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The transition from student to graduate means countless changes, and your banking accounts are no different. Your student accounts turn into regular old checking accounts. Your monthly allowance from mom and dad starts to dry up. It’s time to tackle banking and your finances like a responsible adult, and here are seven tips to help.
1. Get a Job!
Don’t become another barista-with-a-master’s-degree tragedy. The first step to financial independence is building a strong base of income. You can’t do it with a part-time job living at home for the rest of your life.
Get out, dust off your degree, and start looking. Yes, the economy might be bad. But you won’t land any jobs you don’t apply for.
2. Apply for Insurance
Insurance can seem like a pain for someone used to their parents paying for it. You’re basically betting against yourself getting hurt, sick, crashing your car, or having your apartment robbed.
Change your mindset and consider insurance more of an investment than a scam. Sure, the odds of totaling your car or your house burning down are pretty slim. But those monthly payments are worth the piece of mind, especially when they can save you thousands of dollars up-front when disaster decides to strike.
It’s better to get used to paying every month than burning through each paycheck, and suddenly finding a need for a new car.
3. Organize Your Important Documents
Why do your parents still have your birth certificate? Store that alongside your Social Security card, insurance policies, bills, bank statements, loan documents, and any important online passwords and security questions.
Place all of these in a secure location – preferably an actual safe – and ensure that a trusted confidante knows its location. You may also want to toss in your car registration and title, lease information, or any other documents you’ll need/possibly misplace down the line.
4. Create a Realistic Debt Repayment Plan
It doesn’t matter how much money you’re raking in with your new job if you don’t manage it properly. You’ll likely have monthly payments from most of the following sources – insurance, phone bills, student loan repayments, utilities, cable, rent, car payments – and the list goes on. Failing to account for any regular monthly expenses can and will put you in a hole.
Make it a priority to pay off any debts with high interest rates, like credit cards and student loans. If money is tight this month, it may make more sense to make your car payment a little late in favor of paying down that ugly student loan. You can use our Debt Payoff Calculator to find out how much you could save by paying off you different loans off earlier. No two budgets are the same, so put some thought into yours and save yourself the hassle later.
5. Look Out for Hidden Banking Fees
Since you were a teenager, you’ve probably enjoyed the privilege of a fee-free student or youth checking account. It depends on the bank, but at a certain age your once-free kiddie account will grow up, and could incur additional fees. Some banks also charge you for debit transactions, and although these are sometimes just a buck, they can quickly add up if you aren’t careful.
Using an ATM outside your bank’s network can incur a charge from the ATM and a charge from your bank. Be careful, since a $6 charge every time you withdraw money can be a real pain.
In addition, some banks charge a fee for withdrawing too much money, especially from savings accounts. Your safest bet is to contact your bank and find out everything they can charge you for.
6. Watch Checks and Automated Payments
Unlike cards, checks can take up to a week to appear on your online bankingstatements. When you are forced to use a check, keep track of it in your monthly budget. There’s nothing worse than thinking you suddenly have enough for a new TV when a huge check you forgot about comes through.
Automated payments are more convenient than checks but equally dangerous to someone with a poor memory. Many banks and credit cards will allow you to set up recurring payments for bills, which is great when you remember them. But as you allow a computer to take more control of your finances, and can be easier to lose track of where your money is going.
Always figure these charges into your budget, and cancel monthly payments for services you no longer use.
7. Build a Nest Egg
Accidents happen. Accidents can also be expensive. Even with insurance, a steady income, and an airtight budget, you can find yourself in dire straits at any time. Set aside a portion of every paycheck until you have at least 3-6 months of expenses in a savings account. That way, when nothing goes your way, you’ll at least have a Plan B.
Author: Jeff Gitlen