Thursday, June 16, 2016

5 Biggest Money Mistakes College Grads Make

College graduation marks a major turning point in any young adult's life. It's the end of a big chapter and the start of a entirely new one filled with its own ups, downs, challenges, and successes. Many young people (even those in their early twenties) do not feel like "adults" until after they graduate from college, at which point they may feel suddenly thrust into adulthood and all of the financial perils it may bring. 

First Bank of the Lake is here to help ease this transition for new graduates. If you have recently graduated from college, keep reading to learn about some of the common mistakes recent graduates make and how you can avoid falling victim to them.

5 Financial Mistakes Recent Grads Make

1. Taking On Too Much Debt
As a recent graduate, you have a lot of potential expenses ahead of you. You may want to buy a car, buy a house, or go to graduate school. These can all be rather expensive endeavors, and you may be tempted to take out loans to help you cover these costs. However, you will want to be cautious about taking on so much debt that you become weighed down by your monthly payments and unable to cover your day-to-day expenses.

2. Not Taking On Enough Debt
While it's important to be realistic about the debt you can shoulder and should avoid taking on too much, it is also important not to avoid debt altogether. Manageable debt is good, because it allows you to strengthen your credit rating and show creditors that you are a trustworthy borrower. The key is to limit your debt so that you can be sure you will be able to make your monthly payments in full and on time every single month.

3. Spending Too Much
Depending on your financial situation in college, you may have been able to treat yourself to happy hour every weekend, takeout several nights per week, and new clothes whenever your heart desired. However, you may not have been covering car payments, rent payments, utilities, and other living expenses at the same time. Now that you are on your own, your fixed living expenses will significantly increase. Take a close look at your old spending habits and be honest with yourself about whether or not they may need to be scaled back.

4. Waiting To Invest
With your potentially limited income and your significantly increased living expenses, the idea of saving for retirement and making other financial investments may seem like a distant dream. However, our finance experts at the Lake of the Ozarks strongly encourage you to begin investing in your future as soon as you can - even if your initial investments are as small as $50 per month. Anything you invest now will make a big difference in the long run, and you can always increase your monthly contributions as your budget allows.

5. Neglecting To Set Up A Budget
As you navigate unfamiliar financial territory, your budget will serve as a valuable compass and guide. As soon as you take on your first job, we recommend breaking down your monthly income (after taxes) into various categories - rent/mortgage, utilities, groceries, phone bill, car payment, fuel, student loan payment, retirement, etc. Once you allocate funds for your fixed expenses, you can see how much you have left over for fun expenses such as dining out or shopping for new clothes. It is imperative that you don't go over-budget in these "just for fun" categories so that can comfortably meet all your required payments.

First Bank Of The Lake Is Here To Be Your Financial Resource
If you have moved to the Lake Area after graduation, we hope you'll consider our bank in Osage Beach MO as your trusted financial resource. As a local bank, we are well-equipped to meet our clients' unique needs. Contact us for information about setting up a checking account or savings account at the Lake of the Ozarks.

First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway
Suite 100
Osage Beach, MO 65065

(573) 348-2265

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