Avoid Graduation Money Mistakes

graduation cap and diploma

Graduation is an important milestone that deserves to be celebrated. However, with it comes the responsibility of taking the reins of your financial future and independence.

Committing these common post-grad mistakes could cause you to fall into old patterns where you rely on your parents instead of getting on with your life.

  1. Not taking the time to learn how to manage your money.
  2. Not paying yourself first. Saving money is essential to financial well-being. Setting up an automatic transfer to savings with each paycheck lets you build a savings account before you miss the money.
  3. Overspending on credit cards. Building credit is important for your future financial goals, but carrying high credit card balances can lead to financial disaster.
  4. Acquiring too much debt by way of loans. Some types of debt, such as mortgages and student loans, are considered good debt. However, acquiring too much debt for any reason is risky business.
  5. Buying more house than you can afford. A good rule of thumb in home purchasing is not to exceed 2 to 2.5 times your annual income for a home.
  6. Not understanding your employee benefits. Before accepting a job, consider all benefits offered by your prospective employer and exercise your right to negotiate them.
  7. Not contributing to a 401(k) plan. You’re never too young to start saving for retirement. Take advantage of employee matching programs, and if your company doesn’t offer a 401(k) or a similar plan, open an individual account.
  8. Skipping health insurance. Medical emergencies can occur no matter how healthy you are. If you do not have health insurance, you could be left paying thousands for medical bills out of your own pocket.
  9. Not purchasing disability insurance. In the event tragedy strikes, whether accident or illness, those without disability insurance could be exposed to the possibility of losing major assets such as homes and retirement savings.
  10. Not planning for earning power predicaments. Unexpected unemployment can leave you reeling, so plan ahead by creating an emergency savings account.