Wednesday, October 6, 2010

10 Common Money Mistakes Made by Recent Graduates

Since I'm a recent grad, I decided to do my next series on recent graduates. All my fellow recent graduates know it's hard trying survive in this rough economy. We are bound to make mistakes now that we are in the real world. I found these common mistakes from a guest post over at realmofprosperity. For each mistake, I'm going to tell whether I'm guilty or innocent.

1. Overspending on the wardrobe. Guilty
I love to shop and I get bored with my wardrobe. After struggling through college and working a minimum wage job during the summer, I felt rich once I got my first paycheck from my current job. It feel good to not worry about bills and to spend money on things I wanted. While I needed work attire, I could of bought a few pieces at a time instead of going on two shopping sprees.If you need a work wardrobe, buy a few quality pieces at a time. Use coupons and shop sales and clearances whenever you can.

2. Partying and drinking more while out of school.  I Plead the 5th.  I’m not sure where to place myself.  It’s okay to go out, but if you are fortunate to have a job just remember you have to get up for work in the morning. If you don't have a job, you can be using that money for your job search. You can spend a lot of money going to happy hours or going to clubs every weekend. It is also not wise to play Mr or Ms. Big Shot and pick up the tab for everyone.You are only fooling yourself and wasting your money. Skip happy hour sometimes and find cheaper alternative ways to have fun. Your body and wallet will thank you for it.

3. Eating out too much. Guilty.  I’m guilty because I don’t mind spending $30 or $40 on a meal. (I know, a waste.)  Eating out can be expensive and it can affect your health. Learn how to cook some of your favorite restaurant meals. It may not always taste the same, but you can control amount of calories you’re consuming and save money.

4. Buying swanky gadgets.  Innocent. Even though I want a Mac, I have not spent my savings on a new laptop. (Although my current laptop almost blew out on me.)  The money you want to use to buy a new iPhone, plasma TV, or laptop can go towards your student loan payments. Your current gadgets are good enough until you can afford to buy the latest and greatest gadgets.

5. Abusing the credit cards. Innocent. My mom yelled at me for four years, “ Don’t get a credit card cause I will not help you pay the bill!” I was a good girl and I listened. All I have to worry about is my $50,000 of student loan debt. Woo hoo!!! For those of you who have credit cards, it’s easy to get caught up and start using credit cards to pay for things. You’re making big money now so you can just pay if off later right? WRONG! Or you can use credit cards to get by until you find a job right? WRONG AGAIN! Do not abuse your credit cards with the intention of worrying about it later. Never be tempted to carry a balance on your credit card.  Always pay the full balance.

6. Not being savvy when grocery shopping.  Guilty. One tip my mom gave me to eat what was on sale. I didn’t always do this when I was living on my own. I also didn’t use coupons. Using coupons may make you feel like a soccer mom(no offense to soccer moms), but you will save money on your grocery bill. Look through the supermarket circulars to find sales and use coupon sites.

7. Celebrating with an expensive trip. Innocent. My dream last year was to backpack around the world for an entire month after graduation. Good thing my money did not allow me because I was able to focus on my career. As recent graduates, we do feel entitled to a trip after putting our blood, sweat, and tears into getting a degree, but it may not be the best idea. Vacations cost money that you may not have and you need to focus on starting your career. You will have plenty of time to travel and enjoy the good life once you are established in your career.

8. Purchasing a new set of wheels. Innocent. I am driving the purple bucket that my dad left me. I hate my clunker as much as the next college grad, but buying a new car can become a financial burden. Buying a new car gives you more debt on top of your student loans and credit cards. A new car also depreciates in value as soon as you drive it off the lot. Get as many miles off your clunker and drive it until the wheels fall off. If you must buy a new car, buy a gently used car.

9. Renting a new crib by yourself. Innocent. While it may be nice to have a place all to yourself, a roommate cuts expense. You might be tired of living with other people, but you save money in the long run. You can put that extra money into savings for a house. You can also do what I did and move back in with your parents for awhile. Mom and Dad might nag you, but dealing with them allows you to save for a house too.

10. Forgetting to save for retirement. Guilty. When you are young, retirement seems sooooooo far away, but it’s important to start early. If you start saving now, you will have a lot more money than someone who starts saving in their 30s or 40s. Sign up for your company’s 401k plan especially if they match your contributions. If your company does not offer retirement plans, you can set up a Roth IRA. Since I haven’t found a permanent position, I am looking into various Roth IRAs offers.

I’ve been charged with four counts of recent grad mishaps. I guess I’ll start serving my sentence now-sticking to my spending plan and researching IRA accounts. What mistakes have you made as a recent grad?

Contributors: Mr Credit Card www.askmrcreditcard.com.

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