Financial Mistakes New Graduates Need to Avoid

Many people say that graduating from college is the beginning of the rest of your life. You are no longer in school, you have no more classes, you have no more teachers, and you are just starting your job hunt to launch your career! While graduating from college is a fantastic accomplishment, many students get an F when it comes to financial planning for the future. Therefore, we at American Investment Planners want to give you a few tips to dodge some financial pitfalls of recently graduated students.

Don’t Move for a Job Unless You Sign a Contract

When you graduate, it may be the first time in your life you have the freedom to move anywhere in the world. This is an exciting prospect for many young workers, but securing a job before you move is crucial to your financial success. Although you may not have much, getting your things from point A to point B costs money, and attempting to go across the United States (or overseas) without a guaranteed job can land you in the fast food industry. Before you move, find a job, if you land the job, make sure to sign a contract before you move. Without a signed contract, a “you got the job” over the phone means nothing. Don’t spend the money till you sign the deal!

Pay Off Your School Debt as Soon as Possible

For government loans, you have six months of deferment from the last day of your enrollment. Therefore, you do not have to pay back a penny of your loans until six months after your graduation date. Deferment is the government’s way of letting you settle your accounts and find a job before forcing you to pay back your loans. While this is an excellent perk for you, if you land a job and start to make a stable income, you should start to attack your loans as soon as possible! Waiting for deferment to kick in to pay off your loans often means that your accrued interest will be added to your loan’s principal. This means you will have a more significant lump sum to pay off, which then accrues interest at a faster rate. It is likely that you won’t have the money to squash your loans entirely, but if you can pay off the interest that your loan has accrued before your loan goes off of deferment, you will stop your loan from compounding.

Refrain from Credit Card Use for Anything Other than Necessary Purchases

Although a credit card is a handy tool that can help you in sticky situations when money is tight, you should never use a credit card for unnecessary purchases when you can’t pay off those purchases within a month. You probably have thousands of dollars of debt due to school loans, and using a credit card for superfluous purchases can send your money (and your credit) down the drain. Focus on purchasing what you can afford, and only use a credit card for unavoidable emergencies. The last thing you need is more loans you can’t repay!

We hope this list is helpful for you as you start your new journey! If anything on this list confuses you or you need clarification, reach out to us here!