Last year, we explored strategies for managing financial obligations to extended family members, particularly within the context of African family systems where communal support and interconnectedness play a significant role. We discussed how balancing family expectations with personal financial goals is essential for long-term financial stability.

However, there’s another side to this discussion—how young people can prepare themselves financially without relying on their parents. In many cultures, especially in Africa, the expectation of parental support often extends well into adulthood, from paying for education to covering living expenses, and even funding major life milestones like weddings or starting a business. While this safety net can be a blessing, over-reliance on parental support can lead to financial stagnation and delayed independence.

In this article, we’ll explore how family dynamics shape financial habits, the importance of self-reliance, and actionable steps to prepare for financial independence in a family-oriented context.

The Role of Family in Financial Planning

In Nigeria, and many parts of the world, family serves as the first line of financial support. Parents often take pride in ensuring their children have access to education, housing, and even financial assistance well into adulthood. For many, this is not just a duty but a cultural expectation, with parents seen as lifelong providers. In return, children are expected to care for their parents in old age, creating a cycle of dependency.

While this system has its merits—especially in cultures where wealth-building opportunities are limited and informal safety nets are necessary—it can also create significant challenges. For instance:

• Relying on parents for too long can stifle the ability to make independent financial decisions.

• Parents who continue to support adult children may deplete their retirement savings, creating a financial burden for future generations and themselves.

• Some young adults may develop a false sense of security, assuming parental support will always be available, even in emergencies.

These scenarios have all played out in many families in more ways than one. Therefore, understanding how to be financially independent from your parents becomes just as important as it affects not just your own future, but also your parents’ retirement security and the overall family’s financial health.

The Case for Financial Independence

Financial independence isn’t just about money—it’s about freedom and self-reliance. When you no longer rely on your parents for financial support, you gain the confidence to make decisions about your life, whether it’s pursuing a career change, moving to a new city, or starting a business. The ability to fund your own goals creates a sense of self-worth that cannot be understated.

Undoubtedly, when parents provide financial support indefinitely, young adults often delay building their own safety nets. This can lead to a lack of emergency savings, retirement planning, or investment. Financial independence ensures that you’re preparing for your own future, not just relying on the safety net of your parents.

Strategies for Preparing Financial Independence

So, how can you prepare yourself to be financially independent from your parents while maintaining respectful family relationships and cultural values? Here are some actionable steps:

1. Start with a Clear Financial Plan

The first step to financial independence is understanding your current financial situation and creating a realistic plan for the future.

How to do this:

• Track your expenses: Monitor your spending habits to identify areas where you can cut back. Expense tracking apps can help with this.

• Set financial goals: Determine short-term, medium-term, and long-term goals. For example, saving for rent (short-term), building an emergency fund (medium-term), and investing for retirement (long-term).

• Create a budget: Allocate a specific portion of your income to essential expenses, savings, and discretionary spending. Stick to this budget to avoid overspending.

2. Build an Emergency Fund

An emergency fund is a vital asset for anyone seeking financial independence. Think of it as a buffer, ensuring you don’t have to rely on your parents in case of unexpected expenses like car repairs, medical bills, or job loss.

How to build it:

• Aim to save at least three to six months’ worth of living expenses.

• Start small. Even setting aside a portion of your monthly income (e.g., 10-20%) can add up over time.

• Keep your emergency fund in a separate, easily accessible account, such as a high-yield investment account.

3. Diversify Your Income

Relying solely on one source of income can be risky, especially in uncertain economic climates like what we have currently in Nigeria. Diversifying your income streams can help you become more financially secure and reduce the likelihood of needing parental support.

Ideas for diversifying income:

• Freelancing or part-time work: Use your skills to earn extra income through platforms like Upwork or Fiverr.

• Investing: Start small by investing in low-risk options like ETFs or mutual funds. Over time, your investments can grow into a significant source of income.

• Side businesses: Consider starting a small business or monetizing a hobby, such as photography, baking, or tutoring.

4. Learn Financial Literacy

Financial literacy is the foundation of independence. The more you understand about managing money, the better equipped you’ll be to make informed decisions.

Key areas to focus on:

• Saving and budgeting: Learn how to effectively save and allocate your resources.

• Debt management: If you have loans or other liabilities, create a repayment plan to minimize interest.

• Investments: Familiarize yourself with basic investment concepts, such as compound interest, diversification, and risk management. This will help you in the long run.

5. Live Within Your Means

One of the biggest challenges young adults face is the pressure to maintain a lifestyle they can’t afford. Avoid falling into the trap of lifestyle inflation, where you increase your spending as your income grows.

Practical tips:

• Resist the urge to compare yourself to peers who may appear more financially successful.

• Prioritize needs over wants. Focus on essentials like housing, food, and transportation before splurging on luxury items.

• Consider living modestly, such as sharing accommodations or driving a used car, to save money.

Conclusion

Family dynamics and finances are deeply intertwined, particularly in cultures like ours where parental support is the norm. While it’s natural to lean on family during difficult times, an over-reliance can hinder your growth and financial independence.

Ultimately, financial independence is not just about freeing yourself from reliance on others; it’s about creating a foundation for success that allows you to thrive while still honoring your family values.

Bravewood provides Nigerian professionals with low-risk, high-return investment products, licensed by the Central Bank of Nigeria.