Life after college can overwhelm many graduates, especially if it is the first time they are handling personal finances outside of a school setting or without the help of family members. Knowing what mistakes to avoid can set up individuals for financial success. According to Michael Sullivan, a personal financial consultant with Take Charge America, these mistakes include living without a budget, not having an emergency fund, opening too many credit cards, putting off saving for retirement, and neglecting student loans.
To succeed with money, a budget is a must. Graduates should start by tracking their expenses for a month to learn their spending habits. Then, necessary adjustments should be made to accommodate habits and goals.
The unexpected can happen at any time. It is recommended that individuals save three to six months of living expenses in an emergency fund. People can start with small contributions and increase as their budget allows.
Graduates should avoid the temptation to open multiple credit cards they do not need. One card is enough to build a positive credit history, which plays a role in many life milestones from buying cars and homes to landing some jobs. Individuals should use one card regularly and pay it off in full every month. Individuals can avoid fees and interest by not overspending or carrying a balance.
Retirement may be a long way off, but that is to one's benefit. The sooner a person starts saving, the more money they may have in retirement. Workers should contribute to their 401(k) or company retirement plan and explore a Roth or traditional IRA. Individuals should save what they can at first and steadily boost contributions as their career progresses.
For new graduates, there is a six-month grace period before students must start repaying federal student loans. Even with the recently announced temporary payment reprieve, individuals still must select a repayment plan. If a plan is not chosen by the individual, he or she will be automatically enrolled in the Standard Plan, which requires fixed payments over 10 years. That may not be the best option depending on one's situation. If they are overwhelmed, graduates should contact an experienced student loan counselor to help.
For more financial tips, visit http://www.takechargeamerica.org and explore the links under "Financial Education" or call 866-987-2008.
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