of geography that are related.

But if you choose a career first and then you try to choose geography, that career may or may not transfer over. So consider your career choice. Here you should spend time very carefully reviewing your skills, your talents. Look at what your college degree is in. Consider if that is something that you want to continue working in.

Look at your areas of interest. Do some personality profiles, etc. and carefully design a career choice that you think will be helpful for you, that will be appropriate to you in the long term based upon the lifestyle that you desire to live. Now when you're doing this, think about a few things.

Think about the economic future of the geography that you've chosen. Some places are in decline. It doesn't mean you can't live a great life there. It just means that you might not choose a local place, a local career, a career that is tied to geography. I personally would be very happy to live in a place that had a declining economy because my income can be earned from a place that doesn't have a declining economy.

And so I could get a very great value on my money by earning money from a place where there's lots of people to send it to me and spending it in a place where my dollars go farther I can set up a really nice arbitrage situation for myself. On the flip side, if you're in a location that has a growing economy, look at the local economic trends and try to understand how those will impact your potential career choices.

There's not just one career choice that's appropriate for you. Rather, you have skills, talents, and abilities that could be translated and applied to various careers and various applications. So think carefully and study carefully your career choice. Think carefully and study carefully how your career choice will integrate with your future, with your future plans, with your future goals, with your future dreams.

Think carefully about how the work that you've chosen to do will integrate into your future family life. Don't spend time building a career that you'll want to leave or change in the future if you could take that time building a career that you won't want to leave or change in the future as your family circumstances change.

So think carefully and design your career. Those are some of the most important things that you can do to really build a life that will develop a system of independence, that will build a life that will be happy, that will build a life that will give you the feelings of financial independence and will cause everything else to flow from there.

If you're in a career that's well-suited for you, it won't be hard for you to be really good at it, which means that your income will automatically go up. And because your income is automatically going up, you can save a lot more money and become financially independent much more quickly.

If you've chosen your husband very, very carefully and you've figured out what values and attributes are important to you and you meet somebody at the local investment club or in the local real estate club or in the local business club versus at the local bar or at the local place that attracts people who are not forward-thinking, the local, I don't know, video game hangout or whatever the version of that is in your local area, you're much more likely to meet somebody who will share your financial goals.

And now when you come together, instead of looking at things and fighting against each other, you'll be able to build a future together. So do you see how these things are integrated? You can't approach financial problems and just say, "What's the one, two, three? How much money should I save?

How much money should I put in my 401k?" These are secondary questions. They're not primary, but those things I laid out for you are primary. Here are some financial things to consider. You are in a phenomenal position of being a college graduate who is debt-free. Here's a suggestion for you.

Commit yourself to never borrowing money, any time, for any reason. Here's why you might consider that. If you commit yourself to never borrowing money at any time for any reason, you will be able to have freedom and independence for the rest of your life, no matter the situation that you're in.

Is this guaranteed to be the most optimal financial outcome? No, I don't think it is. I think you can make a compelling financial case that sometimes borrowing money will lead potentially to your being wealthier. But would this type of commitment lead to your being more financially independent? Here I think you can make a very strong case that by making this personal commitment to never borrow money, any time, for any reason, you always have your liberty.

You can always walk away. You haven't mortgaged your future to pay for your present. And if you're interested in liberty and financial independence, I think this is a personal financial commitment that would go far for you. Here's another simple commitment that would lead to financial independence. Never spend more than half your income.

Make sure that you never spend more than half your income. And maintain that commitment until you are financially independent. I think that a good target number for you to shoot for is to always make sure that 50% of your income is invested for your financial independence. You will have expenditures that you will want to make during this phase of your life.

And you need to be careful not to try to live too frugally. Now, of course, I recognize that and I honor you for working a full-time job, saving all that money, working an extra part-time job for your spending. But this time of your life is not only something that should be spent on work, work, work all the time.

These are experiences that will be very valuable for you to accumulate during this time of your life. And so how can you figure out how to set a budget towards those things? Well, I think it makes a lot of sense to just simply make sure that you never spend more than half your income.

If you want to set a different number because you have different goals, if you want to say, "I want to spend 30% of my income or 70% of my income," that's fine. I just like half. It's simple and it's effective. And here's the key. You should save. 50% is what goes for long-term financial independence.

You can still save money out of the lower 50%, but that money could be spent on experiences if you want to have them. 22 years old is a great time to set aside money and consider traveling if that's something that you're interested in. Consider investing into a hobby or skills that are valuable for you.

You have a huge amount of personal freedom and autonomy at this stage of life. And it's important to make sure that you maximize that. Don't live a deferred life. Plan for the future and live in the present. You don't know if you have tomorrow, so live in today while also recognizing that it's valuable to plan to save for tomorrow.

There are a lot of things that you can do during this phase of your life that will go with you for the rest of your life and you'll be very happy with them. Don't make the mistake of putting everything on tomorrow. Also don't make the mistake of spending everything today.

There's a balance. And I think a really great way to approach that is always set aside 50% of your income for financial independence until you're financially independent. Spending less than 50%? You might choose to save, you might choose to spend. That's up to you. But I think that's a really good way to approach it and a really useful balance.

What tactically can you do? First, before you participate in anything such as investing in your 401k at work or going on any fun trips or anything, I recommend to you that you work really hard to set aside $10,000 in savings before you do anything else just as a good round number.

There's no magic to this figure. It's just a good round number that I think buys you a substantial amount of freedom. And I would love to see everybody have $10,000 sitting in a savings account before they moved on to any kind of investing whatsoever. Tactically after that, if your employer retirement accounts give you an employer match, go ahead and consider signing up for that and at least take advantage of the match.

And then focus on setting aside something like $100,000 in savings. Now how you allocate this money and how you divvy it up, that's up to you. Is this all going to go for your long-term financial independence? Well, how much of it came from the 50%? You got to decide that.

But I think it's really valuable for young people as quickly as possible to get their hand on at least several tens of thousands of dollars and $100,000 is a great round number. During this phase of your life, it's very possible, very probable that if your life will look anything like many of your peers, you will be in a situation to where you'll have many expenses that you'd like to make at an early age.

You might find yourself wanting to buy a reliable car. You might find yourself wanting to make sure that you save for have a nice wedding if that's important to you. Go on a nice honeymoon with your husband. Set up a life that will establish you in the type of lifestyle that you want to live in.

And money is very valuable in these early years. Liquid money, not money that gets wasted, not money that gets spent, but liquid money. And it will give you, if you can save several tens of thousands of dollars, hopefully as much as $100,000 in a non-retirement account, that will give you the ability to follow your dreams no matter what they are.

I have yet to find anybody who can prove me wrong in this or who's brought evidence that's convinced me I'm wrong. When I look at almost every situation where somebody's stuck, when I look at every situation when somebody's unhappy and their finances are contributing to that, I can't find a situation that would not be solved by keeping $100,000 in the bank.

I really can't. And when you recognize that the true benefit that you're trying to get is this sense of independence, not the money, it's what the money buys for you. It's the lifestyle, it's the effect. Money just helps you get there, it's the cause. I think this is well worth considering in terms of some simple financial steps.

After that point in time, you would need more specifics to figure out your plan. You would need to figure out, are you tuned in an entrepreneurial bent? Is your career high-powered and worth pursuing further? Is there a particular type of investment that's well-suited for you? From there, you need to get much more personal.

I can't answer it in the context of an email like this. But if you go through these things, I think that you will have a good foundation for financial independence. I hope you see the tension that I'm trying to bring here between life decisions and financial decisions. Start with life decisions.

As I said in review, number one, biggest impact, relationships. Good relationships with your family that you live with now and a great relationship with a potential husband. Give serious time and consideration to how you're going to arrange those circumstances. Number two is geography. Number three is career choice. If you establish those three things well, you almost don't need the money and the money will flow.

Financially, never borrow money at any time for any reason and you'll maintain your independence throughout your lifetime. Always save half your income for financial independence until you become financially independent. And any kind of spending and saving that you want to do, make it on the other half. Consider setting aside cash first, 10 grand in the bank, move on to fund employer retirement accounts, etc.

with the goal of getting to $100,000 as quickly as possible to buy you freedom, no matter the life circumstance that comes at you. Don't forget to take care of basic insurance. As a young single woman, you should make sure that you have good comprehensive disability income insurance to protect your income, which next to your health is your most valuable asset that you have.

And I would encourage you, continue taking advantage of the situation that you're in with your family. If you have good family relationships, enjoy the situation, enjoy those years with your parents until or unless you decide to move out. Take advantage of the financial savings and contribute to their household.

Here's my thoughts on living with parents. There is this massive social stigma against living with parents. I think it's horrible. I really do. Now young men and women should be responsible. And there's a big difference between being a mooch and consuming everything from your parents and not contributing to the household versus being a responsible member of the household.

I don't get the sense. You're obviously not a mooch. But your parents' great joy is to contribute to your life and to help you. So if that means that staying there, if they allow you to live there rent free, as long as you're saving and you're not squandering all of your money, that's good for your character.

The most important lesson if your parents were writing me an email that I would be telling them is to say, "Make sure that your son or daughter is responsible, that they're not squandering all their money." Well in this situation, you're not. You're saving. And so your parents can look at that and recognize that you have the character that's necessary.

Now take advantage of those family relationships. Enjoy that time. This can be a very special time in your relationship with your parents where you can really build deep and enjoy those relationships. It won't always be this way. So take advantage of it. I'm convinced people who live with other people, I don't have any sociological data for this like I do for other claims, but I'm personally persuaded that people who live with other people are generally happier just because most of us get lonely if we live by ourself.

Who wants to live in an empty apartment by yourself just so that you can impress the world that look at me? This is silly. I'd much rather live with my parents, period. I'd much rather do that. As long as I'm not being a mooch and a leech. That's the important thing.

So I make that distinction. I encourage you, save your money, continue living with them and build those family relationships there and enjoy. Until or unless there's something compelling that takes you beyond that, I think that's well worth considering. And make sure that you use this time period to invest in some of the intellectual pursuits, some of the recreational pursuits, some of the deep things that will be more difficult later as life gets more gets complicated.

If you I don't know what your college degree was in, but I didn't spend as much time in college reading the types of books I wish I'd read. Take the time now to work on your personal ideology. Think about your political philosophy. Think carefully about it. Think about your religious ideology.

Think carefully about it. Consider what you believe and why so that you can be well grounded. That's another thing that leads to happiness. Religious people are happier than non-religious people. So consider what you believe and why. And those are pursuits that are hard to do at later phases of life.

But if you really take advantage of this period of time, you can live some amazing adventures while also really building up and working toward financial independence. Final practical thought, I would be cautious about working an extra job at this point in time if that extra job is costing you the time that could be put into something that'll have bigger long-range benefit for you.

You don't need the extra money from an extra job. I would work a 40-hour job for someone else, and I would invest the other time into personal skills, personal hobbies, personal intellectual pursuits, personal business. I think you'd have a much higher rate of return than just working trading hours for dollars.

So I hope these suggestions are useful for you, Kylie. You've got an amazing future. And I think any parent listening would be proud to have you as a 22-year-old woman starting your life on this foundation. I hope these thoughts are useful as you pursue financial independence. Thank you so much for listening to today's show.

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