As college students across the nation graduate and start their careers,
financial responsibility should be a top priority, says the American Bankers
Association (ABA). We would like to share with you six traps ABA has identified that could hinder you as a new
college graduate from securing your financial future.
“College graduates can make their
future even brighter with an early focus on sound financial planning,” said
Frank Keating, ABA president and CEO. “The financial lifestyle and habits they
establish now will go a long way toward deciding their financial future.”
Here are six traps that you should avoid:
·
Not having a
budget. Simply put, don’t spend more than
you make. Calculate the amount of money you’re taking home after taxes, then
figure out how much money you can afford to spend each month while contributing
to your savings. Be sure to factor in recurring expenses such as student loans,
monthly rent, utilities, groceries, transportation expenses and car
loans.
·
Forgoing an
emergency fund. Make it a priority to set
aside the equivalent of three to six months’ worth of living expenses. Start
putting some money away immediately, no matter how small the amount. A bank savings account is a smart place to stash your cash for a rainy day.
·
Paying bills
late – or not at all. Each missed payment can hurt your
credit history for up to seven years, and can affect your ability to get loans,
the interest rates you pay on loans and your ability to get a job or rent an
apartment. Consider setting up bill pay for regular expenses like
student loans, car payments and phone bills.
·
Racking up debt. Understand the responsibilities and benefits of
credit. Shop around for a card that best suits your needs, and spend only
what you can afford to pay back. It’s a great tool if you use it responsibly.
·
Not thinking
about the future. It may seem odd since you’re
just beginning your career, but now is the best time to start planning for your
retirement. Contribute to your employer’s 401(k) or similar account, especially
if there is a company match. Invest enough to qualify for your company’s full
match – it’s free money.
·
Ignoring help
from your bank. Most banks offer online, mobile and text banking tools to manage your account night and day. Use these tools
to check balances, pay bills, deposit checks, monitor transaction history and
track budgets.
Remembering to avoid these six things will establish good financial habits and make your future even brighter.
