- Discussing finances with roommates leads to fewer unwanted surprises.
- If available, make the most of any community support, whether that is sharing streaming accounts with your friends or using a trusted adult's credit history to boost your own.
- A couple of monthly or yearly subscriptions can be worth avoiding expensive one-time fees.
The pandemic made me grow up fast.
Like many recent graduates, I was thrown into the adult world at the beginning of a global pandemic. I wouldn’t wish that level of unpredictability on any young person, but I chose to learn some difficult lessons out of it. Here are my major personal finance takeaways, so you don’t have to learn them the hard way.
1. You're never too young for an emergency fund
The freedom of increased income or a brand new credit card might feel permanent -- but after COVID-19, we all know it’s not. Young adults can benefit from emergency savings as much as anyone who must pay for food and rent. In fact, an emergency fund could save you from racking up debt early on that could take years to pay back.
To be prepared for the unexpected, focus on boosting your savings while you still have money coming in. Even a month's rent could keep your future self out of debt. If your income permits, finance experts recommend saving three to six months’ worth of expenses in an emergency fund. Some even recommend up to a year's worth.
Have I saved that much yet working my first job out of college? No, but I have some funds sitting in a high-yield savings account, creating interest and getting me closer to financial stability. If you're unsure of your savings goals, check out our emergency fund calculator.
2. When choosing a roommate, discuss finances
When looking for my current apartment and searching the internet for compatible roommates, I had zero experience and no parents or siblings to ask advice from. So besides budget, my major roommate worries were location preference and if I could see us becoming friends. I was missing a huge determining factor: financial history.
I'd never judge potential friends on their financial standing, but a leasing office will. Some of the major deciding factors on whether your application is approved are:
- Monthly or yearly income
- Past late payments
- Previous evictions
- Credit score
- Background check
So when you apply for an apartment or mortgage with someone else, their financial credentials are weighed as heavily as yours. Even if you have a high salary and clean record, you need to know how your roommate compares. It’s the only way to set reasonable expectations when choosing which apartments or leases to apply to -- even though it can be awkward to talk through.
After weeks of conversations and apartment tours, I lost a potential roommate because their credit score was too low. Now I know not to get invested in a roommate until we've discussed the nitty gritty of our finances, no matter how uncomfortable it can be.
3. Get your name added to a financially savvy adult's credit card account
I was reaping the benefits of this lesson way before I knew about it. A family member signed me up as an authorized user on their credit card years ago. This automatically added years of experience to my credit history, and by the time I graduated, I had a high credit score without any of my own effort.
You might not have the same privilege that I did. But you might be able to find someone you can ask for help. This could be a parent, older sibling, grandparent, or extended family member. Or they might not be related to you, and could be a neighbor, mentor, or close family friend.
While attaching your name to someone's finances can have big rewards, choosing the wrong person could be damaging. Make sure you talk through everything thoroughly and you trust them to remain financially stable before committing.
4. Look for subscription deals
Growing up, penny pinching meant clipping coupons. Now the world has completely changed, and there seems to be a subscription for everything. Instead of paying several one-time fees per week, I save a ton with monthly or yearly subscriptions.
While I don't like supporting big corporations, this is what's in my budget:
- Yearly Walmart delivery fee: I paid a yearly fee to get anything from Walmart delivered for that year. This keeps me from paying individual delivery fees every week or two and encourages me to cook from home. Also, since I work from home, it eliminates the need for a car.
- Monthly Amazon Prime subscription: This is the only entertainment and package fee I need -- I don't pay for cable, movie theater tickets and snacks, or individual DVDs. Plus, two-day delivery makes it harder to miss having a car, without paying extra shipping fees.
I stay away from overspending on subscriptions by striking deals with friends to use their streaming accounts. I let my friends use my Prime Video in exchange for a profile on their streaming subscriptions. Another friend let me be on their Spotify Premium Family plan for free, since they had extra slots available. If I want more streaming options later, I'll ask around to see if any of my friends want to split the subscription fee.
Take advantage of your parents' subscriptions for as long as you can, but if that's not an option, trusted friends can become your streaming family. If it gets too complicated, you can monitor your subscriptions with an app. Now, I rarely pay one-time fees for anything, which quickly adds up. When I do spot a fee, I stop to wonder if the product is worth it.
Being thrown into adulthood during an economic recession changed the way I think about finances. More than ever, I'm prioritizing saving and discussing money. But before I can start obsessing over it, I remind myself that everyone has inherent worth beyond any number in their bank account.
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