If you're starting your career soon, you're probably already thinking of all the new things you'll want to buy with those fancy paychecks of yours. Before finalizing that not-so-structured budget of yours, here are some mistakes to avoid.
1. Skip moving in with parents
If you have the option to move back in with your parents (or anywhere you could live rent-free) and choose not to, you're losing. You're losing money, time and honestly, you're missing out on life. You could potentially save $12,000 (if not more) by moving in with your parents for a year. You could do a lot with $12,000 –– like pay off a chunk of your student loans. The quicker those are taken care of, the faster you can plan a trip you've been wanting to take.
2. Buy a brand new car
No. No. No. Cars depreciate so quickly. It's an awful financial move to buy a new car, especially out of college. Find a sensible used car, and you could save hundreds if not thousands, of dollars in the long run. Just ask Dave Ramsey.
3. Spend your bread and honey
Your hard-earned money is exactly that--hard-earned. You really want to spend it on $10 shots at the bar? After you invest and start earning money back, invest more. Once you have your cushion, reward yourself with things you actually want from life.
4. Don't worry about retirement
It may seem far away, but the earlier you start saving, the more room your money has to grow. Also, let's say you start working at age 21, retire at age 65, and live until you're 90. That means you'll work 44 years and live off of retirement money for 25 years. You're basically working now to support yourself down the road. Start saving for retirement now!
5. Pay minimum balances
A lot of people don't realize that by only paying the minimum balance on credit cards, those $25 jeans could end up costing you $50 because of the interest you're paying. Get into the habit of only spending what you have budgeted to spend in any given week. A friend recommended Daily Budget, and I love it.
6. Prioritize incorrectly
Some people go out for drinks 3-4 times a week instead of using that money to invest. I know people who worry about which movie to go watch next instead of budgeting for birthdays and anniversaries. Then when Christmas comes around, they're using credit cards instead of cash to pay for gifts because they didn't budget for the holidays. Plan ahead.
7. Start your own phone plan
You can save so much money with a family plan. Ask to stay on your parents' plan and pay your bill every month, or find some "responsible" friends who would be willing to jump on a family plan with you.
8. Purchase without researching
Don't use your parents insurance just because they have it. If you're in the alumni association of your alma mater, they usually include benefits like discounts on home and auto insurance. SHOP AROUND.
9. Stop educating yourself
Unless you were a finance major in college, you likely don't know a lot about budgeting properly or investing in the S&P500. Read some books and educate yourself about how to spend and grow your money. Don't get caught in the "rat race" because before you know it, you'll be living paycheck to paycheck. I've listed some of my favorites below.
Rich Dad Poor Dad by Robert Kiyosaki
The Total Money Makeover by Dave Ramsey
MONEY Master The Game by Tony Robbins
The Millionaire Next Door by Thomas J. Stanley and William D. Danko