| June 3, 2013

College graduates need to avoid poor money habits

Immediately after graduating college is a terrible time to find yourself in financial trouble. Whether you are struggling with credit card debt, or you don't have any savings, these mistakes can hamper your finances for years. 

That being said, you need to be sure to avoid any major money mistakes when you graduate college or you may find it difficult to obtain a loan for a car or a home in the future.

Mistake No. 1: Borrowing money to buy items that lose value

While likely unavoidable when purchasing a car, you should do your best to avoid borrowing money to buy anything that loses value. Some popular items that people use financing to purchase include furniture, appliances and electronics. It may seem like a good idea at the time, but borrowing money to buy these products is a mistake as you are hit with a double whammy financially – you have to pay interest on the loan, and the products lose value. 

Mistake No. 2: Failing to save money

No matter how much money you make from your first job out of college, you should find some room to save. Having savings is essential to financial success, as it allows you to have a safety net for unexpected expenses. For example, if your car ever breaks down unexpectedly, an adequate savings account enables you to have money for the repairs. If you don't have savings you may be forced to take out a loan for the repairs, which can just add to your financial difficulties. 

Mistake No. 3: Spending too much money on unnecessary items

Impulse purchases are a problem for many people. For example, when you are walking through the mall and you see a big screen TV that you need to have. Buying that TV could leave you short on your rent, or force you to miss a credit card payment. Avoiding impulse purchases at all costs is essential when you are trying to stick to a budget. Window shopping is fine, but don't buy that latest and greatest TV if you already have one at home that works perfectly fine. 

Mistake No. 4: Ignoring your credit score

A good credit score is essentially the key to your future. Without a good score, you will either get poor rates on loans you need to obtain when purchasing a car or a home, or you will be denied altogether. Using credit cards responsibly is one of the best ways to build a credit score, so be sure to obtain one or two cards and always pay on-time. Additionally, you should make sure you pay your student loans each month. 

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