Now that you’re living on your own, there are many financial decisions that you need to make. Decisions that your parents previously made for you or helped you to make.
The single most important thing you can do is to create life-long savings and investing habits that have you live well and within your means. With a little up-front time and energy you can create good financial habits. One of the first habits is to develop a spending plan. Incorporating these habits into your regular routine will enable you to spend and save comfortably. The current economic crisis has shown us all, what can happen if people live beyond their means.
Money Management
Insurance
Investments
Plan for now and the future. Make the most of what you make. Lead the life that you want!
Spending Plan/Budgeting: Track your expenses for a couple of months, both bills and cash, use our GEBA budget calculator to see how you are doing. Develop a spending plan; know how much you make and how much you spend on fixed (rent, insurance, loans) and discretionary items (dining, clothing, shopping). Do you want to save for a vacation, new car, education or retirement? Do you need to trim spending before you start saving? If you have high interest credit card debt, pay down as soon as you can. Don’t increase your personal debt unless you are gaining an asset, for example a car or home.
Emergency Fund: Start a savings plan for eight to twelve months of your monthly expenses. Save eight months if you are single and 12 months if you are married. You don’t want to be derailed by expensive car repairs or other major unplanned expenses. This is your financial safety net since it is liquid and easily accessable versus retirement accounts which have large penalties for early withdrawal. Keep this money in a savings account, money market or CD (certificate of deposit) that can’t lose value and is FDIC insured.
Investment Planning: Come in and meet one of GEBA’s Member Services Representatives or call us to chart out the next few years of your savings targets and receive investment advice for the future. GEBA has the tools that can help map out your financial future one step at a time.
Education/School Debt: You may have debt from your education. Double-check your payment plans and options. Make sure that you pay on-time. Your credit score is greatly influenced by on-time bill payment. If you have multiple loans with various rates and terms, explore consolidating into one loan with a fixed, lower rate.
Credit Scores: Since you are now a working adult, you will be responsible for your own credit scores. Check your credit scores for free once a year (annualcreditreport.com). Understand how the credit reporting agencies set your scores by visiting www.myfico.com or www.creditkarma.com. If you want to buy a home make sure to clean-up any credit related issues from all three credit reporting agencies before applying for a mortgage.
You have been covered under your parents’ policies up until now, but now you need to make important insurance decisions. Some insurance is required by law (i.e. auto) and others are optional. We, at GEBA are here to help you, so please ask lots of questions.
Medical Insurance: Your health is your most important asset. An unexpected emergency room visit can cost hundreds if not thousands of dollars. Don’t risk your health and savings by not having medical insurance. In addition, if you are female under 60, annual obstetrics/gynecological check-ups are a must. Review your employer’s plans and choose the one that best fits your health and finances. If you are young and healthy see if your employer offers a High Deductible Plan, it may be a more cost-effective plan for you.
Dental Insurance: Just like brushing twice a day is important for the health of your teeth, so are bi-annual cleanings and dentist check-ups. A single filling or cap can be hundreds of dollars. Review your choices and see if coverage is available and at what cost. GEBA offers a variety of plans through Delta Dental at very competitive group rates.
Vision Insurance: If you wear glasses or contacts you know how quickly your prescription can change. Help offset the cost of your annual vision check-up and frames and lenses with vision insurance. Review your choices and see if coverage is available and at what cost. GEBA offers a plan through Vision Benefits of America (VBA) with competitive rates. There are also discounts available for Lasik surgery.
Life Insurance: Life insurance provides financial protection for your loved ones when you are no longer living. Review your FEGLI coverage first. GEBA may be more affordable for Basic Coverage than FEGLI. Use GEBA’s comparison calculator. With GEBA’s term life insurance coverage you are able to keep insurance if you retire or resign. That's right. Even if you leave the U.S. Intelligence Community, you can keep your term life insurance coverage as long as you continue to pay your premium.
Federal Employee Guaranteed Life Insurance (FEGLI): As a federal government employee, you are automatically signed-up for FEGLI unless you cancel in writing. The amount of your basic coverage is your annual pay rounded to next higher $1,000 plus $2,000, with minimum $10,000 coverage.
Auto Insurance: Your automobile (or motorcycle) is probably your major source of transportation. One minor fender-bender can cost a lot of money to fix, let alone the problem of having no transportation while it is getting repaired. Protect your ride by having auto insurance with well thought out coverages and deductibles. GEBA offers excellent protection through MetLife Auto & Home, at competitive group rates which can include discounts of up to 10%. You can even get a quote online here. (Just be sure to enter "GEBA" as the company name.)
Renters or Homeowners Insurance: Your home is your castle, so protect it as such. Make sure you are protected from loss, theft or damage. A single water leak from a broken faucet could cause thousands of dollars of damage. A single break-in to your apartment could leave you with no computer, television, music system or jewelry. GEBA offers plans through MetLife. As a GEBA member, you could save up to 15% with your group discount from MetLife Auto & Home, plus you can save an additional 10% if you choose to pay your policy through payroll deduction.
Disability Insurance: Accidents happen. What would happen if you couldn’t work for an extended period of time? Would you be able to pay your monthly bills? Do you have high risk hobbies? Protect your home, car and assets with long-term disability insurance. Check if your employer offers disability insurance, there are both short-term and long-term policies. GEBA’s long-term disability insurance is a cost effective and smart way to protect your income in case you become unable to work.
Emergency Travel Plan: In the event of a serious illness, accident or death, are you financially prepared to be with your family when they need you? If an emergency arises and you need to travel to get home (U.S. or abroad), the costs of last-minute airfare or train fare can be extremely expensive. GEBA’s Emergency Travel Plan provides partial reimbursement for you to travel to visit immediate family members due to serious illness or death, up to 80% of your ticket costs up to $1,500.
Veterinary Pet Insurance: Do you have a pet(s)? You responsible for their health. A regular check-up with a vet can be $100 or more. An emergency illness with an overnight stay at a pet hospital can be even more. The cost of even routine visits can add up quickly. Can you afford not to have pet insurance? GEBA offers discounted pet insurance through Veterinary Pet Insurance (VPI) to help defray these costs.
Since you are young, now is the time to start saving! Even small amounts of saving add up over time. Start your nest egg and watch it grow! (link to 25-year savings chart)
Federal Government Thrift Savings Plan (TSP): Invest the maximum amount allowable from your pay each period to start your retirement savings (for 2010 the IRS maximum is $16,500 or $22,000 if you are over the age of 50). If that is more than you can afford, you should still contribute but at least to the amount your employer matches (5%). The employer match is free money to you! See more on the Thrift Savings Plan here.
Individual Retirement Plan (IRA): Utilize the tax-deferred benefits of IRAs to save for your retirement. Currently you can contribute $5,000 per year under the age of 50 and $6,000 if you're over the age of 50. GEBA offers both Traditional IRAs and Roth IRAs to meet your needs as well as many other investments.
College Savings: Advanced degrees may help in your chosen career. Many times you can receive partial tuition reimbursement from your employer. GEBA also offers scholarships in the amount of $2,000. GEBA Foundation scholarships will be available for those who attend, or will attend, an accredited post-secondary educational institution (including trade and vocational schools) offering credit towards a bachelor's degree, associate's degree, professional degree, or other recognized post-secondary credentials.
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