Start Planning Now for Future Expenses
Set yourself up for future success by understanding some of the basics of money in your college years. Learning about borrowing in and out of college, taking advantage of employment benefits when you start working and establishing saving goals are all important aspects of your financial health. The sooner you start to plan, the more you’ll be able to grow your assets over time. Whether you're still in college or beginning your career, there are many financial strategies to learn and practice. We’ve outlined some general advice to help get you started.
RentING an Apartment
Whether renting alone or with a friend, close to home or far away, renting your first post-graduate apartment takes some smarts. Follow some basic advice to be sure the home you choose is within your means.
- Budget Based on Your Income & Area
The general rule of thumb is your cost to rent should be less than 30% of your income. Of course, in more urban markets, you may have to pay more. Be sure to take a Rental Checklist with you and consult websites such as Rentometer and RentJungle which can give you an idea of rents in your target neighborhood to help you budget wisely. Once you find a place, be sure you ask about possible rent increases so you aren't surprised and priced out of your new pad.
- Budget for the Inevitable Extras
Be sure you're aware if your rent includes heat, electricity and other utilities. Often, rentals that include utilities end up cheaper in the long run. If utilities are not included, you'll need to add these items to your budget, which can sharply increase the total cost to rent. If you're on the hook for utilities, call companies with the address to inquire about the last few years' worth of bills to get a better grip on what you're facing for costs and budget accordingly.
- Impress the Landlord
The rental market is competitive. Treat your interview with your potential landlord as you would a potential employer. Make a good first impression by having everything they'll want to know on hand and organized. Bring a folder with your vital information and have a check in hand in case you want to jump on a good find. If you haven't yet established credit or do not have rental history, start with these four pieces of advice:
- Be ready with proof of income and dates of employment.
- Have one or two bank account statements with you, demonstrating that you have one or two months of payments banked.
- If someone is willing to cosign on a lease for you, bring that person with you to the meeting. Have a co-signer agreement with you, ready for dates and signatures.
- Provide a few references — both employer and character — with contact information.
- Get Everything in Writing
It may be tempting to avoid paperwork, but it is never a good idea to rely on a handshake to seal any kind of deal, even an apartment rental. A rental lease should cover all questions and issues that may arise in the future: how much notification do you need to give to move out? Is your security deposit refundable? Are you responsible for fixing things in the apartment when you leave? If you're uncertain about anything you're seeing, be sure to have someone with lease experience to read it with you.
If you're signing a lease with roommates, you all may want to consider signing a co-tenancy agreement, which will spell out responsibilities and liabilities for each person, which could help you avoid problems down the road.
(Legal assistance websites like Rocket Lawyer allow you to create free accounts and free documents, such as those relating to leases.)
- Do a Thorough Walk-Through When You Move In
Never, ever rent an apartment without seeing it at least once — even twice. Before you sign anything or move in, it's important to do a thorough walk through to be sure things like the stove, refrigerator, heat, hot water and anything else major is in good working order. Take note, with your landlord present, of possible dings, scratches and stains so you aren't held responsible for these defects. Have your landlord sign these notes to indicate his/her agreement with your findings. This could be the difference between a fully refundable deposit and losing that hard-earned cash when you're ready to move on.
Buying a Car
"A new car is second only to a home as the most expensive purchase consumers make," says the Federal Trade Commission. Add to that the possible expense of repaying for your student loans, and you have three major long-term expenses that require knowledge and planning. You might want to consider the pros and cons of buying a used versus a new car before saddling yourself with another big loan. A used car will be less expensive, will depreciate more slowly and will cost less in insurance. A new car, on the other hand, might be safer, have more gadgets, offer better fuel efficiency, have lower maintenance and have better financing options. We recommend really digging in and doing your homework. There are a ton of online resources to help you compare the benefits and risks of car buying, including Edmunds and Kelley Blue Book.
considering benefits when landing a job
There's more to consider with job offers than only the starting salary. Look for companies and organizations that offer retirement options, health insurance, tuition reimbursement, paid time off and other benefits. Think of these options as additional money on top of your salary and consider the total package when making a decision about where to work.
Setting Financial Goals
- Pay off student loan debt and any other debt that you might have to get started on the right foot. Paying down debt should be your highest priority because you are losing money on the interest every day you carry a balance.
- If you have extra cash, consider contributing to a retirement plan, like a 401k where your employer will often match your contributions. By contributing early, your money has a long time to grow. And once those early investing years are gone, you can't get them back. You will want to do your research on the different types of retirement funds available. Fidelity Investments, UNE's staff partner, offers some great advice! Fidelity also offers some handy investment calculators, if you're willing to register by answering just a few quick questions.
- Always put a portion of your paycheck directly into a savings account. Think of this as “paying yourself first.” The more you save, the more quickly your assets will grow.
- As your student loan debt decreases, work on growing your savings and investments more aggressively.
- Buy a home only after thorough research and knowing the "all in" costs of home ownership. Do some homework on the advantages of renting versus owning here with US News & World Report's "Renting vs. Buying a Home: Which is Smarter?"
- Click here to read an article from the Washington Post on “5 financial milestones to reach in your 20s.”