How college graduates approach financial planning during their first years in the real world following college often establishes the pattern for their financial habits down the road. Here are five common financial traps young adults can fall into—and how to avoid 𓆉them.

Mistake #1: Not Trying to Save

Recent graduates often encounter sticker shock as they establish their new lives. If they leave their parents' home, entire paychecks can get spent on regular expenses—rent, utilities, car payments—and on furnishing their homes. There's also other expenses, like transportation costs to work and student loan repayments.

Despite all these demands on their newly-earned dollars, new grads should strive to save money. One important savings goal to build an 澳洲幸运5开奖号码历史查询:emergency fund in case there's automobile accid🌄ents, lay-offs, or other unforeseen expenses.

Mistake #2: Spending and Not Investing

Recent graduates naturally equate a steady paycheck with newfound wealth and independence. No longer is money being doled out to them, in the limited shape of an allowance or scholarship or financial aid. It's money they earn—and it's all theirs. The sense of autonomy can lead to unreasonable spending habits: spending money on discretionary items or recreational experiences.

The reality is assets either 澳洲幸运5开奖号码历史查询:appreciate or 澳洲幸运5开奖号码历史查询:depreciate. The purchase of a car is the purchase of a depreciating asset because the car diminishes in value as soon as it leaves the lot. The same is true for furniture, clothing, and TVs. Flying to Cabo San Lucas over spring break or going barhopping every weekend is an expense. It's cash leaving your walleꦡt, never to return.

However, there are ways to create real financial securi✤ty.

First is investing: put your money into assets that appreciate over time, such as 澳洲幸运5开奖号码历史查询:blue-chip stocks, dividend-yielding stocks or 澳洲幸运5开奖号码历史查询:growth stocks, or even 澳洲幸运5开奖号码历史查询:real estate.

While some stocks pay cash dividends as a way to return money to investors, bonds are 澳洲幸运5开奖号码历史查询:debt securities or loans issued by a company or government. Investors who purchase bonds may, in return, receive periodic interest payments, and at the bond's maturity, the pr✱incipal—or original amount invested—is returned to the bondholder.

There's also investing in yourself to improve your prospects for growth and increased income. By devoting money each month to improve your performance as a professional, you can expect to earn more promotions and higher pay over the long run than your complacent counterparts. These personal investments can take the form of training, online classes, industry certifications, books, and seminars.

Mistake #3: Letting Debt Get Out of Control

Depreciating assets and reckless spending often lead to only one thing: debt. Debt devours your cash flow and negates your assets, skewing your personal 澳洲幸运5开奖号码历史查询:net worth toward the negative side. Establish timelines for eliminating your various debts, including school, car, credit card, and home loans.

Mistake #4: Damaging Your Credit

As a means of establishing a good credit history and acquiring appreciating assets, manageable debt can help recent grads become financially credible to lenders when it's time to take out an auto loan or a mortgage. Additionally, extenuating circumstances may require a recent graduate to take out an emergency loan. Manageable debt means that payments and the 澳洲幸运5开奖号码历史查询:principal balance are easily affordable and that there is a target t🍒imeline for an e✤ventual pay-off.

Mistake #5: Forgetting Life Insurance

Recent grads rarely think about life 澳洲幸运5开奖号码历史查询:insurance. And from a financial standpoint, it doesn't make sense unless you already have dependents. But if you do—if there are children or a spouse who depend on your income—there's a significant benefit to taking out a policy when you're young. 澳洲幸运5开奖号码历史查询:Life insurance for a 22-year-old is a better proposition than life insurance for a 55-year-old. In term💙s of premiums, it is always cheaper—sometimes substantially cheaper—for a you🐎nger person to buy insurance than an older person.

Although term insurance is usually recommended for the young, permanent life insurance—in which 澳洲幸运5开奖号码历史查询:a portion of th♛e premium goes🌺 towards investments within the policy—has its points. A cash value that builds for decades can amount to hun✅dreds of thousands of dollars in future tax-free income.

The Bottom Line

Personal finance is a critical area for your mental and emotional well-being. Once you graduate, managing your money and 澳洲幸运5开奖号码历史查询:building a solid personal𝓰 balance sheet should become one of your dominant priorities.