Class of 2010 - Congrats on graduation and welcome to the real world. As you prepare to leave Mr. Jefferson's University, I offer you a few practical financial tips for your future that you can take advantage of during your last weeks on Grounds, this summer and beyond. Although there may be some "green shoots" of economic recovery, it is still tough out there for everyone looking to get - or keep - a job. Best of luck!
Classes of 2011, 2012 and 2013 - Listen up because this advice applies to you, too. Whether you will be working this summer at the internship you hope will turn into a post-graduation job, staying in Charlottesville to take classes or just trying to figure out what major to declare, there will be something in here for you. Plus one extra special tip: It's not too late to take Prof. Karin Bonding's Personal Finance course. Although in the Commerce School, the course is designed for, and restricted to, non-Commerce students. If you take this course, you will find it to be one of the most useful courses you take in college. With that said, here are some tips about how to manage your money wisely as you move from U.Va. through the real world.
Savings are the best defense you can have against layoffs and deferrals. Start an emergency savings account if you don't already have one. This account should have enough money to cover your expenses for six months. If you are already set with an exciting job, a great vacation or a new car is probably tempting you. You should remember how fast the economy has turned and prepare for the unexpected. An emergency savings account will give you peace of mind that may be even more satisfying than a new ride. Moreover, it's not an "either or" situation; you can save for multiple financial goals at once. Just keep separate accounts, so you don't blow your emergency fund on that vacation. If you have been saving to reward yourself for all the years of hard work in school, then I commend your diligence. Just don't blow all your savings and end up in a fragile financial situation.
Save for retirement. Take advantage of the retirement plans offered by your employer. If there is a 401(k) or 403(b) plan, you should try to contribute up to the limit. Contributions made at the start of your career can grow for 30 to 40 years and will set you up much better for retirement. Your employer may offer a matching contribution; this is effectively "free money" for you, so be sure to take advantage of it.
If you expect your income to increase in the future, see if your employer offers a Roth 401(k) option. If you are starting a full-time job, take the time to see what other benefits your new job offers; there's probably some great opportunities for you. Undergraduates who aren't graduating probably won't be eligible for their companies' plan this summer, but you still may be able to set yourself up nicely for retirement by contributing to a Roth IRA.
Take out insurance. Insurance exists to protect you from financial catastrophe. Anything that could be financially disastrous to you or your loved ones merits insurance. In practical terms, you almost certainly need disability and catastrophic health insurance. If you own a house, you need homeowner's insurance. If a fire destroyed everything in your apartment, and you couldn't afford to replace all your stuff then you should have renter's insurance. If you can't afford to replace your car, then you ought to have collision and comprehensive insurance.
Most of you probably don't need life insurance. But if you have a spouse or children who will depend on your income, then you do need it. Your parents also may want life insurance for you if they are co-signers on your student loans. Given how litigious this country is, you may want to think about getting a Personal Liability Umbrella Policy at some point too.
Get a will. You will die. Me too. Hopefully not soon. Your life is valuable, especially because you will have a fancy degree from a great university. A will lets you nominate a guardian for your children - if you currently have them - or you can identify recipients of whatever property you might own.
One of the best reasons to think about getting a will before graduation is that you can get a good one cheap through U.Va. Your student activity fee funds more than just a losing basketball team and tickets to theater productions; this fee also pays for Student Legal Services, which can assist you with drafting a will, should you need one. And they do it for a rate that is so far below the market rate that you should really consider taking advantage of the program while you are still eligible.
Until the fall, good luck on exams and best wishes to all for a wonderful summer.\n\nBen's column runs biweekly Thursdays. He can be reached at b.grosz@cavalierdaily.com.
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