Top 6 Financial Traps College Graduates Need to Avoid

graduation cap sitting on pile of money

One of the priorities for college graduates should be financial responsibility. There are a few financial traps that recent grads should avoid. These financial traps could hinder new graduates from securing their financial future. Take a look at these 6 financial traps college graduates need to avoid:

1. Not setting a budget.

A woman budgeting with her calculator.When you graduate college, it’s important to set a budget. You want to be careful not to spend more money than you make. To create your budget, calculate the amount of money you’re taking home after taxes, then figure out how much you can afford to spend each month. You should also set aside an amount to contribute to a savings account monthly. Be sure that when you make your budget you factor in recurring expenses, like student loans, monthly rent, utilities, groceries, transportation expenses, and car loans.

2. Not having an emergency fund.

Unexpected costs can come up at any moment, which makes it important to have an emergency fund. Make it a priority to set aside an emergency fund that’s equivalent of 3 to 6 months’ worth of living expenses. No matter how small the amount, start putting money away immediately. Opening up a savings account at Tennessee State Bank is a great way to store this extra money for when you need it.

3. Paying bills late or not paying them at all.

final notice on billsEvery missed payment can hurt your credit history for up to 7 years. This can affect your chances of getting loans, the interest rates you pay on those loans, and your ability to get a job or rent an apartment. To guarantee you don’t miss paying any of your bills, consider setting up automatic payments for regular expenses like car payments, phone bills, and student loans.

4. Racking up debt.

When getting a credit card, be sure to shop around for a card that best suits your needs. You should understand the responsibilities and benefits of credit. Be sure to spend only what you can afford to pay back.

5. Not considering the future.

401k fundWhen you’re just graduating college and starting your career, you might not be thinking too far in the future. However, it’s the best time to start planning for your retirement. You should contribute to your employer’s 401(k) or similar account, especially if there is a company match. You’ll want to invest enough to qualify for your company’s full match because it’s free money!

6. Not accepting help from your bank.

We want to help you secure your financial future as much as we can! Take advantage of all the ways your bank can help you manage your money. At TSB, we have a variety of convenience services that are available 24/7 that you can access from anywhere with your electronic device. Use the tools we offer to check balances, pay bills, deposit checks, monitor transaction history, and track budgets with Online and Mobile Banking. Click here to see all of the convenience services we offer.

About Tennessee State Bank

Tennessee State Bank has been serving our local community for over 48 years. With branches in Sevier County, Knox County, Cocke County, and Jefferson County, we offer convenient banking services in East Tennessee. Whether you’re looking to open a checking account, obtain an auto loan, or apply for a home mortgage, we make the process as simple and straightforward as possible. Tennessee State Bank’s motto is “Banking at its Best!”SM, and we strive to live up to that creed every day. Let us know how we can help you by sending us a message via our Contact Form.

Tennessee State Bank is Member FDIC and an Equal Housing Lender.


“6 Financial Traps New College Graduates Should Avoid.” American Bankers Association.