7. Cover your Assets: Manage Risks and Plan for Your Future

Below are the things you can do to keep what you've got safe from theft and accidents, plus how to safely take care of all the extra money you'll have now that you are sticking to a budget. 

Keep a System for Your Financial Records

It is a good idea to keep hard copies and digital copies of your financial records. If any financial records include your Social Security number, account numbers, or other information that is personally identifiable, make sure these records are kept secure in a safe or a password protected file. 

Keeping a secure system for maintaining personal financial records will help you to handle your daily personal business such as bills, tax returns, FAFSA information, and/or other budget information. 

Items to keep in a secured file at home or a safe deposit box might include:

  • Employment records (keep for 7 years)
  • Income tax records (keep for 7 years)
  • Insurance records (update every year or when there are changes)
  • Investment and bank account statements (keep for 1-5 years)
  • Credit reports (update each of the big three once a year)
  • Copies of FAFSA (update once a year while in college)
  • Birth, marriage and death certificates and/or military and citizenship papers (keep indefinitely)
  • Credit card statements (keep for one year)
  • Insurance policy numbers (keep for the life of the policy)
  • Investment records (keep for the life of the investment)
  • Real estate records (keep until sold or updated)
  • Serial numbers of valuables (keep while as long as you own the item)

Product warranty information or large purchase receipts should be kept in a file for the duration of their coverage or value. When you dispose of any personal records, make sure that you do not put them in the garbage; shred them, or take them to a reputable shredding company.

Protect Yourself from Identity Theft

Identity theft occurs when someone steals your identity and uses your personal information to commit crimes, such as to obtain a credit card or rent an apartment in your name, charge things on your credit card or other accounts, or withdraw money from your bank account. Identity thieves can even get a driver's license, or get utility or medical services in your name. You may not find out about these crimes until you notice money missing, or charges you didn't make, or you may be contacted by a debt collector.

The best way to avoid identity theft is to safeguard your personal information and regularly monitor your personal accounts. For more information about identity theft and how to avoid it, visit the Federal Trade Commission's Identity Theft Prevention site.

Invest in Your Future 

Once you have met all of your immediate financial obligations, and you have saved enough money in the bank to cover at least three months of living expenses, you might want to consider investing your money. It is a good idea to start investing when you are young, because most investments earn you money over time. Here are a few kinds of savings and investment options to think about: 

  • Government bonds are essentially a loan that you make to the government and in turn, the government provides you with a written promise to repay the specified amount of money, with interest. 
  • Stocks refer to shares, or ownership investment in a company. When a company does well, the price of the stock increases and the value of the stock increases. Investors who own stock in a company are considered shareholders in that company.
  • Mutual Funds pool money from many different investors (shareholders) to invest in a variety of different companies. The benefit to investing in mutual funds is that you actually invest in several different companies (diversification), instead of just one company.
  • Real Estate can also be considered an investment with a lower rate of risk; however the return is often higher over an extended period of time.
  • An Individual Retirement Account (IRA) is a retirement savings plan that allows you to save money towards your retirement. The money in your IRA is tax-deferred, meaning you do not pay taxes on money in the IRA until you start to use it.
  • Certificate of Deposit (CD) is a saving plan that requires a set amount of money to be left in an account for a stated period of time and will earn a specified interest rate. CDs offer rates of return, but there is a penalty for withdrawing funds before the specified time.
  • Money Market Accounts are savings accounts that require you to keep a minimum balance and you are paid market interest rates on your money. A penalty is often imposed if you do not maintain the minimum balance. 

For more information on establishing a financial plan, or how to begin investing, visit the U.S. Securities and Exchange Commission's educational site

Minimize Risk: Insure Yourself and Your Property

It may be tempting to think about not purchasing insurance. After all, insurance companies charge a ton of money for a service that you might not need. And as a student, you are trying to keep your expenses down, so why pay for something you might not need?

There are several reasons why insurance matters, even to those on a student budget. Some types of insurance (for example, car insurance) are required by law. Additionally, some insurance can save you financially if a catastrophic event occurs (for example, a severe medical crisis, a severe car accident, or damage to your home or apartment).

Let's look at types of Insurance that may pertain to you and your situation:

Car Insurance

All drivers in the state of Oregon are required by law to have and maintain basic liability insurance coverage. Liability insurance provides financial coverage in case of bodily injury and/or property damage. 

Types of liability insurance that are required by the state are:
Bodily injury liability
Property damage liability
Personal injury protection (PIP)
Uninsured and underinsured motorist bodily injury

If you drive without liability insurance and you are caught, you may receive fines, your car may be towed (at your expense) and you could have your driving privileges suspended. Each month, the State of Oregon selects random drivers and asks them for proof of basic automobile liability insurance. If you don't respond with truthful information that you do have basic liability, you could have your driving privileges suspended.

Types of automobile insurance that are optional in the state of Oregon are: 
Uninsured motorist property damage
Collision coverage
Comprehensive coverage

Check out the Official State of Oregon Department of Motor Vehicles insurance information webpage.

Renter Insurance

If you rent, having renters insurance can protect you from financial loss if your possessions are damaged in, or if items are stolen from, your apartment or house.

Because renters insurance does not insure the building in which you are living, the premiums for renter's insurance policies are usually very low. Even though such policies don't cost much, if your stuff gets damaged or stolen, insurance coverage can help you to afford to replace the items that were lost. 

Your landlord's insurance on the building generally won't cover damage to your property, so renters need to make sure they have covered themselves. Renter insurance can also protect you from liability if someone gets hurt in your home or elsewhere because of your negligence. 

Homeowner Insurance

Homeowner insurance can be much more complex than renter insurance and will cost more since your actual home and property are being insured. Carefully review with an insurance agent the things that are covered and not covered by a homeowner insurance policy you are considering. 

Usually standard homeowner insurance policies don't cover things like: 

  • Damage caused by earthquake, flooding, landslide, mudslide, earth movement, and nuclear accident
  • Theft of valuables such as furs, jewels, coin or stamp collections, or antiques. These items may be covered on a limited basis for damage caused by events other than theft
  • Damage or loss connected to a home business or storage of business goods
  • Boats, jet skis, automobiles or other motorized vehicles. If any motorized vehicles are used on your property for maintenance purposes only, they may be covered by a standard policy
  • Water damage that occurs over time and is not sudden and accidental such as damaged caused by a slow leak in the plumbing
  • Damage caused by lack of routine maintenance and upkeep
  • Intentional acts by the homeowner or a family member
  • Mold

For more information about Homeowner and Renter insurance, see the Oregon Insurance Division Consumer Guide to Homeowner and Tenant Insurance [pdf].

Life Insurance

It may seem strange to think about life insurance when you are in school, but as the saying goes, the only two things you can count on in life are paying taxes… and well, the need for some sort of life insurance.

How much life insurance you need and what type of policy you get are really dependent on your role in life. If you are a provider for your family, you will likely need enough life insurance to provide your share of the contribution to family expenses for about 5 years. At the very least, if you are single and have no dependents you will need enough insurance or savings to take care of funeral costs. Here are some guidelines for how much life insurance to buy:

Living Expenses 
Outstanding Debts 
Home Mortgage
College Education
Emergency Expenses

When you add up all of the above expenses that apply to you, you have your recommended coverage amount.

There are four basic types of life insurance:
Term Life
Whole Life
Universal Life
Variable Life