Image
The Top Mistakes University Grads Make
University can offer you structure and, at times, a false sense of security - especially financially if you’ve been living off a loan or parents’ support for the past few years. When you graduate, a whole different set of concerns come into play. Here are the top three financial mistakes new graduates make and how to avoid them:
1. Not having any savings
Once you’ve got a job that pays, there can be a big temptation to spend it all. This is a problem because you’re going to want to do bigger things with your money someday, like buy a house or car, or retire. Saving doesn’t have to be complicated though. Put your “fun money” into your budget that’s separate from your savings, and set up automatic transfers from one account to the other to make sure your savings behaviours actually do happen. Easy peasy.
2. Not having an emergency fund
Life happens. Cars break down, people lose jobs. If you have a slush fund at the ready, you can reduce a lot of the stress that comes with those unexpected events. Your emergency fund should be enough money to carry you for three to five months of unemployment, if possible. For example, if your costs are $1,200/month, keep at least $3,600 aside and available in case of emergency.
When it comes time to apply for credit (think car loan, mortgage, etc.), your credit rating is important, but so is demonstrating responsible savings habits. It’s all part of the big picture that lenders look at when you apply for credit.
3. Losing control of debt
Make sure your budget accounts for debt repayment as well as monthly savings. For example, if you have $400 to dedicate to both savings and debt repayment, try $300 going to debt repayment and $100 going to savings.
When paying off debt:
- Pay off your loans with the highest interest rate first. Most often, that means your credit card.
- Make a payment plan and stick to it. Control and pay off your student loan or other debt within a certain time frame.
- Having trouble paying down your student loan? Contact the National Student Loans Service Centre as they may be able to help.
- If you’re struggling, don’t wait until your credit is damaged. Reach out for help early – it’ll pay off.
Stop by Coast Capital Savings for a Where You’re At Money Chat today.