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College Grads – Don’t Make These Five Money Mistakes

Freedom at last! It’s the first thought a new college graduate think. Unfortunately, the freedom from cruel college life can quickly become the harsh truth of reality. The lesson of effective money management may be one many college students aren’t taught. With the studying and partying come students’ first experience in paying bills and money management. Inexperience can play a huge part in financial mistakes, even leading to disaster. Below are common money mistakes that can add further debt obligations to the average college graduates’ outstanding student loans.

Living Large

Dinners out, $15 - $20 lunches and happy hour can all be indulgences beyond the recent graduate’s financial means. Joining the working masses for the common good can be a great feeling, but trying to keep up with an entry level salary can lead to some big financial mistakes. Learn to cook. Invite friends over rather than hitting the local hot spot.

Let It Slide

Putting off financial obligations, failing to make payments on time and just plain debt-repayment neglect can be a long-lasting credit stain remaining upwards of 3 to 7 years. Neglecting a monthly bill will result in another late payment and another again. As the bills mount, so will the penalties and interest fees. This can cause a financial hole that’s just too deep to easily escape. Form a solid plan around a simple monthly budget to pay your obligations on time.

Every Cent Can Count

Putting even a few dollars away each week into an interest-bearing account can prove to be a great asset. Even $25 a month can lead to a small savings during a college career. Learning restraint in spending and seeking bargains or savings now will lead to a healthy financial future. Don’t wait to save. Seeing your name on a paycheck is new and exciting. If your employer offers the benefit of direct deposit, have a small amount taken from each check automatically and deposited into a savings account. What you don’t see, you won’t miss.

401K

Investing now in a 401K will benefit you in more ways than you might imagine. Choosing to wait until later in you life or career to start investing and saving is a huge mistake.You may not miss the money as much as you think. Although you cannot withdraw money from a 401K without huge taxes and penalties, a 401K loan is readily available, depending on what you have invested. The interest you pay on the loan gets deposited back into your account; basically you pay yourself back the interest on the money borrowed. Several life events allow you to withdraw money without penalty. Buying a home is one, for example. This American dream may be realized a lot sooner with a healthy 401K started early in your career. Many companies match contributions made into a 401K.

Don’t be The “Poor College Student”

This is a term heard all too often about our American college student. Poor money management, lack of savings and financial non-awareness contribute to this stigma. Develop good money management habits early on. The “poor college student” can follow some simple and responsible steps to become tomorrow’s young and upcoming professional.

 

 

Jessica Bosari is a freelance writer and Web editor for billeater.com, a site dedicated to helping you save money on your bills and make smarter financial decisions.

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