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For the inevitable, treacherous day that we all become adults, I compiled a brief reference guide to help us navigate the real world. These are all of the questions that I wondered throughout my life, but did not take the time to learn the answers. Now that I’m a rising senior, the real world is less than a year away and I actually need to know how to function on my own.
How does a 401K work?
Contrary to popular belief, this does not mean that your employer hands you $401,000 at your retirement party. In fact, it is a savings plan sponsored by your employer in which they match the monetary amount that you choose to save from each paycheck up to a certain number. Did I mention you should start doing this at age 22??
Rent, lease, or buy?
After college, graduates secure jobs (hopefully) in various cities with fluctuating costs of living. Regardless of where you end up, there is more to consider than cost:
- Rent: A monthly, short-term option if you don’t know where you see yourself in the next month or year. If your company might make you move or you foresee a change in career, renting could help you to avoid being stuck in one place.
- Lease: Can be signed for six months to a year, so the commitment is more long-term, but these cannot change for the duration of your contract. Rental agreements could change with 30 days notice, but the lease you sign won’t change until it expires.
- Buy: If the amount you’re paying to rent or lease costs more than a mortgage then consider buying a property instead. Especially if you foresee yourself staying in that location for an extended period of time.
Why does everyone hate Homeowners Associations?
During my brief guest appearance in “adulting” (aka my internship), I cannot find anyone who enjoys his or her HOA. One woman threw away a basketball hoop and her HOA said it had to be lying on its side to be out on the curb. What?? Long story short: double, triple, and quadruple check the HOA at your future house or apartment before moving in.
What is a good age to have children at?
Parents attribute children to changing their lives for the better, but a 2013 report showed the cost of raising a child to age 18 was about $250K. At this point in my life, I can’t even afford my Chipotle habit so I’m going to push this topic off for at least another decade (or two).
Is there such a thing as “good” health, auto, or home insurance?
Honestly, they all look pretty undesirable. Every contract has clauses and stipulations that negate full payment in the event of accidents. Best advice would be to take the plan your company offers or just do an “I’m Feeling Lucky” Google search.
In one year I’ll need to file my own taxes, begin my $401K, and make decisions that will impact my life until age 65. While that is terrifying, knowing my ultimate goals (travel, family, workplace environment) allows me to prioritize all of these options and choose the best ones for myself in the long run. Hopefully this advice allows other millennials to achieve their dreams, post graduation.