In honour of National Financial Literacy Month in the US, I thought I would share some tips for those just starting out in the student housing field. Next week, I will share financial tips for those looking to make the move off-campus (yes, that world DOES exist).
As a new professional, you will no doubt be very excited about your first role. If your new position requires you to live on-campus, you may face some unexpected expenses, so be sure to ask your supervisor for clarification. Some incidentals may not be covered by your department, like a parking pass, so be sure to ask so you can plan ahead. Also, make sure you find out if your apartment is furnished or not. If not, furniture can be a major expense. Shop around for sales, and if you are offered hand-me-downs, make use of them. It’s better to have an older, outdated couch than no couch at all.
If living on-campus is a component of your job, find out if you will pay rent or if your accommodation is a taxable benefit. If it is a taxable benefit, find out how much will be listed on your T4. That number can bump you up into the next tax bracket, and you could end up owing come tax time. If you know this in advance, you can save each month so when you get the bill it won’t be such a shock.
Credit Cards & Student Loans
Often, credit card companies will up your limit without consulting you. Keep an eye on your statements and if you do not want the increase, call the credit card company and ask them to lower the limit.
You can call credit card companies and negotiate a better interest rate, especially if you are a client in good standing (always pays at least the minimum payment on time, etc).
If you have a student loan from a bank, once you graduate, the line of credit is no longer revolving (meaning that the loan is technically closed and you no longer have access to the “unused” or paid-back portion of the loan). Talk to your bank about opening a regular line of credit (LOC) and transferring your student LOC to the new LOC if you are interested in being able to access the “unused” portion of the LOC. Usually a LOC will have a lower interest rate than a credit card and can be a good alternative. Note, not all banks will allow a student LOC to be transferred to a regular LOC. Also, student LOCs tend to have a lower interest rate than a regular LOC.
Make sure you update your mailing address information with your bank to ensure you receive your monthly statements. Or opt for e-bills if your bank offers them – it’s environmentally friendly and regardless if you move, as long as you have access to your email, you’ll always receive your bills on time. Just make sure to use an email that you won’t change!
Budget & Set Goals
It will be really exciting to get your first full time paycheck, but be smart about how you spend it. Be pro-active and develop a budget. Know how much your fixed expenses are (the amounts that are the same every month – car payment, student loan payment, rent, etc.) and anticipate your variable expenses (the amounts that fluctuate each month – groceries, gas, entertainment, etc.). Set aside an amount that is realistic for savings every month, and add that to your fixed expenses, so you learn not to miss that money. Some people call this “paying yourself first” and it is truly a good habit to get into. You’ll be amazed at how much even $100 a month turns into! Be realistic with your budget and don’t deprive yourself. Make sure to include an “entertainment” line in your budget, to include small luxuries like going to see a movie, going to dinner with friends, etc.
Along with your budget, set financial goals. Think about the near future (next 3 years) and more distant future (beyond 3 years) and what you want to accomplish. Do you want to buy a car? Go on vacation? Purchase new furniture? Save for a down-payment on a house? Determine how much that will cost and work backwards. For instance, if you know you want to purchase a home in 5 years, and have a $25,000 down payment, you know that you need to save $5000 a year. Break it down even further…$5000 a year works out to a little over $400 a month. Can you afford that? If so, add that to the fixed expenses portion of your budget. If not, take a look at your goal. Maybe a $20,000 down payment in 5 years is more realistic. Do whatever works for you.
Setting, and sticking to, a budget will help put you on the road to financial freedom. Good luck, and welcome to the field!
What financial tips do you have for new professionals? Share them below!
*Originally posted on the OACUHO blog.