So, your child has made it through their college years and graduated with flying colors. They have scored their first adult job and are ready to take on the world. However, as a parent, you also know that they have some very heavy financial responsibilities to learn that they probably didn’t learn about in school.
Figure Out the Net Pay
It’s not what you make per hour, it’s what you bring home on the paycheck. This is what you’ll be living off and paying your bills with. Just because you have a great paying job doesn’t mean you should do on spending sprees. First off, figure out what is being deducted from your paycheck. Most deductions you will not have any control over, but there are some that you will.
There are several that you can use to your advantage. For instance, if your employer has a matching 401k plan, make sure you max out the matching amount. It is very literally free money that is being set aside for your retirement. Also, if your employer offers an HSA (Health Savings Account,) you should be putting money into that as well. This helps to cover any medical costs that your regular insurance does not cover. Both of these deductions reduce your taxable income at the end of the year so they are doubly advantageous.
Know Your Student Loans
When you graduate from college, you will probably be holding loans from a handful of different lenders, and even different types of loans. You may want to look into getting a personal loan from a private lender so that you can consolidate the multiple payments into one monthly payment. This allows you to control monthly payments better and fall victim to such things as late fees if you forget about one of them. The consolidated payment may also save you money on interest payments as well.
Don’t Be Afraid to Use Credit
You may be tempted to avoid credit cards to help stay out of debt, but as long as you are paying the cards off in full at the end of the month, you will avoid any interest payments while building your credit at the same time. Great credit will be crucial when the time comes to buy a home or start a business.
Aside from the benefits already mentioned in this article, your employer may offer other financial benefits as well other types of benefits. Make sure to inquire with your company’s human resource department as to what is all offered so that you can take full advantage of them.
Power of Attorney
While you may not want to think about it, accidents do happen and you need to be prepared in the event you suffer from one. Since you are an adult now, your parents cannot instantly take care of things for you. You must set up what is called a power of attorney that will allow someone to make decisions for you in the event that you are incapacitated.