Prepared For Life: On Your Own

Freedom! Finally being on your own is an exciting time in life. But with that freedom comes responsibility. Here are some pointers for balancing work, school, finances, obligations and fun so you can make the most of your newfound independence (either now or when you get there!).

TIME MANAGEMENT

Managing your time effectively isn’t just a nice thing to do when you leave home — it’s essential. Whether you’re in school and/or working, you’ll need to get the most done in the shortest amounts of time by organizing, prioritizing and sticking to your schedules.

Here’s where to start:

• A “to do” list. Identify main tasks and a timeline for getting them done. Post your list where you’ll be sure to check it, several times a day if necessary.

• Daily/weekly planner. Keep track of classes, meetings, blocks of study/work time, appointments, due dates for bills, projects, etc. First thing
in the morning, check to see what’s ahead. Also check your planner before going to bed to get a grasp on what’s in store for tomorrow.

• Long-term planner. Use a monthly chart to see what’s coming. Be sure to keep all your lists and phone calendars updated.

Learn more about time management.

MONEY MANAGEMENT

There’s no magic to managing your money; you simply need to make sure that what comes in will cover what has to go out.

You’ll have expenses you probably didn’t have when you lived at home: rent, clothes, furniture, etc. Car expenses include monthly payments, registration, inspection, insurance, maintenance and gas. The good news: With planning, budgeting and saving, you can handle it.

RENT

Your main expense probably will be rent. Whether you’re renting an apartment or house with or without roommates, here are some things to
keep in mind:

• Don’t underestimate the cost. Even if there are move-in specials, there will be other expenses like electric, gas, water and garbage pickup. All of these occur monthly. Also, be prepared to shell out for a security deposit and the first month’s rent, as well as application, credit check and pet deposit fees. Be aware that fees are often nonrefundable.

• Check out the actual apartment or house before you lease. Make sure the doorways are wide enough for your furniture, turn on the faucets, flush the toilets, test the heater/air conditioner, turn on the lights, etc. If anything is wrong, ask if repair work can be done before you move in.

• Read your lease. It’s long, but it is a legally binding document you are being asked to sign. Take it with you overnight if needed. Pay extra attention to anything that has been added or deleted and to sections dealing with early move-out (“breaking the lease”). If anything makes you uncomfortable, it might be a sign to look elsewhere.

• Get renters insurance. This insurance coverage can help in case of fire, burglary, natural disaster, or even if someone slips and falls on your property. The monthly cost is low, and it’s available from most insurance agencies.

Learn how to prevent costly mistakes when renting for the first time at kiplinger.com.

BANKING AND CREDIT CARDS

If you haven’t yet opened checking and savings accounts, now is the time. While many banks offer free accounts for students, make sure you fully understand the fees beforehand. Often there are limits on the number of transfers and other transactions.

When you apply for a credit card, just remember: Financial institutions are in business to make money, and one of their best sources is through credit cards, which provide immediate gratification but can mean debt for years. Be very careful with credit. Read the fine print on your contract and know the interest rates you’ll be paying for this privilege.

A few general tips about credit cards:

• The only way to get out of debt is to stop charging and always pay more than the minimum payment.

• Even when you buy something on sale, the interest alone can double the price. Compound interest, when working for you (like investments or savings accounts), can be great. But it can be bad when it’s working against you (as in credit card debt).

• Maintaining good credit is crucial. Credit scores can make a big difference when you want to buy a car or a house. It can take many years to recover from a bad credit score.

For more details about money matters, check out “Prepared for Life: Money Smarts” in BL’s December 2015 issue. To learn more about student credit card debt, visit cardratings.com.

TAXES

If you make a certain amount of money in a year (even if you work only part time), you’re required to pay federal income tax. For example, single people younger than 65 who made more than $10,350 in 2016 had to pay. Depending on where you live, you might also have to pay state and local taxes. Tax rates vary and also include FICA, which is the Social Security and Medicare taxes you accumulate until you retire.

The tax process can seem a little overwhelming, but here are the basics: When you’re hired, you’ll fill out a W-4 form, which tells your employer how much to withhold from each of your paychecks and send to the government for taxes.

At the end of the year, you’ll receive a W-2 form from your employer that reports your income for that year. If you earned the minimum amount or more, you’ll fill out a tax form (or “tax return”) and submit (or “file”) it to the U.S. Internal Revenue Service by Tax Day (usually April 15). If you paid more than what you owe in taxes, the government will send you a refund for the difference. If you haven’t paid enough in taxes, then you’ll need to pay that difference by Tax Day.

Learn more about tax basics and tax planning or get tips for filing for the first time.

HEALTH CARE

No matter how healthy you are, everybody needs some form of health insurance, because accidents and major illnesses can happen unexpectedly.

Until now, you’ve probably been on your parent’s group policy. If possible, stay on this policy until you are financially stable. It should cost less and provide adequate coverage. If not, check with your school and/or workplace to learn what group coverage is available. It might seem expensive now, but it’s much better than going into debt due to an unexpected health situation.