Ignore These Money Myths About Your Post-College Life
Your years in college don’t really give you a solid footing for the financial challenges that you’ll deal with after graduation. Your money situation is so different once you’re really on your own and earning, and there are plenty of misconceptions out there. Below are a few of the myths you can dismiss as you settle into your new post-college life.
Retirement Savings
Your employer offers a retirement plan, but all you can see is how much participating will take out of your pay every couple of weeks. Besides, you’re young, meaning that you don’t need to worry about retirement, right? Don’t be so certain. This is actually the very best time of all to make retirement contributions because the money that you put away now has years to increase exponentially in value. Do your very best to contribute as much as you can even if it means pinching pennies a bit somewhere else.
Fixed Student Loan Payments
You might assume that the terms that you agreed upon for your student loans when you first borrowed money are the terms you will always have, but this is not necessarily the case. When you refinance student loan payments, you may have a lower monthly bill as well as less to pay overall with a lower interest rate. This can help you save money over the short and long term.
Buying a Home
You may have heard that if you’re renting instead of buying, you’re just throwing money away every month. Does this sound familiar? You might hear this and feel like you need to jump in the housing market, but the truth is actually more complicated. First of all, homeownership isn’t for everyone. If you’re not ready to put down roots where you currently live and expect to be moving on in a year or two, don’t rent. However, even if you’re happy where you are, it might not be the right time to buy. Real estate could be in a bubble. Buying a home ties up a good chunk of your money in a single investment. You’ll be responsible for the costs if anything major goes wrong. Maybe you just don’t want to be a homeowner. Don’t feel pressured into buying before you are ready. Follow your own timeline.
Credit Cards
You may have heard two different things about credit cards. One is that they are a great way to get things you don’t have the money for up front, like furniture and vacations. The other is that credit cards are to be avoided at all costs because it’s so easy to fall into debt. Would it surprise you to learn that neither of these is exactly true? Credit cards can actually be a great way to get cash back or earn rewards toward flights or hotel stays. You can put nearly everything on them as long as you pay off the balance in full at the end of each month. That’s the clincher in using them responsibly; they shouldn’t be used for things that you can’t actually afford.