Congratulations, Graduate! Now, beware of these personal finance mistakes.

Now that you’ve successfully graduated from college and are looking to move on, there are a few things you need to know about personal finance. The more you know, the more you can avoid mistakes and losing money.

Being able to handle money well is one of the most important things you can do. It means that you will be able to enjoy life more.

When it comes to money, here are some mistakes to avoid.

First, about working for others

Although it is possible to get a job that pays more than $100,000 in your first year out of college, the vast majority of recent graduates will not have this privilege. Don’t be too disappointed if your newly earned college degree only gets you started at the bottom of the corporate ladder. The important thing is to give your best wherever you work. A good job performance in a low-paying job can lead to strong recommendations for future jobs, allowing you to move up to higher-paying jobs.

While most of us find ourselves working for others, you can usually make more money working for yourself. However, not everyone is cut out for this. If you think so, learn as much as you can about the type of business you want to start before you launch it. Talk to other people in the same or a related business to help ensure success.

Don’t complain if your first job is in a junior position. Work hard to accumulate experiences and knowledge. Your managers and co-workers will write strong recommendations for your future jobs. (tokens/Pexels)

Pitfalls to avoid: spending without a budget

If you’re not already in the habit of creating and following a budget, now is the time to start. Set up different categories for each area: rent, groceries, utilities, car, etc., and determine how much money you need to allocate to each. This will help you avoid spending money on unnecessary or frivolous things. Prioritize savings over optional spending, then figure out how to use the rest of your money wisely.

Avoid wasting your hard-earned money by eating too much. Learn how to cook meals at home and ask yourself if you really need those expensive coffees and lunches.

Keep track of where your money is going with some sort of spending log. You can use a personal finance app, personal finance spreadsheet, or some other tool that quickly reveals how much is left in each budget category.

Do you want your money to grow? Make a good budget plan first. (Romolo Tavani/Shutterstock)

do not save

If you don’t have a plan to save money, you can be sure that you won’t have much in the long run. You will only end up in debt. Avoid this trap and learn to better manage money by establishing a budget that includes savings.

Start setting aside some of your income in a savings account of some sort. Put your money to work immediately earning interest. One of the best long-term savings instruments is a 401(K) or a Roth Individual Retirement Account (IRA).

If your employer offers matching funds in your retirement account, take advantage of this by depositing as much money as you can, up to the maximum amount. This “free money” will build your retirement fund faster.

If your employer doesn’t offer a retirement account, create your own IRA. These accounts can also provide you with tax breaks, allowing you to keep more money in your pocket.

Ignore your credit score

Not knowing what’s going on with your credit score can affect you in more ways than you may realize. This can easily happen if you have one or two credit cards and keep them maxed out.

Your credit score will allow you to obtain loans and credit cards with lower interest rates and better terms. Potential creditors will look at the score to determine how likely you are to pay them. It will also affect your ability to rent an apartment, get a mortgage, and get better insurance rates.

To give you an idea of ​​the difference a credit score can make, Nerdwallet provides an example. If you had a credit score of 620 and you borrowed $200,000 on a mortgage, you would end up paying up to $65,000 more than someone with a score greater than 760.

The best way to get and keep a high credit score is to have good money management and pay your bills on time, every time, at least the minimum amount. You should also keep the amount of money you owe on credit cards at or below 30 percent of your available credit. Other factors are also considered; Learn more at ConsumerFinance.

Employers and your credit score

Also, your prospective employer may review your credit report before considering you an employee. If it’s low, you may not get the job. WalletHub reveals that employers in 39 states and the District of Columbia can run credit checks on potential employees. Eleven states prohibit credit checks, though even these generally make exceptions, such as for jobs that require handling money. CNBC says that at least 31 percent of employers conduct credit checks for all prospective employees. About a third obtain credit or financial information from some candidates.

An employer must get your written permission to get your credit report and will only be able to see your credit report, not your actual score.

hasty investments

Another mistake to avoid is investing your money too quickly or carelessly. Although there are stories of people making big money quickly from investments, remember that the higher the possible payout, the greater the risk of losing your investment.

Make sure your investment money is money you can afford to lose if things don’t go your way. The stock market is very volatile right now, as are cryptocurrencies. Often, your money is not guaranteed to produce results.

Professional investors rarely put all of their investment money into a single stock or other investment instrument.

Balance your investments by putting some of your money in safe investments. This will ensure that you always have some money protected. Forbes suggests several safe investments, noting high-yield savings accounts as one of the best because these accounts are FDIC-insured and highly liquid.

Other safe financial tools include CDs, treasury bills, preferred stocks, and gold. Forbes warns that real estate investments and real estate investment trusts can be risky, depending on the market.

vintage photo
You should not invest all your money in one product or invest too quickly. Know the market before acting. (Olivier LeMoal/ShutterStock)

neglecting health insurance

Getting treatment at any medical center can be quite expensive, especially if it is a medical emergency. Health insurance can help you avoid high costs that you could be paying for years.

If you’re currently on your parents’ health insurance policy, stay there if you can. If not, see if your employer offers coverage. Getting group health insurance from your employer will be a cheaper option than an individual policy.

High Deductible Health Plans and Health Savings Accounts

If you are in good health, consider getting a high deductible health plan (HDHP). This means paying more each time you visit the doctor, but it could lower your premiums.

Another advantage of the HDHP is that it can be connected to a health savings account (HSA). An HSA can be very helpful if you have high out-of-pocket medical expenses or costs that are not covered by insurance.

Money deposited into an HSA account is tax-free (deductible) and earns tax-free interest. Unused funds roll over to the next year, creating tax-free savings for later medical needs, says HealthCare.

If you have money in your HSA when you turn 65, you can spend it on whatever you want, but it will be taxed as income if you don’t spend it on a qualified medical expense.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors alone. They are intended for general informational purposes only and should not be construed as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times is not responsible for the accuracy or timeliness of the information provided.

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