The Necessity of an Adulting 101 Course
Photo by Olia Danilevich
Wouldn’t it be wonderful if there was a college course that taught just some of the basics of how to make sound financial decisions? High schools have us spend two years on algebra, a year on geometric proofs, and the torture of pre-calculus, and colleges further the edification of our minds with another year or two of higher math. Yet, they never taught me about what exactly is a credit score?
For some who are lucky enough to have parents who can make tuition and car and housing payments on their behalf—financial realities may seem trivial. However, the fact remains that it’s rare to find parents who can cover these financial burdens for their young adult children in this unstable day and age. And, for those that can, they may not be able to do it for long in the age of a global pandemic. It’s best to be prepared, for the “real world” has a way of creeping up on you, especially after graduation (when those student loan collection notices start coming). In that sudden rush of responsibility, all the things you don’t know may cause you to make some decisions that you will come to regret.
The first step before any large purchase is to do your research. Depending on your definition, “large purchase” can mean almost anything; there's the obvious--cars, houses, apartments—but most people fail to realize the potential repercussions of even the small things. What seems to be a great deal on paper may turn out to be a big mistake that, in reality, can affect your future for years to come. However, you're not at the mercy of a failed public education system. These days there are many resources available to help buyers make informed decisions—two of the most popular are Consumer Reports and The Better Business Bureau.
Consumer Reports is an online database (with a monthly publication) that offers an unbiased review of the most popular products that people buy. They have a section that covers the more significant purchases, like large household appliances, furniture, electronics, and cars but have a vast repertoire of reviews on the more commonly used daily objects. They publish reviews on things like yoga mats, vacuum cleaners, hearing aid, and blood glucose monitors. Their online database even offers further links to reputable online marketplaces and sites that offer the most economical deals.
Photo by Karolina Grabowska
The Better Business Bureau (BBB) is another online asset for making financial decisions. Their online database covers everything from businesses specializing in home and auto repair to restaurants to beauty salons. Each business is graded on a harsh set of criteria, allowing for people to search for businesses that meet their needs/specifications, weed out scams, and leave their own reviews for the next person.
Ultimately, no matter who you decide to consult, the decision will fall on your shoulders. It would help to be able to go into the situation armed with good advice from people you trust, and not everyone has parents or guardians that are able to fulfill that role. At the pivotal time of young adulthood, where credit card companies are trying their hardest to recruit you and your entire financial future is in front of you, it would help to have a source of accurate knowledge. For instance, someone to teach you how to purchase a car.
Very often when you purchase a car—whether new or used—you will need to find the best interest rate out of the loans offered to you. Those loans might come from the automaker themselves (Ford, GM, Chrysler, Dodge, etc.) who typically offer incentives to finance with them, or the major banks. It would be lovely to be prepared with this information before buying a 2022 Kia Telluride with a 17% interest rate because Shauna at the dealership told you it was the best deal offered to you.
To compound upon this monumental headache, before you leave the car lot, you will be required to provide proof of insurance. Louisiana law requires anyone who finances a car to carry liability and collision insurance. All these things contribute to the bottom line. So, not only do you have to consider your car note, but also the cost of your car insurance, and the monthly cost of what it will take to maintain your vehicle (gas, oil changes, tires). Sometimes it’s best to hold off making a big purchase until interest rates go down. Even better, wait until you have saved enough money to buy the item outright or can afford to make a significant down payment.
But how do you determine how much a down payment should be? How do you know when interest rates go down? For that matter, how do you figure out what constitutes a “high” interest rate? What's the difference between collision and liability insurance? Why shouldn't you take advantage of the furniture store 50% off sale? And why shouldn't you get a new iPhone every year? What even is a credit score, and why are the emails from Credit Karma saying it went down? What are the future repercussions of taking out thousands of dollars of student loans in order to attend a private liberal arts college instead of the community college that offered you a full ride? Who knows? Maybe Centenary can create a new course that will aid in making wise and informed decisions about finances, insurance, and student loan repayment plans.
