Don't blow it all at once: financial tips for recent graduates
Danielle Bly, OSCPA Ambassador to CWRU
Issue date: 4/23/10 Section: News
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But the most common mistake that new graduates make is not planning their finances. You'll be making more money; so many graduates are tempted to spend their extra dough as though they are millionaires. The first time newly employed graduates touche their first professional paycheck, visions of new cars and shopping sprees at the local mall start dancing through their heads. For recent graduates, the old saying of "earn more, spend more" usually holds true. Don't allow yourself to fall into this trap that can create greater debt and keep you from reaching your financial goals. Follow these tips, and you'll be well on your way to financial independence after graduation.
1. Pay off your debt. Most college students leave with at least some amount of student loans and/or credit card debt. Make paying off this debt your first priority after getting a job. Think about consolidating your student loans so you only have to worry about one payment each month. In addition, the sooner you pay off this debt, the less money you'll be throwing away on interest accumulations. The longer you wait to pay, the more interest you'll have to pay down the road.
2. Manage your expectations. All throughout college we've been hearing about the "real world" we will be launched into upon graduation. This brave new world includes new cars, apartments, independence, lots of money, and maybe even weddings. What we sometimes forget to think about is the expenses associated with all of these great things. New car? Try $200 per month at least. Apartment? Think $500 per month minimum (not including utilities). All of these great things cost money, so try to temper your expectations from the start so you don't set yourself up for failure. Yes, you'll be earning a lot more money when you begin working full time, but you will also have many more expenses that you expect to go along with that newfound cash.