Graduation from college is an exciting time for anyone. I know exactly what it was for me. I came out of it with a bachelor’s degree, high hopes for the future, and a huge amount of student debt waiting to be paid off.
As I delved into the world of getting my first graduate job and managing my finances (while keeping track of my student loan bill), I definitely made my fair share of financial mistakes.
Looking back, it’s hard to swallow the many mistakes I made with money. But knowing what I would have done differently has helped me move forward with a better attitude towards money.
6 Financial Mistakes I Made as a Newbie
Financial mistakes in 20 years are quite expected. And while it’s hard to admit that you’ve made mistakes, learning from them is the best thing you can do.
I hope you can take inspiration from the money mistakes I made as a rookie and not make them yourself.
Committed to further education opportunities
Source: Tenor.com
Out of fear of the unknown, I jumped right after receiving my bachelor’s degree to opportunities for further education. I was terrified at the prospect of entering the world of work without the insurance that the academy had provided me with for the last four years.
I paid for admission to graduate school and even signed up for a couple of online courses in college. I thought I needed more qualifications. I thought that I needed something more. Maybe even a whole new career path.
While it’s more than normal to explore options, especially when you’re in your 20s, rushing into any such decision comes with financial risk. I ended up not going to graduate school and quit my online courses.
Instead, I accumulated my work experience for my resume, which was much better for my life and wallet than the courses.
Read more: Are graduate programs worth the money?
Don’t set aside freelance income to pay taxes
I’ve been freelancing since before I graduated from college. And honestly, I think this is a great option for recent graduates – you can get some experience and make money in any field you choose.
But during my job search, I ended up taking on a lot more freelance work to support myself. I sent out proposals for articles, contacted the editors of publications I wanted to write for, and constantly wrote down ideas that could turn into a concert.
And then I made a big financial mistake: I didn’t set aside a portion of my income for taxes. I was new to the world of self-employment and I needed to do my research and get into it better prepared. Because now I had to pay a large tax bill, which completely unsettled me.
When tax season hit, I was overwhelmed by what I owe and by the process of filing a tax return as a sole trader. If I took the time to think about what paying taxes as a freelancer would be like, I could set aside money ahead of time to cover expenses.
Ignore monthly bill payments in my budget
Source: Giphy.com
When I budgeted for graduate school, I didn’t take into account monthly checking account payments, which quickly caught up with me. Prior to graduating, I had a student bank account that was free of charge.
And while the fees certainly didn’t seem like much at first glance (about $20), they added up quickly each month and I didn’t factor them into my budget.
I would like to take a closer look at how my finances will change when I graduate. I thought about the most obvious factor—student loan repayments—but the little things eluded me.
Read more: The best settlement accounts without commission
Thinking I’m too young to invest
A big money mistake many people make is to discredit their ability to invest. At least I know that’s what happened to me!
Investing is a scary word for some. It seems like such an intimidating and confusing financial enterprise. And while you may have some learning curve, the biggest investing mistake is not investing at all.
Even if I invested small amounts of money, I could get a solid head start on my savings and get a little familiar with the world of investing.
Read more: 7 easy ways to start investing with little money
Neglect of my pension
As with investments, I thought I was too young to open a retirement account. I put it off, not understanding how he could start earning in at least two years – not to mention tax benefits!
To be honest, it was the tax season that prompted me to start thinking about starting a retirement plan. I wish I didn’t need a big tax bill to point me in the right direction, but it happened nonetheless.
If I could go back in time, I probably would have made an appointment with my bank immediately after graduation to discuss my doubts and get professional advice on what forms of investing and saving might be right for me as a new graduate.
Read more: How to know which retirement account to open first
Impulse spending when things go wrong
As a new graduate, I was regularly defeated by the world of work. I applied for a lot of vacancies, passed interviews at several stages, and yet the job went to a candidate with a lot of experience. It’s hard to feel motivated in your career when you’re on the starting line and just hoping someone will try to give you a shot.
Source: Giphy.com
With each rejection, there was a desire to buy something that would make me feel good for a while.
I regret giving in to impulse instead of taking care of myself or planning my next steps. Mental health and finances are inextricably linked. And I think the financial mistakes you make in your 20s are a good example of that.
This is a vulnerable, turbulent time in your life, and it’s hard not to spend money on something you really want – whether it’s a big takeout order or a pair of shoes – just to fill the void of your seemingly never-ending job search.
But looking back, if I had instead taken some time to be mindful and take care of myself and my finances, I would have felt a lot better. So maybe take a nice relaxing bath, grab a pen and paper, and write down your career goals, or even set aside the money you were about to spend unnecessarily into an emergency fund.
Financial mistakes are normal…
… as long as you try to learn from them.
Financial mistakes in your 20s are bound to happen. But turning those mistakes into lessons that will improve your future financial well-being is a choice you can and should make. Most likely, like me, over time you will realize what you could do better and be able to try again.
Featured Image: Medvid.com/Shutterstock.com
