The lack of financial literacy is one of the biggest problems that fresh graduates face. This is very evident with the financial mistakes that they have made on the first few years in their professional career. In this article, we discuss the 4 biggest financial fumbles fresh graduates commit and how to avoid them at all cost.
Pouring Too Much On The Pod
Your housing must only consume 28% of your salary. This rule must be one of the first things that fresh grads should learn. Going beyond that percentage means putting your overall finances at risk.
Excluding Debts and Retirement On Your Budget
You need to learn this early that housing and debts should only accumulate 36% of your income. Also, you should have a clear payment plan for your loans before getting yourself into more financial responsibilities.
Another thing that you must not exclude from your budget is your pay for retirement. The earlier you start, the bigger you can get when you retire. It’s that simple.
Take advantage of these things when paying for your retirement: the 7% average annual rate of return and your employer’s offer to match your retirement plan. Never make that mistake of taking these things for granted
Not Saving
Save as early as you can. Do it right from your very first paycheck. Fresh grads must set up an automatic recurring transfer every payday to transfer their funds on a high-yielding account.
Not Tracking Your Progress
The best way for you to track your progress is by subtracting your liabilities from your net worth. If your net worth is increasing, then it means you’re making good progress. Do not be clueless about your financial progress or you will suffer in the end.
