College, Money, Podcast

Transitioning from College to Adulthood: Finances, Part 1

Listen to the corresponding podcast episode here!

The college experience is a rollercoaster, but for most, there is an end in sight. What do you do when you graduate? Hopefully, land a full-time job or work full-time for yourself. The first year (or two) is crucial in determining where to from here. Many changes occur as full-on adulthood settles in. The Transitioning to Adulthood series talks about those changes and how to approach them head on!


The first area of changes that I experienced was with my budget. Once scholarships and loan money runs out, you truly are left to your own devices to cover all living expenses. In this post, we’ll talk about ways to conquer these new areas that will benefit you most! I believe the most influential ones are: transportation, housing needs, student loan repayment, savings changes, and credit monitoring.

Transportation

Transportation is obviously crucial in college, but that need is amplified in afterward. You once had the needs of getting to class, running off-campus errands and making it to your part-time job. But when that full-time adulthood kicks in, you want to make sure your means of moving are airtight.

Your car, train, bus, etc. need to be reliable to get you to work! Stakes are higher for arriving late, missing morning meetings or missing a day in the office at all. And as I mentioned before, your livelihood is dependent on these paychecks.

So, what can you do to make sure your means of transportation is reliable?

Plan for the worst, operate for the best!

Your best bet is to find something consistent. If you commute from a suburb to a city, then a commuter train may be best. If you live in the city, the bus might be your go-to. If you have a tricky route, the trusted car is your go-to.

Whichever option you choose, be sure to have money in your budget to cover those monthly costs (gas, passes, general maintenance).

This is also a crucial time to build up savings for any irregular maintenance. Many of us with cars know that anything can happen in the blink of an eye. Tire gets a nail, rock hits your window, oil change light turns on. There are a plethora of needs that come up in a year, even expected ones like regular transmission tests and registration renewal.

The list goes on, but the best way to combat these are with savings. It’s best to build up a minimum savings of $750 to cover vehicle needs. Essentially, a car emergency fund. You definitely want to consider this option for peace of mind when something random comes up.

If you go the route of public transportation, be sure to know your alternatives. If your bus is delayed, do you know your alternate train route?

Are there monthly passes or company discounts for you to get the best price as a regular user?

The goal with your transportation needs after college is to put it on “reliable autopilot”. Set your budget, increase your savings, and find the best cost-effective mode for your situation.

Bonus tip: If you’re looking for a “new-to-you” car with low mileage, fairly new and cost-effective; check out Enterprise Car Sales. They have locations nationwide and I had a wonderful experience there purchasing my car, along with family and friends.

Already cruising through adulthood?

Have you considered refinancing your car loan? This can help you pay it off faster and free up cash.

Do you get the best price on your commuter passes? Check for discounts offered to local businesses with high commuter percentages. Or, pay for a longer term pass to save more money.

Do you have a transportation emergency fund? If not, start one now! You never know what can happen and your transportation for work needs to be reliable.

Housing/Utilities

Housing and utility needs can quickly add up and my best advice in this area is to research and plan like no other. Housing can be expensive monetarily and emotionally. But I’ll go over a few options that you have and the other expenses to account for.

First, the obvious: you can rent or purchase your own place. This is awesome because you have your own space to decorate, organize, mess up, clean up, and simply do as you please. It’s your prerogative all throughout and freedom is the key word here.

Some of the cons include the financial burden, being alone when guests aren’t around (mostly a con for extroverts), and maintenance needs you solely have to address. Depending on what your income is like right out of school, this may not be a great option because of the financial stress. And if it’s your only option, try to find a place that is well within your budget so you have wiggle room for emergencies.

The second option would be to have a roommate or roommates, whether it be a friend(s) or someone you’re dating romantically. This option comes with most of the benefits above, but you’re also paying less each month with another person sharing the load.

Having a roommate can be a tremendous help, especially in a city where you don’t have a family to fall back on. However, the biggest factor to take into consideration is the chemistry between you and your roommate(s). A bad rooming match can cost you a lot more than dollar savings. Discuss with your potential roommates ahead of time what their home habits are and determine if you’re comfortable with them. You don’t have to prefer the same things to get along, but an understanding or system should be figured out between you both.

Now, the last option is to move in with family, primarily your parents. They will most likely charge you little to nothing and cover most extra bills such as utilities and groceries.

Living with family can provide a lot of financial and mental security when it comes to housing. I moved in with my parents after school and it was a no brainer. I saved up to purchase my car and get on my feet with my full-time job.

When considering living at home, you have to understand the boundaries that have to adjust between you and your parents. As an adult, you will have to remind them that older house rules should not apply anymore (respectfully of course).

Those are the main pros and cons of the various housing options.

Listen to this topic at the B Chic University podcast

Student Loan Payments

Most federal student loans give you a deferment period once you’ve graduated to adjust to post-graduate life. This is a crucial period to get your priorities straight, and that’s about 6 months. Being in college is the #1 buffer that keeps the student loan creditors away. But once you have un-enrolled or graduated, that is no longer the reality. After college, you must address the new financial responsibility of repaying loans.

For those of you without student loans, good for you. Would you like to sponsor a friend? But really, that’s awesome and make sure you’re saving (or spending) that money wisely.

6 months can do a lot for you when you have a laser-focused goal. I suggest in this period that you research your potential repayment options and compare them to your income.

There is a standard repayment plan that averages out your payments over 10 years. This is just one option but not always the best.

The preferred repayment plan that I would suggest to someone who cannot repay their loans immediately is called the Revised Income-Driven Repayment Plan. This provides a more realistic repayment option based on what your gross salary is.

If this sounds desirable to you, it probably is a good option. But the only way to ensure this plan will kick in immediately is by contacting your loan provider and completing the necessary paperwork at least a month before your payments are set to start.

Of course, there are other options available for paying back student loans, but these are the most prominent and varying options. More information on loan repayment is at studentloans.gov.

If you’re already paying back your student loans and it’s suffocating, consider a different repayment plan. You have the option to review and apply for another plan once a year.

Have you recently paid off your student loans? Put that money toward savings instead of spending.

After graduate school, I had a mountain of student debt that I can’t say I’m proud of. Because of my early research, I was able to apply the Revised Income Driven Plan to my payments immediately, making it more feasible for my budget.

Bonus tip: don’t forget to include your student loans interest form each tax season for a potential additional deduction!

Savings

The importance of savings after college is more important than before. Making your savings a priority is a must after college. The unexpected emergencies and higher priced necessities call for a well-cushioned stash.

I competed in my first pageant my senior year of college. That’s a late start for someone in the pageant world but I was hooked. So when I freed up some time after school, I decided to do another pageant. Registration fees and wardrobe alone cost over $2,000. Since this was something I really wanted to do, I went for it. And that was all possible because of my savings.

Life’s opportunities and emergencies happen at any time. Savings aren’t only crucial for emergencies such as car repairs, medical bills, or the like. Great opportunities can require additional funds as well as an impromptu trip, online course, or music concert.

No matter the situation, you want to be as well prepared as possible.

So do you already have savings? As of 2017, the NORC Center for Public Affairs suggests that $1.3K is sufficient savings to serve as an Emergency Fund. Do you have that?

And if you own a car, bump that up to $2.1K.

Try for it!

This concept became real for me when I started to save for my wedding. With this “do or die” date in mind, I knew that I had to get serious about my savings if I never did before. So I challenge you to also find an important date or event to save for that will make it hard for you to stray.

Bonus tip: savings is your key to a new car or home down the road! Set those long-term goals early and start working towards them with your savings. This ultimately gives way to investing which not only saves your money but grows it!

Credit Monitoring

Lastly, credit monitoring is important post-school because you start to make major financial decisions during this period and within the next 10 years (on average). This includes getting a car, purchasing a home, moving into a new apartment, etc. At all times, you should have an idea of where your credit score lands. Along with savings, your credit score opens up doors for future financial opportunities.

When I purchased my first car, I knew that I had the ability to sign for it on my own. My credit score was great and I went into the process with confidence.

And that’s the importance of knowing your credit score. It gives you confidence and options. The confidence alone is something to strive for especially in your first few years out of college.


Hear more on this topic at the B Chic University Podcast: Transitioning Finances, Part 1

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