|Turning eighteen is a significant milestone in many people’s lives. While teenagers may have felt grown-up long before the “Big One-Eight,” now they are legally recognized as adults. Adulthood may bring a mixed bag of feelings of freedom and trepidation. Whether you are still at home or setting out on your own, you’ll need to prepare for the changes that come with being eighteen. Below we share a quick guide to help you on your journey.
What Can I Do Now?
A lot changes “legally” once you turn eighteen and are officially an adult (or have “reached the age of majority”). You now have the right to do the following without parental consent:
|● Enter into contracts
● Get married
● Get tattoos or piercings
● Sue or be sued in your own capacity
● Purchase vehicles or property or enter into rental agreements
● Become employed as a driver
● Make a will and inherit property outright
● Vote and join the military
● Consent to medical treatment
● Take out loans or lines of credit
|Handling Your Own Expenses
Probably one of the most challenging things new adults have to learn (and fast!), is how to manage their expenses. Many set out on their own for the first time without having had to budget before or worry about bills. It may seem simple to manage this new responsibility (don’t spend more than you bring in) but in practice, newly found freedom can cause huge temptations that lead to financial downfall.
Before moving out on your own, figure out what you will be financially responsible for and how you will pay for it all. Sit down with someone you trust (maybe a parent or mentor) and ask for help as you create a realistic budget for yourself. Some new expenses can include:
● Transportation costs and maintenance
● Cell phone and internet
● Heating, electric, garbage, water, sewer
● Home supplies
● Medical expenses
|You may be surprised how many extra little bills and expenses stack up as soon as you set out on your own. Make sure you are ready by creating a solid budget that meets your income. And be sure to check out your Credit Union’s easy, online budgeting tool to make light work of the task. While you may want to set out and be a full-fledged adult immediately, you may need to start small and grow into financial independence as your income increases. Don’t forget to adjust your budget regularly as things change.
Things To Know About Getting Around
Now that you are eighteen, you can buy your own vehicle for transportation. Many people may not be ready to buy a car, either for financial reasons or lack of credit. However, there are still many affordable options for getting around without needing a car loan, insurance, or maintenance costs (which can add up!). Find out what public transportation options are available to you. Many people without cars take advantage of car rental apps or ride-share apps. And don’t forget the good old bike riding or walking (you get the added bonus of exercise).
If you are ready to buy a vehicle, make sure you spend time researching cars and financing options. You may want a new model with all the bells and whistles, but can you afford the monthly car payment? Many car dealerships can help you get pre-approved before you start looking, so you won’t get distracted by options out of your budget. Your Credit Union also provides pre-approval and exceptionally low rates on auto loans (same for new and used). We’ll even work with the dealer on your behalf. Learn more here. Remember to come to the dealer prepared with information on the market value of the car you will purchase so you can negotiate. It’s also okay to bring someone with more experience to help you with the process, even if you are the one making the final decision. Just remember, you’ll be the one left with the final responsibility too! Most importantly, find out what kind of inspections the vehicle has had, the terms of any warranty, and the car’s accident history.
When thinking about your transportation budget, keep in mind that the car payment is not the only thing you need to afford. There is also insurance, planned and unplanned maintenance expenses, cleaning, roadside assistance, gas, and other costs. When making a purchase, make sure you have an educated idea of how much repairs may cost, as well as gas mileage and other factors that will end up costing you each month.
Getting An Education
Joining the adult world doesn’t mean you have to commit yourself to only working. Gaining training, certificates, and degrees can drastically increase your earning potential as you get older. Suppose full-time college isn’t a good fit for you. In that case, you can also explore part-time, community college, apprenticeship, or vocational training programs that work better for your lifestyle and goals. Career centers at your current school or in your community can help with job placement and educational opportunities that may not have occurred to you. Even volunteer positions are great experiences to list on your resume. And, since you are now eighteen, joining the military is another option for getting a free and impressive education while traveling the world. Some Peace Corps or other organizations offer similar work-study options if the military doesn’t meet your goals.
One of the first financial lessons you will learn as an adult is the subject of credit. Your credit score will begin to impact almost all financial decisions you will make. And sometimes, you won’t be able to purchase things you want (like a vehicle) without it. Since you can now open your credit card accounts, it may be tempting to use your entire credit limit to make purchases—which is dangerous! It is effortless to rack up consumer debt that will become unmanageable and ultimately hurt your credit.
However, without using what credit you do have, you may also be hurting your credit score. Opening a secured credit card or a credit card with a small credit line that you use sparingly and pay off in full each month are both innovative options for building your credit history. Just make sure you pay off your balance on time. Your Credit Union offers a secured card ―Blue Visa―with especially low interest rates (half or less those of banks). As your good credit habits grow, the amount of credit you have access to will also grow. The better your credit, the better interest rates you will qualify for, and the better candidate you will become for housing rentals. The best way to build your credit is to have bills in your name (think cell phone, utilities, rent, etc.) that you pay on time each month. Timely payments can be reported to the credit bureaus automatically, or you can ask to have them reported. Responsible bill paying should be a top priority to make a habit when you are out on your own. This practice will serve you well for the rest of your life.
No matter what stage of life you are in, finding affordable housing is difficult. Many landlords and rental agencies today require you earn three times as much as the rent to qualify. That requirement can be challenging to handle on your own. Some other creative housing options include:
|● Renting with friends to combine income;
● Find job opportunities that come with room and board included, such as a nanny, home health companion, or ranch hand;
● Travel and work abroad by applying to organizations that pay people to teach English in other countries or do other work, such as the Peace Corps;
● Join the military and take advantage of housing benefits;
● Stay at home, but pay rent in exchange for more freedoms;
|With a bit of creativity, you can find housing options that provide you freedom and financial stability.
Don’t Forget the Insurance!
If you are lucky enough to be able to remain on someone else’s insurance, do it! However, insurance can be a necessary but potentially costly budget item if you are on your own. The most obvious are health insurance and car insurance. If you are a student or have a low income, you probably qualify for free or reduced health care or insurance. Check with your local community or school resource centers to see what options are available to you.
Many car insurance companies may have budget policies. However, you should know that as a young driver, your policy will likely be higher than it will be once you have an established good driving record or reach 25.
You may need to consider other insurance policies such as renters insurance if you rent an apartment or personal property insurance for any high ticket items (such as jewelry or electronics) you may own. Dental and vision insurance may be covered under any community health plan; however, they likely are not. Again, community health centers are great places to locate free or reduced-cost vision and dental services. Or, if you are lucky enough to have a job that offers those types of insurance – take advantage!
The best way to find your adult feet is to start small. Slowly increase your financial responsibilities while focusing on growing your earning potential. If you are in a situation where you can’t move as slow as you would like, focus on necessities first, and don’t be afraid to reach out to community organizations (Such as the YWCA/YMCA, churches, or public assistance agencies) for resources to help you out. No matter how you start, the future is unwritten, and now is the time to give yourself the best financial beginning possible.
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