Finishing college feels like an elephant has taken a foot off your chest to quote Modern Love. The euphoria, the relief, the I-can’t-believe-I-made-it, the anticipation for ‘real life’ to begin.

Finishing college also comes with the rude awakening that you are now an adult. You need to start figuring out your life, making an income and taking care of past expenses (student debts), present expenses and even future ones (retirement).

A lot of middle aged people are in poor financial positions right now because of making bad decisions those first few years after college that have had long lasting financial implications in their lives.

Here are ten money mistakes that many people make that first year after college and how you can avoid them: 

1. Expensive living situations

When I finished college, as much as I hated it, I moved back home. It was the best decision of my life because getting a job took longer than I anticipated and everything cost more than I thought. 

Even though it has become normal for young people to move back home with their parents, a good number of new college graduates still choose to live on their own. If you can afford it, well and good. If you cannot afford it, at least find yourself a roommate or something cheaper.

A lot of young people live in apartments they cannot afford and get deeper in debt those first few months before gaining meaningful employment. Other people remain in an apartment their parents are no longer paying for but which their meager starting salary cannot maintain.

Before you sign or cosign a lease, make sure you do the math. Never use debt to pay your bills from day to day. Credit cards are not free money.

2. Misusing credit cards

Need I say more? There are so many expenses with all the big transitions that come with finishing college. 

Post grads often have nothing saved up for moving expenses, wardrobe hauls and even commuting that first month of work before your first paycheck. Enter credit card debt.

Many people just charge every expense that comes up to their credit card without a plan to repay it by the next billing cycle. Guard your credit score, you will need a good one to get a car and in some cities, to get an apartment. 

If you haven’t already saved up for life after college, the best way to go about this is being resourceful. If you need to buy official attire, thrift instead of ordering from an Intagram influencer’s online boutique.

Live with roommates until you can afford to pay rent on your own. 

Leverage your skills to make some money on the side. After college, I wrote technical SEO articles to supplement the peanuts I was getting from an internship.

Live within your means and not a dime above. Educate yourself on everything you need to know about the credit card you have. How much do you owe, what are the billing cycles and how much do you need to repay each time. Never miss a credit card payment and never pay less.

3. Ignoring student loans

71% of American students graduate with student loans. In 2016, the average amount for those 71% was $37,000. If you have students loans, whether higher or lower than $37,000, whether Federal or private or both, you need to have a game plan for it.

The debt is not going anywhere if anything, it will only snowball with fines and interest if you ignore it.

As soon as you finish college, you need to find out the total amount you owe each lender and their interest rates.

Armed with information, you will chart a course for repayment that makes the best financial sense for you. Check out the options available for you such as forgiveness, forbearance, deferment, income based payment plans, consolidation, refinancing and so own.

Defaulting to pay your student loan will hurt your credit score on top of the government garnishing your wage, Social Security check and your federal tax refund.

The government and private lenders often use third party collection agencies who will hound you until they get that money back. Private lenders are notorious for suing defaulters.

4. Not budgeting

Believe it or not, according to Gallup Poll, only one in three Americans have a budget. No wonder more than 70% of Americans admit to having problematic debt according to a joint research by Association of Young Americans and AARP. It was reported that about 50% of Americans spent more than they earn. 

Having a budget will enable you to have an accurate perception of how much income you make and exactly how you use that income. If you do not budget, you will never know where your money is going.

It is inevitable that you will lose a lot of money on what you consider small purchases like Starbucks coffee every day and frequent ATM fees.

You will continue paying for expensive gym memberships you do not use and never have enough money to save, invest or take a vacation.

Having a budget enables you to prioritize what you are willing to spend your income on such as debt repayment, retirement savings, giving and things you genuinely enjoy and are able to afford.

5. Not saving for an emergency fund

Do not use your credit card for emergencies. Save up for an emergency fund. An emergency fund is a safety net for anything unexpected that can happen in the future such as losing your job, unplanned home repairs and so on.

An emergency fund should have three to six months worth of living expenses in the form of highly liquid assets, that is, money you can get to easily when you need it.

Life happens and it can throw you completely off course financially. Any variety of things can happen and it is best to prepare for them financially.

Make this a priority. Save up for an emergency fund by setting aside a percentage of your paycheck each month until you reach your goal amount.

6. Waiting to invest

People often wait until they can get $10,000 before they start investing. That is why a lot of low to mid level income earners never start investing. The more time passes, the more money you miss out on.

As a recent college graduate, you may not be making that much money. However, you need to save as much as you can so that you may start to identify profitable low investment opportunities for you to begin making now.

I realized early on that when you are still young, you may not have the money, but you do have the time and energy. You can invest in learning a craft and getting certification that will increase your income earning potential.

You can invest in a side hustle, high interest saving accounts, an online robo advisor like Betterment, real estate trusts like Fundrise, the US Treasuries Securities and so many more with as little as $100.

7. Waiting to save for retirement

The best and lowest risk investment is saving up for your retirement. You may be young and perky right now, but you will retire one day and you will want to live comfortably.

A mistake that a lot of us make after college is assuming that we have time. However, saving for retirement is a time game, the earlier you start, the more you will have.

Invest in your 401K and take advantage of the free money your employer gives you to match your contribution. Roth IRAs are also a great way to begin saving up from an early age.

8. Failing to invest in their dreams
You have finished college with a lot of dreams. You want to save the world, you want to travel to each country before you die, you want to be a writer and so on. A lot of us finish college with noble desires and an ideal life.

However, life gets in the way and we chose the path of least resistance, the traditional path. Years later when the mid life crisis hits, we have a lot of regrets and no financial security to actually make any significant change to our lives or vocation.

That is why in your first year after college, although you may have to take any job in order to make ends meet, you have to keep setting money aside for creating the life you really want.

You will use this money to learn skills and create systems that can make it possible for you to succeed.

9. Failing to get all the necessary insurance

We are thankful for the Affordable Care Act which allows adult children to be covered under their parents’ health insurance until the age of 26. However, we all need a plan for when we turn 27 or have children of our own. Medical debt is one of the leading causes of bankruptcy in the United States.

Take out all the necessary insurance for your car and other assets you own. Make sure that if you need it, you have in place professional insurance.

Another thing we pet owners forget is taking out a medical insurance for our pets. Especially if you own an exotic pet like a ferret, you know how shocking those vet bills usually are.

If you won’t take out insurance for your pet, at least save an emergency fund for their health expenses.

10. Taking on huge amounts of ‘good’ debt

Some people take on more debt right after college for their graduate education, wedding or business ventures. There is nothing wrong with any of these except wedding.

The expectation of taking a loan to start a business or advance your education is that you will be able to pay for it and even make more money.

It is only good debt if you can pay it back and if it will leave you better of. Sometimes getting an MBA right after college is not the best route to take to advance your career.

Always look for alternatives, including jobs that help you pay for your graduate studies. It could even be better if you work for a few years to repay some of your student loan and save up for that graduate program if it is possible.

Businesses owned by young people make up a significant number of the 90% of businesses that fail before their first year.

This is because young people come into business with a lot of unrealistic expectations and lack of experience. Any business will take more time and more money than you anticipated.
That is why you should not be borrowing to try out a business that you are not familiar with.

Most financial advisors encourage first time business owners to bootstrap or fund raise from great aunt Lily and friends other than take out a loan or charge business expenses to your own personal credit card.

Finally, you are likely to make one of these ten mistakes. It is not fatal. Just take an assessment of where you went wrong, what you can change and make the adjustments that need to be made. 

The best money advise I ever got right after college was to educate myself. If I was going to make good financial choices, I needed the right information.