When I saw Buzzfeed posted an article called “46 Questions Every Twentysomething Still Asks Their Mom,” it resonated with me — but I wish it gave some answers.
I’m a twentysomething and I’ve asked my mom questions like these. Questions like, “Why doesn’t my chicken taste like your chicken?” and “Do you have my passport?” (She doesn’t; I think it’s somewhere in my college apartment.) But what stuck out was: Millennials really have no idea what we’re doing when it comes to money.
That’s because many of us are just entering the real world — even student loans are just Monopoly money until you have to start paying them back. Now the problems are real.
For example, three weeks ago I ran my car into the back of some guy’s SUV at a red light. I had to call my dad to explain in tears that yes, I wrecked my car again and all the auto body shops were closed, and no, I didn’t have my insurance card with me, and yes, there was a half-full beer bottle in my cup holder, but no, officer, I wasn’t drinking, that was in there from last weekend.
But now I know what to do when I get in a car accident — see No. 6 below. And though I didn’t know the answers to most of Buzzfeed’s questions either, I was able to find them pretty easily, thanks to Google and some smart editors at Debt.com.
The answers aren’t too complicated — so here they are, written by a 23-year-old who graduated from college six months ago. Good luck to the rest of you!
1. So do I really NEED a 401(k)?
You don’t really need one, but being old and homeless sounds worse than being young and homeless.
A 401(k) isn’t mandatory, and your job may not even offer one. But if they do, you ought to jump on it ASAP. For one thing, your employer may match your contributions up to a certain amount — which is free money for you. For another, the sooner you start, the faster your money starts multiplying.
If your company doesn’t offer a 401(k), you can start your own beginner retirement account — a myRA — just like I did. It takes less than an hour and it’s a practical way to start saving for retirement now. Because I (and the rest of you) are definitely going to need it.
Learn more about 401(k)s here.
2. What’s the difference between a PPO and an HMO?
First, the acronyms: PPO stands for “preferred provider organization.” HMO stands for “health maintenance organization.” These both have to do with health insurance, BTW, so if you don’t have health insurance you can stop reading now. (Might want to read this instead.)
An HMO basically gives you access to one primary physician. All other doctors or medical visits, besides the ER, require a referral from that doctor. It’s what the industry calls a “network.” The benefit? It’s less expensive, and there’s less paperwork.
A PPO is more expensive, but you don’t have to coordinate everything through your primary physician. You can go to any health care provider you want without a referral.
3. What number do I claim on my taxes?
We’re going to guess you’re talking about tax exemptions, which can reduce what you owe.
Unless you have kids, you have three choices: Zero, one, or two. What you pick has an impact on the size of your paycheck and whether you get a tax refund or not — the more exemptions you have, the less is being withheld in taxes, and the more you’re likely to owe in tax season to make up for it.
- Zero: Claim this if you’re under 24 and your parents claim you on their taxes. You’ll probably get a tax refund.
- One: Claim this if you are single and have one job. You’ll probably get a tax refund.
- Two: Claim this if you are married and filing jointly. You will probably have tax due when filing your taxes.
If you have kids you can claim as dependents — they live with and rely on you financially — you can add one per kid to your exemption total.
4. How much do you think a dog/cat would cost?
A lot. Dogs are more expensive than cats, and can cost close to $2,000 a year.
Have a job? You might have to hire a dog walker. Have an apartment? You’ll get charged for your dog’s rent, too. And that’s not counting all the shots and trips to the vet, which may help you decide to get pet insurance.
When my roommate decided to get a dog, I was really excited at first. But a pet require a lot of work, especially dogs. Especially my dog, who has been known to puke up gravel on the couch.
They also demand a lot of attention. So take that into consideration, too: Do you have enough time and energy to spend on a pet that requires that type of commitment? If not, look for something less needy.
5. What do you mean not all doctors are covered by my insurance?
This applies if you have an HMO plan, mentioned above. If you decide to go see a specialist, like a dermatologist or a nutritionist, you have to get a referral from your primary care physician first and it’s not covered by your insurance.
Generally, the only exclusion is if you are a female and need to see an OB/GYN. Many companies allow women to do this without getting a referral first.
6. I got in an accident what do I do?
First, call the police. After they write up a report, they’ll ask for your license and insurance information.
Once you give it to them and figure out how to get your car home (or to an auto repair shop), you’ll have to call your insurance company.
Tell them about the accident, and give them the information about the other driver, including the person’s name and the make, model and year of their car. Make sure you obtain that information on the scene.
I took photos on my phone of my car and the other guy’s SUV too, just like my driver’s ed instructor told me to when I was 16.
Don’t flee the scene or try to avoid your insurer’s calls, and remember that accidents don’t always hurt your car insurance rate.
7. How do I check my credit?
You can do it for free, yay!
Just go to annualcreditreport.com, where you’ll get one free copy of your credit report from each of three credit reporting agencies — TransUnion, Experian, and Equifax — per year. Since they mostly contain the same information, you can take out one every four months to keep an eye on your credit more often.
Credit reports don’t include your scores, which is what lenders use to make credit decisions. Those usually cost you money to see. Some banks and credit unions are beginning to offer free FICO scores to members, though.
Learn more about how your credit works here.
8. How do I sign up for a credit card?
At 23 you’d think I know this, but having been warned by my parents my whole life about the evils of credit, I don’t. I know I need to get one in the near future, to begin building credit for when I need to buy a new car or get a mortgage (lol, buying a house.) Unfortunately, even if you have no debt, you might have poor credit just from not having a card, and that will work against you when you do go for a loan.
From what I read, you can usually apply online and get approved or rejected quickly. So what’s a good first credit card? Here are the best ones if you’re a college student. But if you’ve already graduated, your best bet might be to ask the bank you already have a checking account with, since they know something about you already.
Learn more about getting your first credit card.
9. So what happens if I don’t pay my bills on time?
Well, it depends on which bills you don’t pay. If it’s your electricity or water bill, it’ll shut off after a few months of not paying.
But if it’s your credit card bills, it could be worse. A lot of a credit score is based on your ability to make payments on time. So if you pay your bill late, and only pay the minimum payment, you’ll be screwed two ways: You’ll pay more in interest over time, and your credit score will drop.
If you don’t pay the government, they can just take your stuff and money out of your paycheck.
For most bills, the debt is eventually sent to collections. Read more about the collections process here.
10. Can I use some of your airline miles?
I don’t have any.
Alternatively, learn how to travel for free, using a technique called “flight bumping.”
Got your own answers to these questions? Let us know in the comments below!