You graduated college, and then reality hit: You have student loans to pay back. The landlord wants rent. Work expects you to show up, every day, in fact.
Ah, lifeâ€”it can be quite the adjustment for a recent college grad who’s used to sleeping in on Tuesdays and Thursdays. Though Salary Survey places the average salary for the Class of 2013 around $45,000, it only takes one unexpected, expensive incident to start a financial domino effect that can set you back for months.
Here’s some help on dealing with three common real-world financial pitfalls:
1. Your Car Breaks Down
Eight million households in the U.S. don’t have a car, according to the Brookings Institution. These people do whatever it takes to get to work or school, and so can you. Have a backup plan in place in case yours breaks down. Know the bus route. Find a couple people at work who don’t live far from you and get their numbers. Make an agreement that in a pinch, you can commute with them while your car is in the shop. Agree to do the same for them.
As you apply for and get credit cards, be smart. Don’t max them out. You may need the available credit to pay car repairs. If you’re already swimming in credit card debt, investigate ways to pay them down. Of course, it’s a whole lot easier to maintain your vehicle and not break it down in the first place, so check your owner’s manual and adhere to all scheduled maintenance protocols.
2. Emergency Trip Home
Life happens, and there comes a time when you have to travel for a family emergency. But traveling home for your grandmother’s funeral or to see your sick father doesn’t have to derail your finances. Several major airlines offer bereavement fares. American Airlines offers discounts for both bereavement and medical emergencies. United Airlines offers a 10 percent discount on airfares to visit seriously ill or injured family, and they also allow customers to apply for bereavement discounts with proper documentation.
If you’re not traveling too far, Ridejoy.com and eRideShare.com are two options to potentially find someone already driving in the same direction. It may take a little longer to get to your destination, but it’s a lot less expensive.
3. No Budget and No Emergency Fund
The above two situations wouldn’t be much of a financial burden if you had an emergency fund built into your budget.
What? You’re not following a budget?
You’re not aloneâ€”a Gallup poll from last summer found that 68 percent of Americans fail to make a budget at all. The number of free smartphone apps out there to help with personal budgeting, including Mint.com and Easy Envelope Budget Aid, leaves no excuse. Make a budget.
Then look into ways you could start funding an emergency fund. You could temporarily adjust your W-4 at work, so fewer taxes are withheld from your check (just make sure to change it back, so you don’t owe a huge sum come tax time). Get a second job for a few months. If you receive regular payments from a structured settlement or annuity, you may be able to sell your future payments for a lump sum of cash now. This can help you build an emergency fund so when the unexpected does happen, you aren’t completely derailed.
Larry is a financial planner specializing in budget and debt management.