Kentucky does not rank well when compared to the rest of the U.S. when it comes to being independent. WalletHub ranked the Commonwealth as the nation’s least financially independent state in a recent study.
In order to determine the most independent states, WalletHub compared the 50 states across five key dimensions — financial dependency, government dependency, job-market dependency, international-trade dependency and vice dependency.
Kentucky’s rankings (out of 50):
43 – Financial dependency
46 – Government dependency
33 – Job market dependency
49 – International trade dependency
44 -Vice (addictions such as food, gambling, drugs, etc) dependency
The study broke down those categories into 39 key indicators of independence in order to determine which states are most self-sustaining. Some of those indicators include credit score, foreclosure rate, smokers, and number of millenials living with their parents.
Kentucky also ranked the bottom three for federal dependency and having the lowest percent of household emergency funds. One of the positive findings from the study was the Commonwealth was in a three-way tie for second with the lowest number of adults with a gambling addiction.
Kyle Aud, Daviess County senior vice president of Independence Bank, said financial independence is a marathon, not a sprint.
“It can be difficult to know where to begin, but the first step is always to be educated about your own budget and spending,” he said. “When you sit down and create a detailed budget to know exactly what you’re spending each month you can begin to understand where your needs and wants lie.”
He said one should consider their income sources (net, not gross) and then subtract all expenses, including mortgage/rent, phone, transportation and utilities.
“Decide what expenses you can eliminate and then if you have money left over, start setting aside an amount that feels impactful yet comfortable each month into a completely separate savings account,” he said. “To make this process even simpler, set up an automatic deposit to your savings account so you don’t have to manually make the transfer. This is where you start your independence.”
Reducing job dependency is directly related to increasing financial independence.
“If you follow our suggestions to set aside funds into a savings account and you find yourself without a job at some point in your life, you’ll then find yourself with a nest egg that you can use to support yourself if you are ever without employment,” Aud said. “With money set aside in savings, you can take your time to find the best job that fits you and your family before making such an important decision.”
