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Monday, May 16, 2022

How To Avoid 5 Common and Expensive Financial Mistakes

Chicago, IL–(ENEWSPF)– Young adults are graduating college and may lack a basic knowledge in financial literacy. After countless hours studying, late nights, final exams and some parties, now it’s time for graduates to head out into the "real world". The Better Business Bureau encourages these graduates to take initial steps toward a safe, bright financial future.

When moving on to the next phase of life, graduates need to take care of and start handling their finances. Employers are finding that their employees don’t understand their paychecks; much less their retirement plans and every day people make bad monetary choices that can cost them for years to come.

"After graduation, it may take a moment to realize that you are now in control of your life and the decisions you make can have a profound effect on your future," said Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and Northern Illinois. "Learning about money management is a great way for recent graduates to understand and jump-start their finances."

Becoming financially responsible is one of the new challenges young adults will face and it is important to achieving success later in life. Learning how to handle money and build a healthy credit history from the start adds value to your financial and personal future.

The BBB shares these common financial issues that need to be considered by recent graduates to prepare for secure financial footing:

  • Being Prepared for Emergencies. It’s often recommended that everyone have at least a three-month emergency fund. You never know when you’re going to have car problems or home repairs. Borrowing money on a high interest credit card can cost you hundreds of dollars in interest payments.
  • Living Off Plastic. Living off of a credit card is one of the worst financial mistakes that can be made. If you are living off your credit card you may be spending more than you’re earning. A credit card is similar to a loan; the money will have to be paid back, with interest. Try to find a credit card with a low interest rate or call your credit card company to try and lower your current rate if possible.
  • Making Minimum Payments. Paying the minimum on a credit card bill is another expensive mistake and may result in higher fees. The higher the balance, the longer it will take to pay off and the more interest you will pay. If possible, only use your credit cards for emergencies and pay off the entire balance on time.
  • Using Loan Leftovers. It is possible to have some money leftover from a college or personal loan. Instead of spending leftover loan money, use it to pay back what you have borrowed. The longer it takes to repay a loan, the more money you’re going to pay in interest.
  • Racing to Build Credit. Many people make the mistake of thinking that they need to build credit while they are still in college. While it is always smart to have good credit, avoid opening multiple credit cards to try and quickly build credit. This could lead to high risk if you lose track of your billing.

For more information on how to manage your finances, visit www.bbb.org

As a private, non-profit organization, the purpose of the Better Business Bureau is to promote an ethical marketplace. BBBs help resolve buyer/seller complaints by means of conciliation, mediation and arbitration. BBBs also review advertising claims, online business practices and charitable organizations. BBBs develop and issue reports on businesses and nonprofit organizations and encourage people to check out a company or charity before making a purchase or donation.

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