Financial Mistakes to Avoid as a Recent College Grad

 

Mistakes to avoid financially as a recent college grad

Mistakes to avoid financially as a recent college grad

Mistakes are unavoidable, but you should be especially careful when it comes to your finances. As you prepare to graduate college, you also prepare for the “real world.” You’ve spent the last four years obtaining as much knowledge as possible in your field, applying for jobs, and writing your resume. Graduates beware, student loans are the second-highest form of personal debt. And with college debts increasing, it is more important than ever to have a smart financial strategy in place. A solid plan will help you avoid as many mistakes as possible.

By taking a step ahead of your peers in choosing wise investments, you can create healthy habits. This not only improves your personal finances for years to come but also avoid future debt issues.

Financial Mistakes to Avoid after Graduation

Financial mistakes can be easy to make, but there are ways you can avoid them.

Mistake #1: Having no credit.

Everyone talks about saving money, and we are no different. Unfortunately, all this talk about savings has college graduates a little hesitant to take out loans or credit cards. This is due to the fear of creating an overwhelming debt they can’t repay. Plus, not to mention, college already creates heavy financial obligations. Furthermore, it is increasingly harder for those under 21 to sign up for a credit card with no existing income. So, what’s a newbie to do? Build your credit history slowly and regularly by opening accounts and using your own credit cards.  Making consistent payments by or before the due dates establishes a good credit history.

Why this is important: When you want to make big, future purchases, like a house, you will have a hard time being approved for a loan. Lenders may require a co-signer or collateral if you have no credit. When I was still in college, I bought my first car with cash I had saved from my summer job. Not long after graduating, I needed to purchase a new vehicle. This proved to be a challenge due to my lack of credit. Over the years, I have been able to develop a favorable credit score by paying off a credit card and the loan for my vehicle. Had I started to build credit sooner, I wouldn’t have struggled so much to get the car I needed.

Mistake #2: Not having a plan.

Having a limited or non-existent financial plan is one of the biggest mistakes recent college grads make. As a poor college student, you are lucky if you have two pennies to rub together as you battle the choice of groceries or rent. When you land that first job out of school though, it can be easy to fall into poor spending patterns very quickly. To avoid this, cut back on unnecessary expenses like going out to eat.  Spend more time enhancing your cooking skills and spreading out your personal purchases. Instead of buying everything for your new apartment at once, budget your expenses over time. Additionally, focus on always paying bills first at the beginning of every month. Then, you know how much is still available in your accounts to last the rest of the month.

Why this is important: Money adds up quickly. So, developing these positive habits sooner can save you not only hundreds but possibly thousands per year.

Mistake #3: Waiting to save and worrying about finances later.

Consider consulting with or finding a financial mentor to help you along this new journey. Waiting to save or pay off student loan debt can cause major inconveniences in your future. Knowing where to invest savings is also tricky, but a certified financial specialist can help you. Try the Digit.co app to automatically save up and pay debts and also try to contact friends from college with a finance degree who may be willing to provide some advice at no charge as they begin their careers.

Why this is important: The sooner you start paying down those student loan bills, the better your overall financial situation. If you were to plug your debt numbers into this student loan calculator tool, you may be appalled at the time frame it will take you to pay it all off. The minimum monthly payments barely cover the interest. Plus, creating a savings account and emergency fund will keep you out of sticky financial situations.

Mistake #4: Not investing early.

Time is the greatest benefit you can give yourself when it comes to investing. Even if you are only contributing a few hundred dollars each year, compounding interest rapidly grows your investments over time. Instead of blowing any extra cash you receive, put it away to help provide some financial security for the future. Try the Robinhood app for this, this is the best app for beginner investors like you.

Why this is important: You are only working against yourself the longer you wait to start investing and planning for retirement. Even with minimal contributions, you can create a significant amount of money the earlier you begin. With a little forethought, you can provide a security net and a nice retirement fund.

By thinking about your future now, you can avoid these common financial mistakes recent college grads make. At the same time, you are also building yourself a nice, comfortable financial safety net.

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Best Online Forums About Saving Money

The first rule of personal finance is to spend less than you make in order to save. However, making financial decisions and lifestyle changes that impact your future can be overwhelming. This is especially true if you do not feel well informed or have never been taught. If you are feeling out of your depth, here are some of the best online forums about saving money. Not only will they point you in the right direction, but they will also provide community support to help you achieve your financial goals.

The Best Online Forums About Saving Money

Best Online Forums About Saving Money

Finance Goal 1: Budgeting to Save Money

Frugal Village

The Frugal Village is one of the best online forums about saving money and budgeting. You can delve into topics about how to transform your lifestyle and spending habits. The forum allows you to browse through dedicated topics and blogs or read up on the latest savings challenges. You can even join other members in taking on one of them with the support of the entire forum behind you. It offers motivation and advice to keep on the right track.

Finance Goal 2: Building Your Savings

Tip Yourself Savings App

One frequent piece of advice about budgeting is cutting out unnecessary daily expenses. While this is solid advice, it can be difficult to maintain discipline to build your saving. However, the Tip Yourself app creates a fun way to save money by making it into a game of sorts. Instead of buying morning coffee or splurging on things you don’t need, the apps allows you to pay yourself instead. You can watch your money accumulate in your personal tip jar and encourage others who are doing the same. It is a fun and alternative way to spur your savings plan into high gear.

Finance Goal 3: Paying Off Debt

Money Savings Expert

This is a very diverse and active forum that covers many financial topics. In particular, their Debt Free Wannabe has a wealth of knowledge aimed to help you pay down your debts. When you join this community, you become part of a network of like-minded people all working towards the same goal. When you have the support of an entire community, it makes the overall task of reducing debt less daunting.

Finance Goal 4: Saving Money for Retirement and Investing

Morningstar

Morningstar has a longstanding reputation as an excellent tool for investment research. Furthermore, the site’s rating system for stocks and mutual funds is universally known and utilized among the investing community. Not only is it a free research tool, but it is an excellent starting point for anyone who wants to learn more about investing strategies and the stock market. While you should seek out several sources, Morningstar is a prime resource to assist you with making major investment decisions.

Bogleheads

This oddly named forum takes its name from the founder of Vanguard, Jack Bogle. Bogleheads forums provide information and advice about long-term passive income. You can peruse through their quick links to read about trending topics or create your own threads. It is a convenient resource when making decisions about balancing your portfolio and allocating your assets.

General Advice Forums About Saving Money

Reddit – Personal Finance

When it comes to common sense advice on a broad range of topics, there is no better place than Reddit. You quickly receive down-to-earth advice in their friendly forums. This holds true even with the Reddit – Personal Finance forums. After you post your question, others who have expertise or experience with your specific situation will contribute helpful tips. While it may not be the first site you think of for financial advice, community members are very helpful in getting you the information you need.

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Ways around Cancellation Fees to Save You Money

Ways Around Cancellation Fees

 

When making reservations, it is important to pay attention to prepayment and cancellation policies. If you need to make last minute changes, you could find yourself stuck with large penalty fees. Fortunately for all of you, I have a few tips when dealing with customer service. My time in the hospitality industry has taught me a few tricks that can save you time and money. Here are a few suggestions to help you find ways around cancellation fees.

Building Rapport

The first mistake people make when calling customer service is unleashing their frustrations on unsuspecting agents. The tone you set at the beginning of the phone call is a huge determining factor in the outcome of the call. Speaking from my own experience, I did the bare minimum for customers who started calls by screaming at me or blaming me for their troubles. It immediately put me on the defensive and attempt to end the call as soon as possible.

However, I was much more empathetic when a customer calmly explained their situation. I took the time to not only understand the problem, but also to find creative solutions. Often times, I would go the extra mile for these callers. Sometimes this meant finding loopholes to waive cancellation fees, seeking permission from a supervisor, or offering other forms of compensation of equal value. The life of a customer service representative is full of stress and undeserving anger, so remember that patience and kindness go a long way. It may be cliché, but you really do catch more flies with honey than with vinegar.

Courtesy Holds without a Credit Card

Another little known tip when making reservations is the courtesy hold. Some hotels and airlines will allow you to hold a rate for 24 to 48 hours without a credit card. This gives you enough time to shop around or discuss it with your travel partners. Just remember that you will have to call back and confirm the reservation with a credit card or risk cancellation. If you are not quite ready to commit, be sure to ask if this option is available. This little known option can buy you extra time without a deposit.

Changing the Dates to Avoid Cancellation Fees

This last option falls into a gray area, so you need to be careful what you say on recorded calls. Most reservations allow cancellations within 24 hours of arrival. However, if you find yourself inside this cancellation period, there is a loophole. Instead of cancelling your reservation and paying the associated fees, simply change the dates. This puts you outside the cancellation period, allowing you to call back and cancel with no penalties.

Although you are not technically breaking any rules, it is frowned upon by many companies. Most customer service agents are aware of this tactic, but cannot offer it to you because calls are monitored. You should also be aware this does not apply to prepaid rates that require full prepayment.

Final Recap

When making reservations, you should always be aware of cancellation policies and required deposits. You don’t want to find yourself in a situation where you are paying unnecessary penalty fees. However, if you do find yourself within a cancellation period, you have options. Most times you can get what you want by politely asking for it. The most important thing is to be kind and courteous. People are more willing to give you what you want when you remain calm and rational.

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