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Well, I'm turning 21 soon and my medical insurance is being cut off from my parents. I'm pretty clueless as to how medical bill works. How do they determine the price for my medical needs?
I'm trying to find work right now. Can anyone give me a general overview as to how tax work? Or recommend me a good book to read about tax.
It's so hard to be an independent adult! Is there anything else I need to know, please let me know, I feel like an idiot for not knowing anything.
With no insurance the doctor can pretty much charge you whatever they want. However, in NYS you can stay on your parents insurance until 23- soon to be changed to 26 too.
Well, I'm 25 now and I wish at 21 I'd had the common sense to ask around about these things. A lot of full time jobs provide health insurance, so if you can get a job, that will help take care of things. As for the amount the doctor charges, that depends on the type of insurance you have (when you get health insurance, you'll get a booklet detailing deductibles and co-pays). In a lot states, you can stay on your parents insurance for a year or two after college until you get a job with health insurance, so check on your state's rules and have your parents check with their insurance company.
Taxes also depend on where you live, but in general you will pay state tax, federal tax and social security tax. I also pay a city tax where I live. Taxes usually come out of your check before you get, but you can alter the level of deductions so that they take less out of your check. At the end of the year, you will file your taxes. If your financial situation is fairly simple- one job, one checking account and one savings account, you can probably do your taxes on your own. I used Turbo Tax the first few times (they charge a small fee) but now that I'm familiar, I use the IRS's website. If you have a more complicated situation (mortgage, investments, etc), you can still do it on your own, but you can go to an accountant if you get stuck. If the IRS has taken too much out of your checks at the end of the year, you'll get a refund. If you claimed too many deductions, you'll owe them money at the end of the year. Filing deadline is April 15th, but if you file early, you'll get any refunds you're entitled to earlier.
As for life in general, the biggest (and hardest) thing to do is to learn how to budget and live within your means. I made the mistake of running up some credit card bills ($5000 at it's peak) because I just HAD to furnish my apartment, buy a business wardrobe, etc when I didn't have cash to pay for it. You may need a little money to buy a mattress and a suit or two, but do your best to pay for that in cash. I'm still paying for things I bought 4 years ago that I don't even have anymore. It will come back to bite you in the a$$, so work odd jobs to save cash while you look for a full time job and don't run up your credit card.
I recently read Dave Ramsey's The Total Money Make-Over and I've found it to be very helpful, partially because I'm dealing with paying off debt, mostly in the form of student loans. It's definitely not for everyone, but there is some good common sense information in there about dealing with debt and how to budget. I would have made some very different choices if I'd read that at 21. His website also has budgeting forms and articles on how to budget, so that can be very helpful. Google personal finance blogs and find the ones that make the most sense to you.
I'd also suggest using some sort of personal finance program like Quicken or Mint.com or just a good old pencil and paper to track your finances. It can really make you think about how you're spending your money when you realize you're spending $200 a month on coffee!
First your not clueless or you won't be asking. I suggest the library to read books about just that. My father told me some good davise once;that is there are two ways to learn things. The hardway when it hits you in the head or by listening ;read others that faced it.Whose advise is leftup to you.
Thanks to Obamacare. Everyone now can have affordable health insurance.
Actually that is not true, first, none of the changes have taken place yet and "affordable" the plans well NOT be if they are allowing everyone on the plans.
OP, go online and get an individual health plan from a major carrier in your area-they all have them and they are quite reasonable especially if you are healthy. You can cancel the plans any time so when you get a job with benefits you can take the group plan when you are eligible. NEVER, EVER go without health insurance-worst financial mistake you will ever make.
You are not an idiot but I am not sure about your parents for not teaching you these things. If they are willing, have them sit down with you and go over this information. If not, find an adult in your area you trust that can walk you through these things.
I had a big response typed out yesterday and lost it before I could hit submit, so I'm going to try again.
When I was a couple years younger than you, I went away to college. Before I left, I realized that I knew next to nothing about finances. My mom was VERY financially responsible, and we were fairly well off, so budgeting was never an issue, but she was also very closed mouthed about finances and there were no personal finance classes required at my high school outside of "supply and demand" type economics. As a result, I had no idea how much ANYTHING really cost, or how anything like taxes or insurance worked either. So I've been there too.
Here is what I can tell you. If you can get insurance through work, DO IT. It is almost certainly cheaper, and almost certainly better insurance. For examples, my husband and I currently have insurance through his work. It is about $160 a month for the two of us, and covers pretty much everything, including medical, dental, vision, prescriptions, even life insurance, with a very low deductible (meaning not a lot of money out of pocket). In contrast, for several years, we had independent insurance through Blue Cross/Blue Shield and it was $250 a month, and covered pretty much only major disasters. It had a $5000 deductible, which means that unless something really bad happened, I just paid all medical expenses out of pocket. My parents at one point were paying over $1200 a month for that same insurance, due to having had some claims.
As for tax, I assume you are talking income tax. I further assume when you get a job it will be as a W-2 employee (which means you get a regular check on a regular schedule that has taxes withheld). In that case, all you need to do is make sure you claim the right exemptions on your W-4 to come as close as you can to breaking even for the year. You want the same amount to be held out of your paychecks as you will owe come April, next year. This can be tricky, and it is probably better to overestimate than to underestimate. If you overestimate, you get a refund check when you file next year. You can then adjust next year's taxes if you want, so you come closer to breaking even. Getting a large refund is nice, but it means that you gave an interest free loan to the government for the year, when you could have been using that money yourself. You should expect to have Social Security held out at a rate of 6.2% of your gross income, Medicare held out at a rate of 1.45%, State and Federal depend on what you claim, but I find that my total net (after taxes) is about 70% of my gross paycheck.
If you are a 1099 employee (most anyone self employed or as a subcontract laborer), you have to estimate how much your taxes will be for the year, and then save that much yourself from your paychecks. In that case, I would get an accountant now and have the discussion ahead of time.
In addition, there is sales tax on stuff you buy, property tax if you buy a home, estate or inheritance tax if you inherit money, and probably half a dozen other taxes I'm not thinking of. Different states have different taxes. There are federal taxes, State taxes, and in some areas, local taxes.
As for other financial things to know as an adult... I would personally suggest getting a credit card, but using it like a debit card. Don't buy anything if you can't afford to go home and pay it off today. DO pay it off IN FULL every month. If you can't afford to do that, you can't afford to buy whatever it is you want. I would suggest you set up some form of savings and put 10% of your net income into that every month (or 5% if that is all you can afford at first). Keep that for emergencies. If you have an emergency fund, you are less likely to have to charge emergencies on your credit card. Total up your monthly living expenses and try to save up 6 months worth. If your job offers any sort of a company match in a 401k program, you should have them invest at least that much of your paycheck. These are all things that young people think they can't afford, since they are just starting out, but if you don't get into the habit now, you never will and you will regret it. NOW is the time to start saving and investing. Learn to live on less than you make, however much that is.
You are not an idiot but I am not sure about your parents for not teaching you these things. If they are willing, have them sit down with you and go over this information. If not, find an adult in your area you trust that can walk you through these things.
Yes, I have to wonder were your parents were while you were growing up. Why did they not teach you these things .......or where were you when the lessons were taught?
Anyway, a good independent insurance agent can help you learn a sort out med insurance and many other types of business questions.
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