6 Money Mistakes New Graduates Make

Fresh out of college or university and you’ve got the whole world as your oyster. However, being a graduate also means needing to manage your money better and that often can be challenging as someone that hasn’t yet entered the real world of financial responsibility.

Unless of course you’re a mature student, paying different bills and managing an income for the first time can prove difficult. So with that being said, it’s good to know about the money mistakes that graduates will often make and how better payment know-how solves them.

1 – Falling into the subscription service trap

Graduates, like so many of us, will often lose track of what recurring digital payments they have. Whether it’s for streaming, apps and other services, this is a mistake that can end up costing the individual hundreds more every month. It might be that you don’t even use that subscription anymore.

In order to help avoid this trap, it’s a good idea to use automated payment tracking tools or banking apps so that you can categorize the recurring chargers. That way, you can see exactly what you’re paying for and what you could avoid paying for in the future.

2 – Mismanaging student loan repayment plans

One of the most important payments you should be making are repayments to your student loan. With update payment thresholds, it’s important to try and monitor what you’re paying.

Some may end up underpaying whereas others can end up overpaying. Not knowing which repayment plan you’re on or failing to take account for any underpayments you’ve made, can be problematic.

It’s important therefore to master your student loan repayment account and ensure you understand exactly what your repayments are and what that should adjust to in the future.

3 – Relying too much on your credit card for everyday purchases

Your credit card isn’t a personal savings account. It’s money that doesn’t belong to you and therefore is something you want to avoid spending unless absolutely necessary.

Too many graduates – and working adults alike – make the mistake of using their credit card like a personal account and so swipe away for everyday purchases.

While it may be small charges, these quickly accumulate and suddenly become an expensive bill at the end of each month. Heavy dependency on credit can lead to poor credit scores and a lot of debt.

Implement dynamic payment rules and only use credit cards for larger purchases that you can’t make with one or two paychecks saved up.

4 – Investing money into businesses without clear strategies or detail

Not quite the everyday money mistake but if you’re a graduate who has decided to start a business, it’s imperative that you’re being diligent with your efforts. A clear strategy or not refining the details of your business and everything that goes into it is short-sighted.

From knowing what credit card processing software you want to use to figuring out brand assets, it’s imperative you’re doing your due-dilligence when it comes to planning a new business out.

5 – Ignoring any tax-efficient salary sacrifice schemes

There are a lot of opportunities to save and invest your money when it comes to having a job and earning a dime.

Failing to use services like salary sacrifice in the workplace with certain perks, will end up with you paying more money in tax. Learning how pre-tax deductions work, it’s a good way of knowing how your money is being moved and how it could be better spent to cut down on some of the taxes you pay, especially if you’re in the lower thresholds of tax.

6 – Delaying the beginning of compound growth

You don’t need a large sum of money to start off your savings or any asset that you end up investing your money in. For example, delaying pension contributions or not setting aside investment pots to indulge in from a young age, could cause a lot of missed opportunities as a result.

Start off as you mean to go on by setting up micro-payment automations. These round-up payment tools are becoming particularly popular, helping to automatically sweep up spare change from everyday transactions. From just this alone, you could accrue savings in no time at all.

Lack of an emergency buffer

Finally, it’s often easy to not realize just how unpredictable life can be and that’s why having an emergency buffer is crucial. Without one, you could end up in a lot of trouble financially should something go wrong or you have a spell of bad luck that costs you a lot of money.

Using automated tools and having a saving mindset from the beginning will help you create this buffer for payment shocks.