Recent graduates are like babes in the woods. The student life is over, now you have to be professional, a grown up. You’ve gotten a job. Your parents are no longer responsible for you. You are on your own. You’re employer is giving you a check every two weeks that look like you’ve just won the lottery, compared to how you’ve been living. You don’t need to wait tables any more.
Hang on. Maybe you do.
Read below to read the three biggest money mistakes recent graduates make:
1. You forget about (or ignore) your student loan. Big money mistake. Make the payment. Your student loan is the most important thing you have to worry about. It’s the worst debt you can have. Why? Because it’s non-forgivable. If you run into trouble, become unemployed or have your wages garnished for some reason, the student loan stays right where it is, and even accrues more interest, making your life even more miserable. It’s your first priority. Make the payment. Even if you have to wait tables to do it. Make the payment. Arrange with your bank to have it automatically paid out of your account every month on the same day. Your credit report will reflect a perfect payback, and you can breathe knowing it’s being taken care of. Make the payment.
2. You forget to budget. You’re a recent graduate and you don’t want to make money mistakes. Your check is more than you thought, so you don’t really need to keep track, right? Wrong. Write down your expenses, groceries, gas, car payment, loan payment, savings, whatever, then add 20%. What’s left is your disposable income, what you have to have some fun with. Not so much any more, right? Keep track of every penny – for real – until you get to the point (or start making more money) you know exactly where you are between paychecks.
3. You think you can “afford” a new car. You’ve just now added anywhere between $40,000 and $60,000 to your debt line (including interest), and the car loses 10% of its value the minute you drive it off the lot. Big money mistake. Car companies offer really low interest rates to entice new buyers. Maybe it’s good, maybe it’s not. Check it out. Be really careful, and ask to see the final price of the car, including interest, for the full amount of the loan. You’ll be shocked to see how much you are really paying for a car. If you have a student loan, can you really afford an additional $300 payment? Crunch some numbers. Wouldn’t you be better off putting that $300 towards the student loan and taking the bus for a few years, or mass transit, or chipping in for gas money for your friend once in a while?
Recent graduates make these three common money mistakes and get into trouble, adding debt and fear to what should be a well-earned, responsible, early career. Take care of your personal finances first, then you can relax spending what you know you can afford out in the world.
Read this additional article: https://www.paymystudentloans.com/7-worst-student-money-mistakes/