Making the transition to financial independence
06/08/2012 3:38 PM
05/16/2014 6:42 PM
Shelby Burford was introduced to the financial facts of life after college in a big way.
Moving to Seattle from Mission to look for work, Burford shared a house with seven other guys, rode the bus to get to and from interviews, and lived off prize money from a contest sponsored by Hershey’s that he had won in high school.
At least the December 2010 Baylor University graduate didn’t have car insurance, gas and monthly car or mortgage payments to worry about. For six months, Burford said he “pinched dollars rather than pennies” before landing a marketing job at “Biz Kid$,” a public television program that focuses on financial education.
What lessons did Burford learn from that early slice of financial independence?
“If you have yet to see a paycheck, you don’t have one to spend.”
Newbie workers, take note: Landing that first job and moving out of the house means a lot of financial responsibilities — many of them offloaded to you from your parents.
While finding a place to live, settling into the new job and new surroundings, and boning up on the employer’s benefits package are overwhelming enough, that’s only part of the picture of financial independence.
What also needs to go on your son or daughter’s to-do list are an assortment of money-related tasks that require attention, such as changing banks, purchasing renters insurance, transferring payment responsibilities on health care and auto policies, getting the car registered in the new state and 28 other things that will pop into your head at 2 a.m.
If you have a new worker who is about to head out on his own, here are few financial pointers that could make the transition easier on everyone’s bank account:
• Insurance coverage. Renters coverage to insure all your child’s worldly possessions is relatively inexpensive and a good buy in exchange for the peace of mind.
Notify your agent about a change of location on the car — and change of insurance payment responsibility from you to him. It might also be the time to transfer the free towing service from the auto club.
If the new employer offers health coverage, how quickly will it kick in? If not for 90 to 120 days, he may need to stay on your policy or purchase short-term basic coverage. (Check out ehealthinsurance.com).
Also, what about a new primary doctor and dentist in the new hometown? Get referrals.
• Apartments. Check on discounts for signing a one-year lease rather than six months and how much upfront deposit will be required. Before signing the lease, check out neighborhood crime reports, distance to and from work and the young person demographics, including proximity to the restaurant and entertainment scene.
• Furniture. Keep the spending to a minimum, given that this is the first job and things could change. Hit the thrift stores, consignment shops and budget antique dealers, at least until you’ve saved enough money to upgrade.
“The matching towels and framed art can wait,” Burford said.
• Fees. ATM fees, overdraft fees, minimum balance requirements, inactive debit card charges and other annoying fees can pile up if you’re not careful in choosing a new bank. The same goes with cellphone plans. Before moving off the family plan with its load of discounts, see if there’s really a better deal by going solo.
• Safekeeping documents. Hand off the passport, Social Security card, car title and other important documents — they will be needed for a new driver’s license, voter registration and car registration. The idea is to avoid getting the emergency phone call, going to the safe deposit box and overnighting a car title to transfer the registration to the new home state.
Speaking of documents, they will need to be stored in a safe place. And for any discarded bank statements and bills, a shredder sure comes in handy.