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Adulting is Expensive!

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History Buff has taken another step towards adulting…he has just accepted and begun a full time job. He is super excited. And I am excited for him.

Last night he asked me to sit down with him and make some decisions on the benefit package. Boy, was that a throwback. Although I had a brief stint back in the corporate world a couple of years ago, it has been over a decade since I had to deal with those types of decisions and paperwork.

But we got him signed up for health insurance and he opted to begin contributing to the 401K at the maximum matched amount which is 5%. I am really excited and proud of him.

We talked through all the health options and I defined all the terms and benefits to him…in network, out of network, annual deductible, maximum out of pocket and of course co-pays.

Then we talked about what a 401K is and why it’s important. We talked about corporate matching, vesting periods and risk tolerance. He’s got a lot more to learn but he’s off to a solid start and I am confident he is aware of what he committed to for now.

Rude Awakening to Come

But I also know that in adding those expenses, his “raise” to full time pay is not going to be as much as he expects. And I tried to explain that gently to him.

He will be paying $57 per pay period for his individual health insurance and contributing $44 per pay period to the 401K. That is essentially, all the money he will be earning as a full time employee versus the part time 25-30 hours he has been doing. I fear he is in for a very rude awakening!

He didn’t get an hourly bump in pay, just access to the full time benefits and more working hours. But it is a big step for him.  And one he needs as he continues to waver on what he wants to do long term…

Here’s to raising more financially aware and responsibly adults than I ever way!


9 Comments

  • Reply Cheryl |

    Good for him for getting both health care and a 401. That isn’t alot of money for healthcare at all. I pay $350.00 for myself.

  • Reply Laura |

    The benefits are so important, and worth the money. A matching 401K at his age will really pay off.

  • Reply Mrs. H |

    Congrats to him on the new job!
    Encourage him not to focus on the fact that he doesn’t have a lot of extra money in his pocket, but instead on the fact that his finances are protected in the event of a medical emergency, and that his net worth is increasing…which will some day allow him to retire comfortably.

    If a person only focuses on how much money they have to spend, rather than the overall financial picture, they will have hard time accumulating any wealth. Which is the goal for adults.

  • Reply angie |

    Couldn’t you leave him in your plan until he is 26? It would be great to hear your thoughts on advocating health insurance for him while you think a cost sharing plan is best for everyone else. What did you consider for each decision?

    • Reply Hope |

      There are reasons this is the right route for him that are beyond me and more about him. He has always had the option to be included in a family plan when I have had one. But there are other factors, again that have nothing to do with me and more to do with him.

      • Reply Angie |

        Not sure what to take out of that. But I’m assuming its something personal.

        To be clear I wasn’t trying to nitpick your choices. But rather get insight on what you considered. Whether it be out of pocket costs, total deductible, pre-existing conditions, etc. Either way, $55 a pay period is VERY cheap for health insurance these days, even through an employer. Great deal for him! Also, very smart for him to choose to do the 401k. I wish I had thought about that when I was 16-22!

  • Reply Meghan1227 |

    If he is taking full advantage of the company match then he is getting a pay rise to the tune of 5% He just won’t see that cash in hand until retirement, at which point that money will have multiplied exponentially thanks to time and compound interest.

    I would also guess there is some kind of corporate contribution to the health insurance that makes his share so low, so he is also getting a pay rise there.

    Compensation packages can be more than just cash and add overall value to working somewhere.

  • Reply Jessica |

    Medical coverage just isn’t an option, it’s a necessity. And at his age, 5% matched in a 401K will be huge! Great job, History Buff!

  • Reply Andrea |

    Once he gets his new paystub I highly recommend he run the numbers through the IRS withholding calculator. It will let him know if he’s on track to have enough money withheld or if he’s over withholding and could get more back each paycheck.

So, what do you think ?