Graduating from college is supposed to be an exciting time in your life, but it can also be extremely overwhelming. You may be completely on your own for the first time and responsible for your own financial well-being. Sometimes those right out of college make money mistakes that can be hard to get out of, but if you know what to avoid ahead of time, you’ll have a better chance of being smart with your money. Check out these money mistakes to avoid after graduation to ensure you have a better financial future.
Mistake #1: No budget.
The worst mistake you can make financially is not having a budget. In order to have a good outlook on your finances, it’s important for you to create a budget that allows you to know what income you have coming in and what expenditures you have going out. There are many budget templates online you can use to help you keep better track of your money. Be sure to list out every expense you have, including those that may be small, such as Netflix. Should you notice that you have too much going out every month than you have coming in, it’s necessary for you to either eliminate some of your expenses or find ways to make extra money.
Mistake #2: Not comparison shopping.
Whenever you’re in the market for something you need, such as a specific utility or insurance, it’s important for you to shop around. You’ll be amazed at the different prices you’ll find just by comparison shopping. According to Mercury Insurance, “Not all insurance policies are created equally, and you can easily negotiate the cost of your insurance by making certain adjustments. Talking with an experienced insurance provider can help you receive the right coverage for the right price.” Be sure to do your research and find the company that offers the best price.
Mistake #3: Taking on debt.
After you graduate college, you’ll be bombarded with advertisements and enticing offers to open credit cards or take on car loans. While these may sound exciting, taking on debt is a bad idea, especially if you’re not responsible with it. After you graduate college, take some time to get your feet wet by bringing in a steady income and learning what it’s like to live financially on your own. Once you’ve proven you can do that, taking on a small amount of debt in terms of a store credit card and paying it off every month will improve your credit score. However, if you take on too much debt and find it difficult or impossible to pay back, you’ll put yourself at risk of going into collections and ruining your credit score.
Mistake #4: Ignoring retirement plans.
You’re young, and while you may look forward to the days of retirement, it’s still pretty far away. However, that doesn’t mean you shouldn’t plan for it. Whether your employer offers a retirement plan or you need to look for one on your own, paying into a retirement plan now will allow you to have a better chance of financial stability when it comes time to retire. Take advantage of the offers out there, especially if your company offers a 401K matching program or profit sharing.
Mistake #5: Ignoring loan forgiveness.
Your student loans will likely be hanging over your head, and it’s something you’ll likely be paying off for a long time. However, there are loan forgiveness programs out there that can rid you of your student loan debt. Be sure to look into the different programs out there, as the requirements can vary. Some programs will offer forgiveness to those working in a nonprofit field or those working in education, while others may offer loan forgiveness based on your current salary. The least you can do is look into free money to pay off your debts.
Mistake #6: Throwing away your student ID.
While you may look forward to tossing that student ID in the trash as a symbol that you graduated, that student ID can actually help you save money. Keep it on hand to continue snagging discounts on things like movie tickets, access to museums, and even public transportation. While you may not be able to use it forever, it can still help you save some money right after graduation.
Don’t let your graduation turn your life into a mountain of debt. Instead, be sure to avoid these financial mistakes and set yourself up for great financial freedom.