For the first time in years, instead of heading back to class, thousands of recent graduates are entering the workforce and many start with student debt.
Financial advisors are pointing out four mistakes new grads make when it comes to saving and budgeting that, when corrected, could set them up for financial success through adulthood.
1. Defaulting on your student loan.
Financial advisor Stewart Willis with Asset Preservation Tax and Retirement Services says he's seeing it happen more and more and warns defaulting will destroy your credit and make buying a house even harder later on.
He says to consider negotiating income-based payments. Even if it's low, it's better than paying nothing.
2. Not having a budget.
Willis says you should be clear on how much is coming in and how much goes out each month. He adds if you're in a serious relationship or married, you should both know those numbers.
3. Not investing in retirement.
It's something a lot of us ignore until later but Willis says if you don't want to have to work until you're 90 years old, then use the 401K at work and try your best to deduct 8%.
4. No money in the bank.
The rule of thumb is to spend 80% and stash away 20% of your paycheck.
"Sometimes you're dealt cards you just weren't expecting. Whether it's a job you don't like being at or an emergency that comes up in life you need that money off to the side so you can make decisions that benefit you and your family in the meantime so you don't have to settle for second best," said Willis.
A final tip for parents is letting your kids sit with you when you're budgeting and paying bills and show them what you're doing so they carry the habit with them.
