Jeanne is a wife and mother of two who works full-time as a freelancer and virtual assistant. Occasionally, she also helps out on the farm she owns with her husband. With a background in finance and medical office management, Jeanne is currently focused on improving her financial well-being and aims to assist others in doing the same.
Many new college graduates have grand plans for their futures. If they already have a job lined up, they might feel they can relax a bit with their finances. However, transitioning from a broke college student to a working professional doesn’t mean they should stop being cautious with their spending. Here are several financial pitfalls new graduates should watch out for:
1. **Buying Things They Couldn’t Afford in School**
While their school days are over, that doesn’t mean they should immediately start splurging. It’s wise for graduates to avoid buying things they couldn’t afford during college, at least for a while. Instead, they should get established in their jobs and save money first, then gradually buy the items they need.
2. **Not Saving for Moving Expenses**
Most graduates will need to move out of their dorms or apartments, which involves packing and handling moving expenses. Even with friends helping out, costs like truck rentals, packing materials, and food during the move can add up. Planning ahead and saving for these expenses can prevent financial stress.
3. **Forgetting About Fees for a New Place**
Moving to a new place often means paying a security deposit, and possibly deposits for utilities, storage fees, and parking. It’s easy to forget these costs amid the excitement of graduation, so saving money in advance for these fees can make the transition smoother.
4. **Overspending on Entertainment**
With a full-time job, new graduates might find they have more money than before and be tempted to spend it all on entertainment. However, there are many inexpensive ways to have fun, like going for walks, playing board games, or cooking at home. Saving on entertainment helps stretch their paychecks and ensures they have money for bills.
5. **Neglecting to Build an Emergency Fund**
Graduates might feel overwhelmed with expenses and think they can’t afford to save for emergencies. However, setting aside money for unexpected situations is crucial. Even small contributions to an emergency fund can prevent financial crises later on.
6. **Defaulting on Debt**
Graduates need to find a way to manage their student loans and other debts. Defaulting can seem like a minor issue at first, but it can severely affect their credit scores and future loan opportunities. They should consider negotiating with creditors or finding extra work to manage their debts effectively.
7. **Disregarding the Creation of a Budget**
Creating and sticking to a budget is essential for financial health. Graduates should experiment with different budgeting methods until they find one that works for them. Abandoning the idea of budgeting can lead to significant financial troubles.
Excited about the future, new grads must avoid these financial pitfalls to ensure a stable and prosperous journey ahead.