Now, however, you’re potentially facing one of the biggest decisions of your life: Will you continue on with your education, or will you get a job? Maybe, you’ll do both!
No matter your path, you will most likely be moving out on your own for the first time–which is a pretty big deal. That being said, here are some tips from your favorite Madison credit union, that will hopefully help you lay a smart, productive path for your financial future.
Make A Budget
Making a budget is always the first step. It’s the best financial move anyone of any age–and in any financial situation–can make. It’s hard to gain ground on your finances without first being familiar with where you currently stand. If you don’t make a budget that is realistic for you, it will be nearly impossible to stick with.
If you’re heading out on your own for the first time, you can’t make a true budget until you’ve lived alone for a few months. Since most kids don’t have much to worry about financially when they live at home, the main things you’ll need to consider now are:
- How much money you’ll be bringing in
- How much your rent will cost
- How much it will take to feed yourself
When you do move out, you may realize that there are, additionally, a lot of other costs you didn’t previously have to consider. These may include:
- Security deposit
- Furniture and cookware
- Transportation costs
Of course, if you’re in school, you may not be bringing in a lot of money. Unfortunately, for a lot of students these days, loans will become part of your picture. The good news is, hopefully, you won’t have to worry about these for a couple of years.
Start An Emergency Fund at a Madison Credit Union
After you’ve got your budget all set, it’s time to start setting money aside for an emergency. If you’re continuing your education, contributing to an emergency fund may be nearly impossible. But it is still worth getting into the habit even if all you can contribute is $5 each week.
An emergency fund is crucial to have, as it’s what’s going to keep you financially in check if (when) an emergency happens. Though it’s recommended that you have three to six months’ worth of expenses in your emergency fund, the actual amount you keep in it is going to vary based on your individual monthly expenses.
One last thing: It will probably take you a couple of years to get your emergency fund to the financial level you want, and that’s OK!
Straighten Out Your Insurance Plan(s)
If you’re moving into an apartment, renters insurance is extremely beneficial. If you’ve got a vehicle in your name, it’s illegal for you not to have car insurance. If you’re going off to college, some parents can afford to continue to keep you on their plans – which can usually be up until you’re 26. If you’re going to need to get your own health insurance, however, you will want to get that sorted as soon as possible.
Consider A Credit Card
You can get a credit card before 21, and for some, it may be beneficial. If you plan on getting one upon graduation, you’ll need to either have proof of your income or get a co-signer to apply with you. If you are going to school, and not earning any income, you may be able to get a student credit card.
Before you own your first card, your credit history is going to be virtually non-existent–which may make it tough to get. Your original card is going to set the tone for your credit history moving forward, however, which means you’re going to need to make sure you can pay off your balance each month. Having a credit card is a big responsibility for someone in their teens, but, if you’re doing really well with your budget, it can set you on a path to having a great credit score down the road.
(Prepare For) Planning For Retirement
Humans continue to stay alive for longer periods of time (meaning they’ll need to stretch their retirement funds over more years), and Social Security is drying up. This means, for younger generations, having money for retirement is going to be a huge deal. Beginning to save for your retirement while you’re in your 20s will give you a big financial advantage over your peers. If you start saving early, your savings will grow more rapidly, thanks to compound interest.
If you’re working right out of school, take advantage of your employer’s retirement options. If you’re mostly going to school, it’s going to be tough to contribute. But, when you’re young, every little bit counts.
Contemplate Continuing Your Education
Going to a two-year, four-year or more-year school can be incredibly expensive. On the other hand, it’s been statistically proven that those who continue their education beyond high school make substantially more money throughout their lifetimes.
If you have decided you’re going to college after you graduate from high school, make sure you have your budget set straight and your loans figured out. If you go the work route after graduation, it might still be worth considering going back to school at some point–whether that means you make a decision next week or a few years down the road.
Graduating high school is the beginning of the next chapter of your life – independent living. If you take the time to put a financial plan in place, you’ll do just fine.