Common Financial Pitfalls After College
Those first few months after college graduation can slam with as a pretty harsh reality check if you’re not prepared. Job concerns aside, there are so many other logistics to consider: relocating from the college town, finding a new place to live, managing what little money you may have, anticipating the debt that you may have accrued from student loans. All these concerns have one thing in common: they involve your finances.
Money is usually tight for the typical college grad, and you’re probably not an exception. Heck, I wasn’t an exception when I graduated with a degree in Journalism and little thought to what the next step was. But I learned very quickly that my number one priority was to keep a keen eye on my finances, especially in the face of so many potential financial disasters that befall young people after they graduate.
So this is the topic of discussion today. I want to help you avoid some of the more common financial mistakes made by young college grads. Let’s save you some money!
Relying on a credit card for “points”
The “points” system is endlessly complex and variable depending on who you bank with and what credit cards you use. Some people sign up with credit cards because they get a little cash back every year, some people sign up for the low interest rate. My plea to you is that you don’t sign up for a credit card solely because it offers great deals on ordering certain items online, or that it reduces the cost of meals at certain restaurants.
Choose your credit cards with care, and choose them for the right reasons: they come from a respected and dependable company, their rates are competitive and their incentives work with your lifestyle, and so forth. If you sign up with a credit card just because you like their points system, you might wind up spending way more than you intend to just because you want more points. And there’s no reason you should add to your financial woes with unmanageable credit card debt.
Draining your bank account on food and beverages
We spend a lot of our money on eating and drinking no matter what age we are. The trouble with college grads is that we tend to have much less money than our elders, thus we should be spending less on food than they do. Steak dinners and cocktails at classy bars: no. Home cooked meals made from modest groceries: yes.
I certainly didn’t get the food memo when I graduated from college. I ate out as often as I could, often without paying much attention to what I was spending. I racked up so much money on my credit card that I hardly believed the bill that I got in the mail. But food costs money, and eating at restaurants costs much more than if you were to cook those same dishes at home. So this is my plea to you, dear college grad, until you land a decent paying job: opt for one-pot meals at home for now. Save the luxurious dinners out for later on.
Delaying loan repayments
This is the biggest mistake you could make with your finances. Many student loan programs allow for a certain grace period after you graduate so you can take stock of your finances and plan out a responsible repayment plan, and my advice to you is to use that grace period wisely. Take the time to budget for the upcoming monthly loan payments, which you can hopefully covered with the paycheck from an entry level job of some sort. If you’re like millions of college grads without a job, you might have to get creative or simply pay the bare minimum each month to keep the loans at bay.
But I would highly discourage putting off loan payments altogether. Not only will it hurt the state of your finances in the long run, but it will bring you nothing but anxiety, taking over every aspect of your life. Everything you do will somehow be connected to how you’re supposed to pay off your loans. No one should live that way, you included.