by Maurie Backman | July 26, 2021
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If you're a recent college graduate, here are a few money blunders to steer clear of.
Graduating college is a huge accomplishment, and one you should be proud of. But now, it's time to navigate the real world -- and start getting on top of managing your finances. With that in mind, here are four money-related mistakes you can't afford to fall victim to.
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When you're new to managing your money, it can be easy to lose track of the different things you spend on. That's where a budget can help. Following a budget will help you avoid overspending and make it easier for you to allocate money toward the things that are important to you, like saving up to travel or buy a home. You can set up a budget using a spreadsheet or even regular old pen and paper. Or, use a budgeting app for extra help and guidance.
If you're renting your first home and tackling your first set of bills, the costs can easily add up. So if you don't learn to spend judiciously on nonessentials, like entertainment, you could quickly wind up with a pile of credit card debt. And that's not a great way to start off young adulthood. Not only can credit card debt cost you a lot of money in interest, but it can also damage your credit at a time when you're just starting to build it. Having a budget will help you keep your debt to a minimum or avoid it altogether, but you'll also need to train your brain to spend carefully.
Now that you're on your own and are responsible for your own bills, it's important to protect yourself against unplanned expenses. And that's why building an emergency fund should be your first priority. If you neglect your savings, you may be forced into debt when your first unexpected bill lands in your lap. Ideally, your emergency fund should have enough money to cover three to six months of living costs, but that may be more of an eventual goal if you're a very recent grad. Instead, do your best to save what you can with the goal of working your way up.
The U.S. economy is down several million jobs compared to pre-pandemic times, so now really isn't the right time to be picky -- especially when you're first entering the workforce and don't have a lot of experience. While there's nothing wrong with going after the sort of job you really want, you may have to settle for one that may be less ideal but gives you experience you can use to find a better role down the road. Plus, any job you get will put money into your bank account, and that alone is a good reason to not be too finicky.
Your first few months in the working world can be overwhelming, both logistically and financially. Avoid these mistakes, and you'll spare yourself a world of stress as you navigate this new phase of life.
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