Congratulations to all you recent college graduates!
Now is definitely the time to take a deep breath and celebrate your accomplishments, but it’s also the time to start planning how you’ll begin your life and career.
The next several months can set you on a fast track to success, or start a slow slide away from your goals if you make poor choices.
Money can’t buy you love or happiness, but it can buy pretty much everything else.
Making sure you have enough of it to support your needs and goals starts with avoiding common pitfalls that hit those who are just getting started.
Here are 15 money mistakes recent graduates commonly make that you can avoid:
1. Waiting around for that “dream job”
Estimates suggest that 50 percent of jobs will be freelance within the next 10 years.
So, don’t think that you have to get a traditional desk job to start your career or that you’ll get the amazing job you’ve always dreamed of right away.
If you aren’t getting the interest you expected from employers, check out sites like Upwork (formerly Elance/ODesk) and Freelancer.com to see if there are gigs you can pick up in your desired field to build credibility and a portfolio.
Making money also will give you more flexibility to wait for the right offer.
2. Choosing your first job based solely on the financial offer
In the first five years of your career, you should prioritize experience.
You will find that the most established businesses (and there is nothing wrong with this) will offer more narrow, specific roles than companies that are just getting started.
I’d argue that your development will be slower at large corporations than if you chose to work at a smaller, more nimble and growth-oriented business, where the pace of your development will be greater.
The rewards of taking more responsibility and developing faster earlier in your career can be profound.
3. Not networking
Almost all jobs come from some connection you have.
To put yourself in the best possible position for snagging a job, find ways to explore your existing network and expand it.
You need to be actively meeting people and learning about what they do.
Don’t go into these conversations expecting anything but to learn, and you’ll be pleasantly surprised about the opportunities that might come your way.
Most professionals are both happy to talk to you about what they do, and are impressed by the initiative you show by being proactive.
4. Not having one
Budgeting based on your income and goals seems too simple to need to be on this list, but it’s not, given how few new graduates actually work off a budget and make financial choices accordingly.
5. Not sticking to said budget
It’s one thing to make a budget; it’s another to stick to it. You have to have the discipline to keep making good budgetary choices.
Some tips to do that include providing yourself positive reinforcement, like one fun night out a month or buying something you’ve been coveting for a while if you meet your savings goal.
6. Not building an emergency fund
It’s always important to save for a rainy day, but building this fund when there are so many fun options available (beach trip, anyone?!?) takes diligence.
Having to put unforeseen important expenses, like a last-minute trip home for a sudden illness of someone you love, on a credit card can lead to major financial distress later.
Student Loan Mistakes
7. Not anticipating student loan payments
If you are leaving school as a graduate of the class of 2015, there is a seven out of 10 chance you have student loans.
They have just become a fact of life, but repaying them isn’t stressful if you plan and take control over them early.
If you took out student loans from the government, you have a six-month “grace period” when payments are not due.
This is the time to build your emergency fund by beginning to act like you need to make the ultimate monthly payment, and making it into your savings account instead.
Gradible offers free student loan evaluations and planning resources to help you get on the best student loan repayment plan for your budget and loan types.
8. Not using income-driven repayment plans
If you were in school and didn’t have income, you will qualify for low to $0 monthly payments on your student loans for your first year out, because these are based on your previous year’s income level.
If you are struggling to find work and are approaching the end of your six-month grace period, you should explore your student loan repayment options.
9. Not contacting servicers
For all of these adjustments, you will need to contract your student loan servicer, which is the company that bills you and collects your student loan payments.
The four main student loan servicers are Navient, Great Lakes, Nelnet and FedLoan Servicing.
If you receive emails or letters from these companies, be sure to open them and review them, because they likely contain very important student loan information and should not be ignored.
10. Spending too much on your first apartment
You’ve just gotten your first job, and you can’t wait to take that huge first step of getting your own place. Stop.
Make sure that this fully-loaded cost, including the utilities you’ll owe and any building or neighborhood fees, is less than 30 percent of your take-home pay from your job.
It will be very difficult to meet other obligations if you let this cost get out of hand.
11. Using credit cards for wants
You should use credit cards wisely, but so many people don’t.
I get it; it’s easy to put the night out on the town or a new pair of jeans on the plastic, but if you don’t have the budget to pay off your credit card in full each month, you’ll start racking up interest charges.
Before you know it, you’ll be struggling just to meet the interest payments, let alone making progress on getting out of credit card debt.
12. Being lazy
The easiest way to cut costs in your budget is to start doing things yourself that require a bit of extra effort, but save you money.
If you can walk somewhere, do it; you’ll save on gas. If you don’t know how to cook, learn now; you’ll save on eating out (and probably be healthier).
Do your own laundry instead of taking it out to someone who will charge you.
Friends And Family
13. Giving in to peer pressure
There will always be fun things to do popping up in your feeds and through texts from all sorts of friends and family. You have to live within your means though.
Make sure to stick to your budget, even when you’re getting the hard sell on a delicious (but expensive) dinner or a crazy (but expensive) concert.
14. Supporting other people
Similarly to avoiding peer pressure, avoid people in your life who are “takers.”
The pressure to help out and pick up a tab or two can quickly spiral into a negative relationship that drains your accounts and leaves you feeling hurt.
Know who your true friends are, the ones who things always even out with and the ones who are more concerned about hanging with you than what you’re doing or who is paying.
15. Trying to be “the boss”
You can be tempted to get your first paycheck (believe me, it feels great) and go out and live large like the boss you are. But, be careful.
A one-time splurge can quickly become a habit if you’re not careful.
To sum it up, if you make a plan and stick to it, put yourself out there, but know your limits. Your entry into the “real world” will be smooth, and all that knowledge you picked up in college will be put to good use.