Will you be graduating from college this spring? Ready to enter the workforce and begin your career? Here are a few mistakes
to avoid when income starts rolling in:
Not
saving for retirement
This one mistake can end up costing you hundreds of thousands of dollars over the course of your lifetime. Even if you only save 1% of your income, over the next 30 to 40 years of your career, the interest earned on that savings (especially if it's in a Roth IRA) really adds up.
Retirement is one of the most difficult things to save for, because immediate needs and wants feel much more important. However, saving early can be the difference between retiring comfortably at 55 and needing to work until your 70.
Living on
credit cards
The benefit of credit cards is that they allow you to delay paying for items until weeks after the purchase (when the credit card bill comes due). The downside of credit cards is also that they allow you to delay paying for items until weeks later. The trouble with the flexibility that credit cards provide is how easy it can be to forget to keep track of purchases. You're not going to like the way that credit card bill looks.
If you choose to use credit cards, monitor your current card balance frequently and never buy anything you haven't budgeted for. Most importantly, pay off your balance every month.
Buying too much car
Avoiding this mistake can save you hundreds each month, and not just in lower car payments. New cars often cost more to insure than used cars, and they sometimes have a higher interest rate on the loan as well.
If you're worried about the cost of upkeep on an older vehicle, buy a certified used car that is only a few years old from a licensed dealership. You get the benefits of a modern car without worrying about ending up with a lemon.
Not
setting financial goals
Thinking ahead about your finances is difficult when you haven't lived on your own before. Do you want to own a home in the next 5-10 years? How about get married? Have children? Write down your life goals for the next decade or so and then determine the financial goals that go along with them.
This simple planning step will help you avoid needing to dig into your emergency fund in order to cover closing costs or an unexpected wedding expense.
Not starting an emergency fund
Speaking of an emergency fund, starting one should be everyone's first financial goal. Even if you start out saving to set aside just enough to cover three months of expenses, it creates a stress-relieving buffer in your bank account.
Peoples State Bank, Member FDIC
