Why College Students (Especially Almost Graduates) Need an Emergency Fund
September 18th 2007 14:08
You hear about emergency funds all the time. For the average college student, it’s hard to justify setting aside a sizable amount of money when you could use it to pay tuition. However, it will be extremely helpful when you graduate.
Imagine that when you graduate your parents live nowhere near where you want to get a job. Or they move to a smaller house and no longer have a room for you. Or you have a job lined up, but don’t start for another three months.
What do you do then? Where will you live if you don’t have an emergency fund built up to rent an apartment?
How much you will need in your EF will all depend on what type of career you’re going to have, and therefore where you will live.
When you are trying to decide how much money you will require upon graduation think about these factors:
1) how much an apartment costs where you want to live
- plus any money you might have to put down
2) other payments you already have (like a car payment)
3) any other bills that come out of the woodwork when you can no longer be on your parents’ bill
- health insurance
- car insurance
- utilities and groceries in your new place
I personally have an EF for most of the above and then the money for my car payments marked as such. (It’s all in one account to earn maximum interest; I just have a spreadsheet marking how much money is for what).
I don’t plan on living in a very expensive city right after graduation (somewhere midwest most likely), so my EF (not including the car money) is just slightly over $1000. Yours will be different if you plan on living in NYC or somewhere equivalent.
Imagine that when you graduate your parents live nowhere near where you want to get a job. Or they move to a smaller house and no longer have a room for you. Or you have a job lined up, but don’t start for another three months.
What do you do then? Where will you live if you don’t have an emergency fund built up to rent an apartment?
How much you will need in your EF will all depend on what type of career you’re going to have, and therefore where you will live.
When you are trying to decide how much money you will require upon graduation think about these factors:
1) how much an apartment costs where you want to live
- plus any money you might have to put down
2) other payments you already have (like a car payment)
3) any other bills that come out of the woodwork when you can no longer be on your parents’ bill
- health insurance
- car insurance
- utilities and groceries in your new place
I personally have an EF for most of the above and then the money for my car payments marked as such. (It’s all in one account to earn maximum interest; I just have a spreadsheet marking how much money is for what).
I don’t plan on living in a very expensive city right after graduation (somewhere midwest most likely), so my EF (not including the car money) is just slightly over $1000. Yours will be different if you plan on living in NYC or somewhere equivalent.
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