Graduated and on your own: Now what?
Nathaniel Sillin | 10/5/2016, 3:01 p.m.
Fall is here and school is back in session but for many graduates, it’s out for good. If you’re a recent high school or college graduate, this might be the first time you’re on your own. Living away from home and paying for your own housing, food and other necessities can be a tough adjustment. But being on your own for the first time is a new and exciting experience and it offers a perfect opportunity to set yourself up for success.
Make sure you have the right bank account for you. A lot may have changed since you opened your account, so consider changing your account to find the best one for your needs. If you are still sharing a bank account with your parents, consider opening your own. Opening an account can be simple and it’s possible to do so online or over the phone — but you’ll need a minimum deposit amount and documentation like your Social Security Number. For helpful tips, see the Consumer Financial Protection Bureau’s (CFPB) guide on opening a checking account.
Live within your means. As you begin your career it’s essential to have reliable income and use it responsibly. A good budgeting guideline to start with is the 50/20/30 rule. Allot 50 percent of your income to necessary costs like housing, 20 percent to financial goals like repaying student loans and 30 percent to spending money. Remember that this is a rule of thumb and you can adjust it to fit your needs. Never spend more than you have, and always pay your bills on time.
Figure out taxes. The most important thing to know about taxes is that you must pay them on time or request a six month extension. If you’ve missed the deadline, don’t ignore the Internal Revenue Service (IRS) — follow their guidelines for repayment. There are multiple ways to pay your taxes and you can download the IRS2Go mobile app to make payments. Check with your parents before filing: if they claim you as a dependent, you won’t be able to claim tax exemptions. Finally, check if you qualify for special exemptions like a student loan deduction.
Take charge of your student loans. First, confirm your loan status at the official Federal Student Aid website where you can also explore your payment options and estimate how long it will take to repay your loans. Always make the minimum payments on time, and if you’re having trouble paying off your loans, don’t ignore them. Contact your lender, explain your situation and pay as much as you can immediately while prioritizing paying off the rest.
Check up on your healthcare. Under the Affordable Care Act, you can stay on your parents’ plan until you’re 26. If you aren’t currently on your parents’ plan or wish to leave their plan, you have several options to explore. Under federal law, if you’re not covered by health insurance you must pay a fee on your next federal tax return. You can explore the different levels of coverage available and estimate how much a plan will cost you at Healthcare.gov, the federal healthcare website.