Taking care of your financial house after graduating college can set you up for financial success as you start a career. However, there are some financial mistakes to avoid during the transition period. Taking the reins of your personal finances after graduation can help you tackle financial issues in the real world with ease. Make life easier by steering clear of these money errors:
1. Not updating the personal budget. It’s easier to stay on top of bills when you work all of your bills into a monthly budget and keep track of payment dates. Make sure to include new regular expenses you incur, such as an increase in gas expenditures for a commute, housing costs and leisure expenses.
2. Waiting to save. Don’t delay socking money away simply because you’re not making much right now. Even small contributions can add up, and you’ll find it easier to maintain a healthy savings account as your income increases. Getting into the habit of saving each month will also make it easier to build up an emergency savings account. Start saving a percentage of your income so you can adjust it easily as you start to earn more. Make room for savings in your personal budget, and consider setting up direct deposit with your employer so you don’t have to think twice about it.
3. Ignoring student loan terms. Working student loan payments into the monthly budget is a crucial money move, but it’s also a good idea to learn about loan repayment options. Take the time to review the terms of your student loans and bill payment options. Consider talking to a loan specialist to see if you’re eligible for forbearance. Ignoring these options could put unnecessary stress on your bank account.
4. Neglecting insurance coverage. Whether you’re moving into a new apartment, buying a car or relocating to a new city after graduation, make sure your possessions and investments are fully insured. Explore insurance rates from different companies, and consider raising your deductible to pay a lower monthly premium. Additionally, avoid paying for insurance you don’t need.
5. Financing your “wants.” Graduation is a time to celebrate and look forward to an exciting career and a new lifestyle. However, applying for more credit cards, taking out a personal loan or financing luxury purchases is a common money mistake among recent college graduates. If you want to splurge on something and don’t have the money on hand, make a plan to pay for it with cash – rather than charge it to your credit card. Buying items you can afford means you won’t pay a premium in interest or put your credit score at risk.
6. Ignoring everyday expenses. Whether it’s going out to dinner with friends, buying lunch or your morning coffee run, make sure you have a system in place to account for daily expenditures. Some consumers choose to neglect these everyday purchases, but they can put a dent in your budget. Use a mobile app to keep track of your spending, create a system for yourself to log receipts in a spreadsheet or maintain a running total of expenses for the week. Monitoring these expenses can make you more mindful about spending and live within your means.
Sabah Karimi is an award-winning columnist at Yahoo! and life hack blog WiseBread.com, where you can find more money and job hunting tips for new college graduates.