Dear College Graduate,
Congratulations! You did it. You made it through classes, essays, exams and finally graduation. It is a big time for you. Your college years were probably a blast — but now it’s time to start an even more exciting chapter in your life: “Real Life.” But what does that mean for you?
In college you may have been dipping your toe in grown-up responsibilities. Yeah you may have had to scrape together enough money to out on Thursday or Saturday nights, but you might have had your parents to fall back on for the big stuff like tuition and rent. Now that you have graduated and are considered an adult, you may not be so lucky and have to shoulder the burden of such financial responsibilities.
If you were listening when Mom and Dad lectured you about financial responsibility, you may know what to expect. Just in case you weren’t paying full attention, here are 10 bills that are incredibly relevant to you now that you are living in the real world.
Your new apartment will be your biggest budget drain. As a former student, low-cost campus rentals are off the table, so living where you want to live can take a big chunk of your hard-earned cash.
The good news: You can add roommates to reduce the cost, but be careful about who you bunk-up with. You want to be wary of short-term roommates, especially if your name is the only one on the lease. If it is just in your name, it is your responsibility to ensure the entire month’s rent is paid on time. If not, you could jeopardize any future housing arrangement given that many landlords run a credit check prior to taking on a new tenant.
2- Car Payment
If you like that new car smell, you'll have to pay for it each and every month.
The good news: Leasing costs less, but understand the fine print like mileage restrictions. Also keep in mind that NH state and local taxes are paid annually and based on the value of the vehicle. Even if your monthly car payment is low, you could get whacked with a larger-than-expected tax bill when registering the car whether leased or not.
3- Phone Bill
Perhaps you never worried about exceeding text message quotas and data plan gigs, or buying a new expensive phone when you drop yours in the toilet. If this bill is yours now, you will want to pay attention to how much you talk, text and stream.
The good news: You may be able to hook up with your friends on a more cost-effective friend and family plan, again assuming you know the people on your plan very well and can trust they will pay their portion.
4- Credit Cards
Credit card companies target young adults. You might already have a credit card or two, but the payments are more difficult to handle when you have to pay those bills along with everything else. Make sure you have the ability to pay your credit card bills based on what you currently earn, not what you hope to earn…someday…hopefully.
The good news: You can look into cards that offer a low interest rate and robust rewards program. Points can help you obtain the things you want like perhaps that new TV or sound system, while the card can help you pay for the things you need like groceries and gas (as long as you pay off the monthly balance). Some insurance companies even allow premium to be paid with a credit card.
5- Car Insurance
When your parents take you off their auto policy, you will need to re-register the car in your own name and get your own insurance policy. In NH, no government agency will prompt you to do this, but if you do not, you will not have any coverage in the event of a claim.
When doing this, prepare ahead as nearly every NH car insurance company will not only give you a credit for maintaining constant insurance, but may also charge you a penalty if you have a lapse in coverage. It is a major rating factor in NH so well worth a little planning.
We would recommend that you contact your local insurance agent, like HPM Insurance, while you are still on your parent’s policy and get a quote for your own car insurance so you know what to expect. When you are ready, complete the application and return to the agency to bind coverage. At that time, it is then safe to have your parents remove you and your car from their policy.
The good news: Walking is free and public transportation is cheap. Be very wary of earning some extra cash by driving anyone or thing for a fee in your own car. Your personal auto policy specifically excludes coverage for such activity. If necessary, talk to your agent about coverage alternatives.
6- Renter's Insurance
If a thief targets your apartment and you don't have renters insurance, replacing your stuff can get costly. Think of everything you own from TV, laptop, clothes and furniture and add it up. You may be surprised how much you have already accumulated.
The good news: Renters insurance is remarkably inexpensive, especially when bundled with your auto insurance. Typically around $100. For more information on NH renter's insurance, check out our website page dedicated specifically for NH renters insurance.
Remember all those parental rants about switching off lights, closing doors to keep heat inside, and turning off the bathroom faucet? You'll understand it better when you pay your own electricity, heat, and water bills.
The good news: If you do all those things your parents told you to do, your bills will be lower.
8- Health Insurance
If your new employer offers health insurance you should consider, it. They'll deduct the premium from your paycheck. That’s the easiest option when your parent's health carrier drops you because you're no longer a dependent.
The good news: If your employer doesn't offer health coverage and you can't afford it, “Obamacare” may subsidize your premium.
You must eat every day and you’ll get really tired of 99 cent fast food burgers or Ramen Noodles. You’ll have to stick to a tight budget to fill the fridge.
The good news: You can eat well if you watch for sales, use grocery store shopper’s cards, and cut coupons.
Uncle Sam takes his income tax money out of your paycheck before you get yours. When you file your return, if you don't have dependents or other deductions, he keeps everything they took. Though there is no income tax in NH, Social Security system will take a share of your money as well.
The good news: Odds are that you are going to be in a lower tax bracket now then you will be later on in life.
Hopefully this checklist didn’t scare you. “Real life” is fun because it is now up to you where and when you spend your time and money. Enjoy!
Your Friends at HPM Insurance