Starting out building a life of your own is exciting! Being able to pick out your apartment and set everything up for yourself is really freeing. However, it is daunting to have to be responsible for paying your own bills every month, it adds up! We have some tips on how to start off on the right foot now, to be sure that you’re spending money in the right places and that you’re able to save for the future.
Choosing A Bank
There are so many banks competing for your business right now, which is really helpful! Many banks have student accounts with no fees, some banks operate solely online, some have physical locations. There are also local credit unions which offer special rates for groups like state employees (like teachers). Explore all of your options when shopping for a bank, and be sure to look for special offers like giving a referral to a friend. Also keep in mind that banks differ state by state, so if you plan to go home to another state for the summer, you’ll want a bank that can serve you in all the states where you reside if you plan to go to a location.
Having good credit is one of the biggest ways to compete for houses, and low-interest rates these days. But first, you have to start building credit, which takes time. Opening up a credit card and paying it off monthly is a great way to begin to build credit. Over time, your credit history is what will get you loans for cars, houses, and even rental properties. People check credit more and more to find out if you are a responsible person who pays their bills on time. You can check your credit score for free without penalty on sites like CreditKarma.com to monitor how you’re doing and get recommendations for ways to improve and to see if you have any outstanding issues like fraud. They allow you to report fraudulent activity on the website/app.
When deciding how much you can comfortably spend on rent, take your gross monthly income (before taxes), you should be spending up to 30% on rent. It may end up being impossible to afford your own apartment when you are just starting off in a city like New York, which is why co-living is so helpful. Splitting the cost of living and utilities can be a huge lifesaver, and many people are looking for roommates. Maybe you have been living at Webster and are able to find a place with a few of your friends. We love that!
Paying Your Bills On Time
Life gets busy and it can slip your mind to pay a bill on time. Making late payments can affect your credit in a big way, so here are some tips to make sure you’re on time.
Setup autopay. Most companies have online bill pay, and will allow users to choose the date the payment is drafted, or at least offer a choice. If rent is due by the 5th of the month, set up bills to be drafted from your bank on the 15th if possible. The idea is to have a little come out of each paycheck so that things are more even throughout the month.
Setup alerts on your phone/email calendar. If you are not paid consistently on specific dates, autopay may not be a good option for you. No problem! You can still do online bill pay that is not auto drafted from your bank, and keep yourself on a schedule by setting calendar reminders in your email or on your phone. Set recurring events to remind yourself to check in with your monthly bills, especially ones that may change from month-to-month like heat and gas.
Pay yourself first. The general rule of thumb is to save at least 10% every time you are paid. An easy way to do this if you have direct deposit is to set up your banking information so that a portion (dollar amount or percentage) automatically goes into a savings account so that you never even touch it. You can also set up different kinds of savings accounts, some that restrict the number of times you can withdraw money (which could keep you from spending your house down payment on brunch).
Here are some tips on opening a high-yield savings account, which will earn more in interest, so your money is growing while just sitting in the account:
Remember that saving money takes time. The more you’re able to put away now, the better off you will be in the future, so keep that in mind when making decisions about getting a coffee and a bagel out versus making that at home. Making little changes daily will add up and make it all worth it in the long run. You’ve got this!