During college, you probably spent the little money you had on going out with your friends, which resulted in Ramen noodles for breakfast, lunch, and dinner. Now that you’ve graduated and have a full-time job (and MONEY!), you’re finding it way to easy to spend your hard-earned cash… You think: Now, I can shop all I want, eat at fancy restaurants, and take trips to the city for the weekend. Life is awesome. But then you get your first student loan bill. And then your first month’s rent is due. And then you need to pay off your car. Suddenly, your bank account isn’t as fun to look at anymore. And it can be easy to go into the red. Here are a few money mistakes that recent grads fall into:
1. Only Paying The Minimum On Credit CardsAccording to this article, 76% of college students have credit cards. Now, having a credit card is great if you're looking to build credit. However, the key is paying it off. Unfortunately, the average credit card debt of college students is $3,173. It's easy to fall behind when you only pay the minimum. Obviously, everyone's situation is different, but it's recommended to limit the use of credit cards and pay the full amount each month, if possible.
2. Renting An Expensive ApartmentYes, you want to a decent place to live, but renting an apartment will all the right perks can be a huge money-sucker. In fact, it's recommended that young professionals only pay 25-30% of their income toward housing. So, for example, if you are paid about $2,400 per month, you should aim to pay between $600 and $720 on housing each month.
3. Not Having An Emergency FundYou never know when you're going to get in an accident or lose your job. If you find yourself in a situation where you have to come up with a lot of cash quickly, having an emergency fund is a huge relief. It's recommended that you have at least six months pay saved up in case you find yourself unemployed (some even say it's best to have nine months worth of pay saved up). An easy way to do this is to save $100/month or 10% of each paycheck. You'll be glad you did! These problems can be easily avoided by having a money management plan. That’s why it’s important to learn how to manage your finances effectively after college. If you can create money management plan and stick to it, you can pay off your expenses AND have fun.
How To Get On TrackIn our upcoming webinar, “Grads & Swag: Surviving Your First Years After College,” you will learn how to:
- Avoid and manage your debt
- Enjoy life but be accountable to your finances
- Create a budget and plan for major expenses
- Become noticeable and irreplaceable in your new career