How to Start Adulting
Congratulations! You’ve graduated! With that very expensive piece of paper in hand, you’re ready to take on the world, right? Well, maybe not just yet. Now the real work starts…and it’s not going to stop anytime soon. Being an adult can be a lot of fun, but it also comes with a truckload of responsibilities, and once you’ve left that safe cocoon of your college campus, you’re on your own.
It sounds scary, and it can be, but with our guide to the basics of being a grown-up, you’ll be adulting in no time.
Find your first job
For most, employment is the keystone to adulting. It provides you with the funds to pay for things like rent and food. But finding a job is often easier said than done for recent college graduates. Job hunting can be incredibly frustrating, but the most important thing is to take it one step at a time—and know what you want.
“Having clarity about what you are looking for helps the job-hunting process proceed less stressfully,” according to Tina Pestalozzi, author of Life Skills 101: A Practical Guide to Leaving Home and Living on Your Own. “You have to set your priorities so you can get a position that gives you the most—if not all—of what you need.”
According to Pestalozzi, this can include asking your college’s career center for guidance on how to optimize your résumé and refine your cover letters , seeking out networking opportunities in your area, reaching out to fellow alumni who work in the same field in which you are seeking employment, and knowing what connections you might already have.
“Sometimes reaching out to our personal connections gets overlooked,” said Pestalozzi. “Provide your friends, family, and family friends, etc., specific information about what you are looking for. An adult friend of the family may know someone who may know someone you should talk to.”
When a job offer finally comes your way (we promise, it will!), don’t say “yes” until you’ve decided what is most important to you, according to Pestalozzi. Does this job hit your target salary expectation? Are you going to be working in your chosen field? Is this work that you feel is meaningful to you and a valuable social contribution? It’s also important that you feel like it’s the place for you.
Once you land your first big-kid gig, you’ll feel like a million bucks…even if all you can afford on that entry-level salary is boxed mac and cheese.
Create a budget
You’ve found a job and you’ve received your first paycheck…awesome! Time to go blow it on those amazing boots you found on Zappos or that new sushi restaurant in your neighborhood! Not so fast. You’ve got responsibilities now, and you need to make sure you have a plan on how you will pay for them. Budgeting is crucial, especially when you’re on a fixed income.
“One way or another, we have to manage all the money that comes our way throughout our entire lives,” says Pestalozzi, “so it makes sense to get a grip on personal finance as soon as we start earning.”
MP Dunleavey, personal finance columnist for the New York Times and creator of the popular “ Women in Red” series for the MSN Money website, recommends being honest with yourself about how you manage your money. “Nobody likes the word ‘budget.’ It sounds restrictive. But the reality is it’s important to get a handle on how you want to manage your money,” she explains. “Some people are very nickel and dimey—they like to keep track of everything and like to use apps that track every expense. You might not be a nickel-and-dime type of person, you might be more of a big-picture person—and that’s fine. But the thing is to acknowledge that and maybe experiment with an app to see.” Mint is a great app for looking at both minutia and the bigger picture.
Even if you are unwilling to follow a rigid budget, develop personal money policies that will ultimately help you not only meet your goals, but also make your life run more smoothly, says Pestalozzi.
You need to ensure that you have enough money to pay for the necessities, such as your rent and other bills, not to mention groceries and transportation to get you to and from work. Not sure where to start when it comes to budgeting your money and creating a spending plan? Pestalozzi suggests trying out different styles and models for your budget to see what works best for you.
Dunleavy recommends the 50-20-30 budget, or other models that play on the percentage system. “The bigger number stands for your living expenses. You shouldn’t be spending more than 50 to 60% of your paycheck on rent, food, medication, etc. It’s a good ballpark number, and it’s very hard to stick with. Don’t panic if you don’t stick with it. Leftover percentages are what you save.”
Once all of your essentials are covered, and you’ve hopefully managed to tuck a little away into your savings, you can indulge in a splurge. No one wants to feel deprived, but let’s not forget about...
Finding a place to live
One of the most stressful parts of adulting is finding somewhere to live. You might be lucky enough to crash with Mom and Dad while you save money before looking for a place of your own. But, if you’ve accepted a job far away from your family, you have no choice but to begin the dreaded apartment hunting process.
Depending on where you are in the world, this process will vary, because the cost of rent fluctuates based on where you’re going to be calling home. But there are a few things to keep in mind, regardless of where you are.
Remember how we discussed the importance of budgeting? Well, this is where it counts. You have to be realistic about what you can afford in rent each month, says Pestalozzi. “You might be drawn to checking out housing that you know is beyond your reach just so you know what’s out there, but don’t fall in love with a unit you really can’t afford. Know exactly what your housing limit is before you start looking and don’t rationalize beyond that amount.”
You should also come prepared with a list of questions to ask your potential landlord or property manager when scoping out places. For example, what hours is the main office open? Is there a doorman? Most of the time, you will think of more questions to ask as you go through every paragraph of the housing contact, says Pestalozzi.
“Make sure you read the contract carefully to be fully aware of its content. This is also where you will find out if there are any hidden fees. For example, there might be a fee for a parking pass, a guest parking pass, or for a friend to accompany you to the pool.”
If getting a place on your own doesn’t seem feasible, which might be the case early on in your career, you can always look for roommates to share the cost of rent. Many people use Craigslist to find someone to share a place with, but you can also use social media to see if any of your friends (or even their friends) are looking for with a roommate. There are also new apps and websites popping up all the time that can help with the search process.
To make sure your potential new roommate is compatible with your healthy lifestyle, try asking some or all of these questions:
- How often do you order takeout?
- What is a typical dinner that you like to cook?
- Do you enjoy exercising?
- Do you like to buy junk food to keep around the house?
Pay off student loans
Some college students may be lucky enough to be walking away from college debt-free, either because they received enough financial aid and scholarships to cover their tuition costs, or because they or someone else (like their parents) were able to pay their way.
But for many, the harsh reality of the cost of a quality college education is student loans. Depending on your own situation, you may have borrowed money from the federal government (you can do that?!) in the form of a Stafford loan or you may have sought out a private educational loan from a bank or other financial institution.
And now that you’ve graduated, those lenders are expecting you to start paying them back. Most recent graduates are given a six-month grace period to get their lives together (i.e., get a job), so they can start the repayment process.
Before that happens, you need to understand not only what type of loans you have, but what kind of interest you’re accruing—either fixed or variable, which, as the name suggests, can vary, potentially making your payments a little different each month. You need to be prepared for those unexpected increases, says Pestalozzi. “If it’s variable and you have set up an automatic withdraw from your checking account, make sure you always keep a small buffer in your account so you won’t become overdrawn by an unforeseen payment increase.”
With government-backed loans, the amount you have to pay back will depend on the type of repayment plan you choose over a set period of time. Plans include:
- Standard Repayment Plan: a set amount each month for the duration of your payment period).
- Income-Sensitive Repayment Plan: a payment plan based on your income that will increase as you begin to make more money.
- Graduated Plan: a plan where the amount of your monthly payment will increase gradually every two years.
But don’t focus solely on the minimum payments, Pestalozzi advises. “If the loan allows, extra payments bring down the principle. Even if it’s a couple of times a year, extra payments will help go a long way toward getting the debit cleared.”
So what if it’s been six months and you still don’t have a job? You can always apply for a forbearance, which means that you do not have to pay on the loans for a set amount of time (usually 12 months to two years), but the loans will continue to accrue interest, meaning you will pay more in the end.
Plan for retirement
You’re young, why should you care about what you’re going to do when you’re 65? The truth is, this is the perfect time to be thinking about your retirement plan. Many companies offer retirement accounts to full-time (and some part-time) employees, usually in the form of a 401(k), which refers to the subsection of the Internal Revenue Code that covers defined-contribution pension accounts. Depending on the employer, some will contribute on your behalf, but a more likely scenario is that the company will match your contribution, up to a certain percent.
“There are very few reasons to pass up an opportunity to participate in a 401(k), especially if your employer offers a matching program,” says Pestalozzi. “You will never get back the years that you are young, so taking advantage of them with retirement savings should be an objective to get in place as soon as possible.”
Dunleavy also recommends starting as soon as possible. With compounding interest, “your money just snowballs. By putting your money in the market early, you have time to weather all the ups and downs. You can’t avoid the ups and downs but you can weather them because you have time on your side.”
What if your company doesn’t offer a 401(k)? Don’t sweat it. Most financial institutions can help you set up an Individual Retirement Account. While you won’t benefit from an employer match, depending on the type of IRA, you may be able to get a deduction on your contributions—up to $5,500—come tax time.
Make sure you have at least $1,000 saved for emergencies or pay off high interest rate credit cards before opening an IRA, says Pestalozzi. “But get a retirement account—even if you are just making small regular contributions—in place as soon as you can.”
When it comes to investing your money, Dunleavy says, “do it and figure it out as you go. You’re young enough that you won’t make any terrible mistakes. The only terrible mistake you can make at this age is not saving.”
The biggest key to “adulting: is knowing what’s important to you and basing all of those big-kid decisions on that.
“You have to decide what will and will not work for you,” says Pestalozzi. That way, even when the real world seems to be rooting against you, you can stay focused and keep moving forward.