Many parents and students see college as the bridge between this life and a better one. While more and more kids are heading off to college, many are struggling with how they’re going to pay for it. While a recent study conducted by Fidelity Investments in California indicates that more parents have started some type of a college savings or investment account, many have experienced a decline in the value of the account because of the declining economy. The results reveal that this loss is in the neighborhood of 27%.

Many parents are wondering what types of accounts are available to save for college and which one may the best one for them. Some financial and college aid experts chimed in on a few of the popular ways that parents have paid for or plan to pay for college—even in a faltering economy.

Types of Savings

529 Plans. Many parents have invested in the 529 plan, which is an account specifically earmarked for paying for college. Many parents and grandparents have come to depend on these accounts to cover college expenses because withdrawals made from 529 accounts to pay for college expenses happen tax-free.

There are two types of 529 plans, prep-paid and savings. Thirteen states offer pre-paid tuition 529 plans. Most states, however, offer a savings 529 plan, which is similar to investing in an investment portfolio, so there can be a fluctuation in the account value.

Financial experts seem to have opposing feelings about these types of accounts. Gene H. Harrison, VP and Director of Financial Planning for D.A. Davidson & Co. says, “Most 529 plans offer a variety of age-based options that provide for a shift in the asset allocation from more aggressive to more conservative as the child nears college age. In other words, if you used one of the age-based approaches offered and your child was within a couple of years of entering college, the account should theoretically be in a conservative asset allocation.”

Stan Ezekiel of College Planning Group Inc. has a slightly different view, “Unfortunately, the only benefit of a 529 plan is that the gain is not taxable if it is used for qualified higher education expenses. If a family has an opportunity to put money away on a monthly basis, they would be better served investing in a whole life insurance policy.”

UGMA/UTMA accounts. Michael Lopata of College Plan 101 suggests UGMA/UTMA accounts, which are another popular type of account with parents and grandparents. The UGMA/UTMA college savings options can also provide tax-free savings without the higher expenses associated with maintaining a 529 plan.

Account holders have a significant amount of control over the types of investments made during the savings phase and on how the distributions are made. It’s one more financial management tool for earning tax-free income. There is also some flexibility built into these accounts because the money doesn’t have to be used for college expenses, so if your child decides not to go to college, your savings can be applied elsewhere.

Real estate. Real estate investments, especially as a long-term investment strategy, are another way parents have invested money and turned it into a college savings account. Take, for example, a small business owner in Florida bought an investment home for each of his three children when they were first born.

He rented out the single-family homes over the 17 to 18 years of each child’s life. The rental amounts typically more than covered the home’s expenses, so not only did he enjoy the increasing value of the properties over the years, but he was also able to turn a profit from the rent. A few years out from each child reaching college age, he sold the home and used the profit from the sale and the money he had saved over the years from the rent to pay for college tuition, room and board for the child.

If you have a young child, now may be the time to consider this type of investment. Real estate prices are affordable and expected to increase again over time. Now may be the time to buy a home or piece of real estate at a deep discount, rent it out and sell it later for more than you paid for it. With somewhat of an unstable real estate market, this is probably not the right investment for parents with older children that have less time before the kids reach college age.

Tough Times Mean Alternative Methods

In previous times, parents may have carried the burden of paying for college alone. In modern times, students expect to pay for at least some of their college education expenses—be it from a part-time job or using gift money saved over the years. This, however, may not be enough to make up the shortfall, and with some families worrying about how they’re going to pay for necessities, college savings is something they’ve had to push aside.

According to Upromise, more families do not have to sacrifice saving for college to pay the bills. By registering with Upromise.com, parents earn one to 25% in rewards when they shop online, dine out or buy groceries and gas. The rewards can be allocated to a 529 college savings plan. To date, Upromise has more than ten million members and has contributed more than $500 million in member rewards.

High school and college aged kids are also approaching paying for their college education with their eyes wide open. This means some kids are attending nearby community colleges or universities rather than going away to school. It’s saving parents on having to pay additional money for room and board and only requires covering tuition and book expenses.

Times have changed and money set aside for college may fluctuate. Recent economic hard times are not stopping parents and students from using old tried and true ways along with innovative ways to pay expenses and save money for future college expenses simultaneously.

No matter what type of investment or account you choose as your college savings account, there is some risk involved. The key is to create a plan and start saving for college as soon as possible. Second, find an account that matches the amount of risk you’re willing and able to make. Once you have a college savings plan in place, all that’s left to worry about is getting your child into and sending them off to the college of their dreams.

A 529 college savings plan is another way for U.S. families to prepare for the high costs of college. Named after section 529 of the Internal Revenue Code, this investment vehicle has some similarities with and differences from the Coverdell ESA.

A 529 plan is another tax-advantaged plan that is designed to give incentives for education planning. Like the ESA, there is one custodian and one beneficiary for each account. The beneficiary can be anybody, even yourself (yes, you can go back to school for that degree you’ve been thinking of AND take advantage of the 529 for yourself).

State 529 Plans

Each state manages their own 529 plan and usually offers incentives for its residents to utilize the in-state version. Some states offer state tax deductions for contributions to residents. If you feel the tax deduction is not as important as performance, you can do the research and pick a better program and invest in that plan.

There are two types of 529 plans: the prepaid tuition program and the savings program.

529 Prepaid Tuition

The pre-paid plan gives you the ability to purchase future tuition at today’s prices. It generally covers all state and community colleges and may encompass private schools as well. It is best to confirm if your state offers this program and what the rules and limitations are. In this program, all funds are pooled together and invested to cover the increase in tuition over time (or so they hope).

Many of these pre-paid plans require that the beneficiary be 15 years old or younger. The tuition can be purchased in a lump sum or paid through monthly installments. Be aware, having a pre-paid tuition plan does NOT guarantee that the student will be accepted to that school.

529 Savings Program

The savings plan works much like a 401k does, in that the custodian has the choice of choosing the different mutual funds offered in the plan to invest in. In most cases, the “age-based” portfolios are the most popular. There are generally some kind of maintenance fee associated with the plan, and if the plan is bought through a financial advisor, mutual fund-type commissions. Each state offers different options and must be researched before you make a decision.

529 Contributions

Currently the contribution limits follow the rules for gifting. $13,000 may be contributed per beneficiary per person. This means mom & dad can put $13,000 each in for little Johnny or Suzy. There is a 5-year “pay-forward” in which you can put up to five years worth in at one time. This works out well for estate purposes; Grandma & Grandpa can each contribute $65,000 and remove the funds from their estate for tax purposes.

There are no income or age limitations to the savings plan. Anybody can contribute and take advantage of the opportunity. Like ESAs, 529 plans are also not factored in when applying for financial aid.

529 Distributions

Like the ESA, qualified withdrawals are federally tax-exempt, and in most cases, state as well. Unlike the ESA, 529s can only be used for secondary education. These funds can be used at any accredited college or university in the US, and in some cases, abroad as well.

If the beneficiary does not go to college or receives a scholarship, there are options to do something with the funds. One alternative is that they can be transferred to another member of the beneficiary’s family. If the funds are withdrawn for an unqualified reason, the earnings (but not the original contribution) would be subject to both federal and state taxation as well as a 10% penalty.

College Savings Plan

It is estimated that for children born this year, the average cost of a four year college education will cost over $250,000. Sure, that number is intimidating but it will be less so if you start saving now, even if it’s only one dollar at a time.

Coverdell Education Savings Account History
Years ago, there used to be an account called the Education IRA. It was created by the government to help parents prepare for the costs of schooling for their children. This account was not that popular, because at the time, it had a $500 annual contribution limit. I remember clients telling me back then that the low limit “just wasn’t worth it.”

In 2002, like any smart company would do when their product isn’t getting used, Congress went back to the drawing board. It was re-branded as the Coverdell Education Savings Account or ESA (named after the main sponsor, Paul Coverdell, R-GA). The new & improved product took care of the biggest flaw by raising the annual contribution limit to $2,000.

Coverdell Account Contributions & Limits

That ESA limit is the same today, but it is subject to income thresholds.   The person funding the account (whether it is a parent, grandparent, uncle, etc.) must have an AGI below $95,000 if single and $190,000 for anybody filing a joint return. These limits are phased out for income between $95,000 – $110,000 and $190,000 – $220,000 respectively. One way you can avoid this issue is by gifting the money to the child so that they make the contribution it to the ESA.

Contributions can be made until the beneficiary reaches the age of 18. The account must be depleted by the time that person reaches the age of 30 to avoid tax penalties. The custodian for the account can also appoint another eligible beneficiary.

Coverdell Investing Options

Unlike a 529 plan where you are limited to the investments of the specific sponsored plan, ESAs have the ability to invest in stocks, bonds, mutual funds, etc. Like the 529 plan or any other custodial account, the custodian has the authority to run the account and make investment decisions. However, those decisions must be based on the minor’s situation. For example, a 17 year old high school senior should not have their account invested in aggressive stocks if the money is to be used the next year for college.

Coverdell Distributions

All withdrawals for “qualified expenses” are tax free. “Qualified” is a broad term in this case for the IRS. All room, board & tuition, books, etc. qualify for the tax-free treatment. However, if your child wants an apartment off campus, the rent for that apartment is NOT qualified. The biggest difference between the ESA and a 529 is that the ESA allows you to use the funds for primary and secondary school expenses. 529s only allow the use of the funds post-high school graduation.

College Planning

Keep in mind the money inside an ESA is not factored into financial aid analysis because technically the funds are not owned by the beneficiary. Hopefully this info on the ESA gave you some things to consider when you look into investing in your child’s future. Some people may choose an ESA over a 529, others may choose both. Either way, use something, it will certainly be in your and your child’s best interest to do so.

Identity theft probably isn’t the primary concern of most college students heading off to school this fall, however, college campuses can be big targets of identity theft.  With so many people living together in such close quarters it can be a hot spot for thieves and dishonest students to take advantage of other unsuspecting students.

If you’re going away to school for the first time or returning for another year, it’s extremely important to take certain precautions to keep your identity and money safe. Here are a few tips to help you avoid identify theft.

Set a password on your computer, lock your computer when away from it.

This is easy to do, and it will deflect most common computer users. Although, if your computer is stolen by a decent computer hacker, they’ll be able to get past the screen saver password so don’t store passords to your online bank accounts or other sensitive information on your computer. Make sure that you never leave your computer unattended in public such as the library, student union, or cafeteria. When you leave your laptop in your dorm room you could even stash it out of plain site.

Avoid revealing too much personal detail on social networking sites.

Every piece of information that identity thieves can gather about you is another clue to stealing your identity.  Seemingly harmless pieces of information individually (birthday, address, phone number, etc) can add up over time and eventually make you a victim of identity theft.

Not only is this good for your security, but can also protect your future career. Remember, everything you post on Facebook, Twitter, or MySpace could end up being seen by the wrong people at the wrong time. Use social networking wisely, and don’t post pictures that might compromise your reputation or give off the wrong idea about you.

Don’t let anyone borrow your credit or debit cards.

This might not sound like something you’d ever think about doing, but you’ll be running across dozens of “mooches” at school. They might ask you, “Hey man, can I just borrow your card to order a pizza, I’ll give you the cash”, but don’t trust them unless you are really close to them. Don’t give out your credit card number or debit card number to anyone, write it anywhere, or store it anywhere on your computer.

Don’t open a tab on your credit card and forget it.

I’ve never done this, but I’ve come close! You never know who might be working behind the bar and if they’ll abuse your card if you leave it there overnight. Make sure your designated driver reminds everyone to close out their tabs. If you’re walking home or taking public transportation, write a note on your hand to remind yourself.

Call right away if credit card stolen or lost.

Do not wait until the next morning if you think you lost or had your credit card stolen. Credit card companies have 24 hour customer service, and it will be much easier on yourself and the credit card company if you report it right away. Even if you end up finding it a couple of days later, it’s better safe than sorry, and you’ll receive a new card usually within a week.

You aren’t personally responsible for an unauthorized credit or debit transaction, but you can make a much stronger case that it wasn’t you if you report it as soon as you think it’s been lost or stolen.

Don’t keep cash in your dorm room, use debit card instead

Identity theives take your identity so they can steal money.  If you just leave your money lying around, they can just skip the identity part and go right after your cash. It’s not that you don’t trust your roommate (or maybe you don’t), but when you aren’t there, your roommate could be bringing in all kinds of people to the room that you’ve never met before. It’s always a good idea to keep your cash on you or better yet, use a debit card for most transactions.

If you’ve never had your identity or credit card stolen in the past, let me assure you it can drain a lot of your time and money trying to get the situation straightened out. Here are some more identity theft tips to help protect your money and your credit.

College students around the country will soon be traveling back to their respective colleges and universities, and many of them will have fatter wallets from summer jobs and internships. However, that money won’t last long when the price of textbooks, school supplies, and tailgate parties starts to take its toll.

One of the toughest things about being a college student when your parents don’t support you is juggling a job with school work. I had a job for the entire four years that I was in school. About half way through, I discovered eBay, and I started selling a lot of stuff on there and other people’s stuff for a commission.

It didn’t last forever, because I got sick of eBay policies and scammers, but for the year and a half that I did it, it was good extra income in addition to my food delivery job. The internet provides a lot of opportunity and your knowledge and hobbies can also provide a source of income while you are in school without working for someone else.

Here are some college student jobs you can do from your dorm room:

Tutoring. Are you great at Chemistry or Calculus? Then, you could make $20 to $40 an hour tutoring your peers! Pass out some fliers at the end of classes and start a Facebook page.

Selling on Craigslist. I used to do this on eBay, but they raised their fees and so many big retailers flooded the market, so the upside of selling on eBay diminished. I still like Craigslist in most markets.

Some markets are flooded with a bunch of junk, but many are not. Many college kids know how to sell something on Craigslist, but few of them want to deal with it. Tell them you’ll take a flat fee or a percentage of how much you get for it, and you’ll manage the entire deal.

Freelance Writing. Are you a good writer? Look for blogging jobs at job boards such as Pro Blogger and the writing jobs section of Craigslist.

Web Design and Application Development. If you know CSS, PHP, ASP .NET, or other web languages, then turn your knowledge into freelance work. Sites like eLance, goFreelance, an Guru.com allow freelance developers to start a profile and bid on contract work.

Virtual Assistant. Are you an organized person? Are you good at helping other people plan and organize?  With a computer and a phone you can have clients all around the country, check out the International Virtual Assistant Association for more info on what you can offer and how to find clients.

Being able to work from your dorm room is mostly about leveraging the skills you have or are in the process of learning. The biggest challenge is often finding people that need your expertise or your time but the Web helps make that possible. 

The great thing about many jobs like this is that you’re building up experience that will apply to your life after college, rather than just flipping burgers or waiting tables.  Not only that, they often come with a more flexible work schedule you can fit in between classes and college life.  Any other ideas for college student jobs you can work from your dorm room?

Once you graduate from college, finding an affordable apartment that suits your financial needs and budget is essential to properly starting off your working life. Finding the right apartment can be a daunting task, so here are some tips to help you pick the right apartment to fit your budget.

Calculate Your Rent Budget

Generally, one-fourth of your take home pay is a safe estimate for the rent price range you should be looking for when renting an apartment or house. If you find that all of the apartments or houses you are looking at exceed 35% of your take home pay, consider living with a roommate or looking in a cheaper area. Although roommates can be annoying, one good thing about splitting the rent is that it can help you save up an emergency fund and pay off college debt faster.

Know Your Apartment Needs

Doing your research before you start looking for an apartment is vital to finding an affordable and safe apartment. Don’t compromise safety for cheaper rent if you can help it, sites like rent.com and apartments.com can give you a feel for the average rent prices in an area.

Take a close look at what features are most important to you. Is two bathrooms more important to you than amenities such as a pool and a clubhouse? Would you rather have a washer and dryer than upgraded kitchen appliances? With the power of the internet, doing your own research is much easier than ever before.

I typically don’t recommend using a rental finder agency, many of them will charge a finders fee for work you can do on your own. Of course if you are relocating to an unfamiliar city, especially an enormous one like moving to New York City, then it might be beneficial to use a rental agency.

Knowing what features you want in a particular area is essential before you start looking at places. Remember, landlords and leasing agents are sales people, so they will do what they can to make their rental seem like the perfect place for you, that’s why you need to know what you want. Then, you control the situation, not the agent.

Finding Affordable Housing

Craigslist. It is now flooded with many commercial apartment complexes, but you can still find independent landlords soliciting their rental properties for lower prices.

The outskirts of the city. If you are willing to commute a little bit to work, more family oriented areas will offer lower rent prices. The hip, young area of town will typically ask for the highest rent prices.

Mother-in-law suites. Some homeowners build these suites on their property to house family members to take care of them. These suites become vacant from time to time and many homeowners take advantage of the space by offering to rent it out. These apartments are hard to find, but they sometimes offer great deals on price.

Saving Money on Apartments

Negotiate the rent down. This can be an option if you do some research and find that the landlord is having problems renting out the apartment.

Offer services for lower rent. I know many people who get cheaper rent because they offer to mow the lawn, make maintenance repairs, or offer professional services to the landlord.

Look for new complexes. Many new complexes will offer rent promotions to fill up all of their units. Avoid amenity rich complexes since you will be paying for the developers cost to maintain the property and the common areas.

Housing costs will probably always be your biggest fixed monthly cost throughout your life, so stop focusing on how many lattes you are drinking. Saving money on your rent could result in thousands of dollars in savings per year!

 This post on finding affordable apartments for college grads is part of a series on personal finance for college graduates.  Some of the other topics covered include auto insurance for grads, budgeting, health insurance after college, buying renters insurance, and credit card tips for grads.

Renter’s insurance may seem like an unnecessary cost when money is tight and you’re working to pay off your college bills. However, if you can get a few renters insurance quotes online you’ll see that the insurance isn’t that expensive and can provide you with some much needed protection.

Do You Need Renters Insurance?

As a recent graduate, you might think you don’t have that many things to insure.  Compared to older, more established people you probably don’t have a ton of stuff but you did have to spend money to furnish your apartment.

You likely brought a few things with you from school like your electronics, CD’s or DVD’s, MP3 players, a cell phone, maybe a computer.  You also probably built up a wardrobe of clothes and maybe various accessories over the last few years.

If you take a look around your apartment and make a list of all the things in it, you’ll probably realize you’ve accumulated enough that you couldn’t afford to replace everything if it was all lost at once.

Why Renters Insurance?

The main idea behind renter’s insurance – or any other kind of insurance – is to be able to replace losses that you would not be able to replace otherwise. In other words, if you have a fire, or a theft, the insurance company would provide you with repayment for some of those losses.  Many people assume that their landlord’s insurance is all they need but typically this insures the building but not the belongings inside of it.

An apartment fire causing smoke or water damage, theft or vandalism, or even a natural disaster such as a tornado or earthquake are all things that can unexpectedly ruin your possesions. Renter’s insurance can provide coverage for these events and help limit your losses.

Renter’s insurance can also protect you if someone gets hurt while visiting. If they are in your apartment or rented home, their medical needs may be covered under such circumstances. It can also protect you in the event of a lawsuit (liability).

What Does Renters Insurance Cover?

Basically, renter’s insurance enables your possessions to be covered on either a depreciation basis or a replacement basis. Replacement basis is the best because it will actually give you a new equivalent – even if it costs more, and the price of a replacement basis policy typically isn’t that much higher. You will have a deductible, of course, but still, your assets are protected against total loss.

In order to have the best protection of your possessions in a rented space, you will need to have an accurate record of them. This means either a photograph or a video, in which you walk through your apartment and then talk about everything you have on it. This photographic record will need to be kept somewhere safe – and updated when new items are purchased.

One nice feature about renter’s insurance is that it can be quite inexpensive – but can provide a lot of coverage. If purchased, it can also provide you with another place to live if your apartment becomes unlivable due to some catastrophe and repairs or replacement is needed.

Where to Buy Renters Insurance?

Some companies like State Farm and Allstate offer what’s known as a multi-line discount, where they offer a renters insurance discount if you already have your auto policy through them.  You can also get renters insurance quotes online through sites like:

• NetQuote
• InsureMe

Applying for and using a credit card during college can help you to start building your credit history. Managing your use of the credit card and making the payments are two keys to building a good credit history that will benefit you in the future. Of course, a credit card is just the beginning when building your credit history but it is a good place to start if you can pay off your balance in full each month.

How to get approved for a card

One factor that goes into credit card approval is having a source of income. Having a job, even if it’s part-time, is one source of income. You may receive money from other sources that you can also include on the credit card application. The bottom line is that credit card companies want to extend credit to consumers who have the ability to repay what they use.

If you don’t have any income, Mom or Dad can also help you get started with you first credit card. See if they are willing to add you as a card user on one of their accounts. The benefits of getting a credit card this way is twofold. First, it provides you with a credit card to use, so it teaches you how to manage your money. Second, it helps you to build your credit so you’ll be able to qualify for other types of loans and credit in the future.

Good credit card options and things to watch out for

If you’ve even perused the credit card possibilities out there, you know that there a myriad of options available. So how do you know which are the best credit cards for a college grad?

No annual fees. The first thing you want to look for in a credit card is one that doesn’t charge an annual fee. While cards with annual fees offer additional benefits, there are plenty of credit card companies that do not require an annual fee for you to have the card. This is an added expense that a recent grad doesn’t need.

Cashback options. Cashback rewards are not as generous as they once were but they can still add up over time with cards like True Earnings American Express or American Express Blue Cash.

Travel rewards. Whether it’s airline credits, hotel rewards, or cash back on gas purchases, look to see what travel rewards the card offers.

0% intro rate. Recent grads have needs such as getting their first apartment outside of college, which may also mean a need for furniture and other housewares. You’re also taking on your first career job so this may mean some new business clothes. If you find a credit card with zero percent interest or a low interest rate at the start of the card like Discover More, you can make these purchases with your credit card without paying interest. The key is to not charge more than you can afford to pay off before the intro rate adjusts to its normal (and higher) interest rate.

Annual fees, rewards, and introductory rates are three things to consider when looking for a credit card; you should thoroughly read the terms and conditions before applying for any card.  Remember, introductory rates can be beneficial but they can also be a hindrance. If you don’t pay off the balance before the intro rate runs out the interest rate adjusts to what usually equals double digits—creating payments you can’t afford to make.

Using a credit card helps you to start building your credit history. Using the card responsibly and making your payments on time are two factors in building a good credit history that can benefit you in the future.

Your credit score when you graduate from college is largely based on decisions you made while in school.  Those choices and your resulting credit history may impact some of the first things you do after graduation such as renting an apartment or buying a car.  We’ll take a look at some of the things that may have damaged your credit report and some steps you can take to get your credit on track.

Credit Score Issues

No Credit History. One of the biggest issues college graduates face is their lack of credit history. Credit reports and scores thrive on your payment history and your ability to manage your finances. If you haven’t had a mortgage, loan, or credit card that you’ve had to make payments on then lenders don’t know how you’ll handle a loan if they give you one.

Credit Card Debt. One of the most frequent vendors that setup on college campuses are credit card issuers getting you to sign up for your own credit card. This is a great start for establishing credit history if you use the card wisely, make payments on time, and do not charge more than you can afford to pay. Those who use the card to charge items they cannot afford usually leave college already in credit card debt and with poor payment history.

Student Loan Debt. Combined with credit card debt, many college grads start their new life in student loan debt. Student loans usually have deferred payments until six months after graduation, but you’re already in debt for what may amount to tens of thousands of dollars.

No Employment History. To top it all off, you may be graduating without a job. This means you don’t have the ability to make payments for any debt you have. Unfortunately, even if you have a job, your job history probably isn’t long enough to make you look like a good credit risk.

Building Credit History

Get help from Mom and Dad. Start building your credit as soon as possible. Ask Mom or Dad to add you as an authorized user for one of their credit cards. Use the card to make purchases that you can afford to pay. Then pay off the balance on a monthly basis or make payments and make them on time.

Only take on what you can manage. It’s about building a credit history, which means using the card and paying it off, not maxing the limit and burying yourself in debt that causes your credit score to plummet. If you can manage a credit card payment, then this is the first block for building a foundation. It’ll help you get approved for other types of credit such as an auto loan or furniture credit account.

Always pay on time. No matter what you are paying for—rent, car payment, credit card payment or electric bill, make your payments by the date they are due. One of the biggest factors used to calculate your credit score is your history of making payments on time.

Build an emergency fund. This won’t directly impact your credit score but having an emergency fund gives you a financial buffer you can rely on to pay bills if you lose all your income.  Paying from this fund can help prevent you from missing payments or charging up your credit card balances.

Whether you’re graduating this year or you have some time left, there are ways you can build good credit. Applying for various types of credit and loans helps to start building your credit history. Be sure that the credit you apply for and use is paid for, on or before the due date. Don’t wait to start building your credit history because you’ll need to rely on it when it comes time to get a loan for a car, house, or business.

This post on credit scores for college grads is part of a series on personal finance for college graduates.  Some of the other topics covered include auto insurance for grads, budgeting, health insurance after college, and getting started investing.

Recent college graduates have some important money choices they have to make soon after graduation.  Some articles in the New York Times and on MSN Money Central take a look at a few of these big financial decisions.

Buy a Home vs Rent an Apartment

The subject of the New York Times article, Madison Nipp, is a recent college grad who earned a degree in financial planning.  She warns graduates to look past just the price of buying a home and to keep in mind the costs of upkeep, taxes, and insurance.  Typically young professionals are on a pretty limited income since they’re just starting out so if they base their estimated expenses on their projected mortgage payments and a bunch of other expenses crop up they could run into a cash flow shortage.

MSN Money reminds graduates that if they go the rental route they need to check into renters insurance that can provide coverage not only for stolen or damaged property but also for liability.

Of course, grads can always move back in with their parents to avoid mortgage payment, rent, or renters insurance.

Where to Find Health Insurance

How to bridge the insurance gap between graduating and getting a job that provides insurance is always a question for college grads.

MSN Money points out one thing that newly hired graduates may not be aware of, that some companies have probation periods before health insurance coverage goes into effect. That, of course, assumes a graduate has a job. In today’s economy, unless you have a degree in engineering or accounting you may be on the job hunt for a while.

Finding health insurance for college graduates means weighing the options of buying short-term health insurance, extending their parents’ coverage short-term under COBRA, or getting interim coverage through their alma mater.

How to Build or Repair Credit

Many college graduates are faced with one of two credit problems, having no credit history or having bad credit history. 

No Credit History

Madison Nipp, from the New York Times article didn’t have a credit card in college and when she went to rent an apartment after graduation the management company wouldn’t rent to her without a co-signer on the lease since she had no credit history.

Bad Credit History

There are other people that did open student credit cards in college, used them foolishly, and are now saddled with credit card debt.

Improving Credit Scores

Students with credit problems can always go to their parents for assistance, ask them to be co-signers on a lease or a line of credit.

Another option is to use secured credit cards or a secured loan to get credit in their name.  Since these secured options reduce the risk of lending, lenders are more willing to offer these forms of credit.  Once their credit score has improved, they may then be able to apply for some of the best credit cards for college graduates and young professionals.

The first step any credit troubled graduate is to get their free credit report and check on their credit history.  If they are responsible with credit and can take steps to improve their credit score then over time their credit history will become more favorable to lenders.