6 Biggest Money Mistakes of College Grads (And How to Avoid Them)

Graduating from college and entering the real world can easily put you in a state of anxiety. You may have the world at your feet, but that world involves dealing with money -- something many of us were never really taught to do properly.
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Graduating from college and entering the real world can easily put you in a state of anxiety. You may have the world at your feet, but that world involves dealing with money -- something many of us were never really taught to do properly.

As a result, more college grads are finding themselves in financial pickles over student loan debt, credit cards and job market expectations. The bad news is we still have a lot of work to do in terms of financially educating our youth. The job market is also still less than spectacular for the most educated generation to date.

Below you'll find the six biggest money mistakes college grads are making and how they can avoid them.

1. Taking On Too Much Consumer Debt

Let's face it, no one teaches you about credit cards in school. In an age where it's easier than ever to get yourself some shiny plastic, many college grads find themselves under a mountain of debt. In fact, the average college grad is now graduating with about $3,000 in credit card debt -- not including all the other debt they've accrued while in school.

Should you start building credit while you are in college? Absolutely. However, there's a right way and a wrong way to do it. Rather than racking up everything your heart desires, be reasonable and only put things on the card that you can pay off in full on a monthly basis -- even if that just means your Netflix subscription.

2. Not Figuring Out the Actual Cost of College

According to a recent Fidelity survey, the class of 2013 averaged $35,200 in total college-related debt. Between credit cards, money owed to family members and ballooning student loans, these grads are in for a rude awakening as their six month grace periods come to an end.

With a tough job market, college grads are coming to realize that perhaps they should have taken saving money, work study, grants and scholarships a little more seriously.

3. Not Working While in School

Experience is crucial when we find ourselves in an employer's market. With millions of job-seekers and still not enough jobs, college grads are learning this the hard way.

College grads who did not work while they were in school are having more difficulty finding a job while their working counterparts are at least getting some form of employment. Moral of the story: Find yourself a job while you're in school.

4. Being Unrealistic About Entry Level Salaries

When I worked in recruiting, one of the biggest shocks college graduates would get was when they learned they would not be making as much money as their educational institutions had claimed. Sometimes it wasn't even by a long shot.

In order to combat this, college grads must research their local market and see what the entry-level going rate is in their area. For instance, you're not going to make the same salary in Florida as you were making in New York for the same job.

5. Avoiding Making a Budget

This may not be just a college grad problem, but it is one where the younger you start correcting it, the better off you'll be. Sit down with your finances and figure out how much you have coming in versus how much you have going out. From there you can adjust accordingly and figure out how much money you can put away into financial staples like an emergency fund.

This is an integral step in getting your financial game together. The sooner you get it done, the more solid you will be. For a fun guide on dealing with budgets check out How to Go On a Date With Your Budget.

6. Not Saving for Retirement When They Get Their First Job

Just because someone may be 22 years old does not mean they should not be saving for retirement -- especially if the company is helping you do it! Thanks to compounding interest, recent college grads would have a very nice nest egg by the time they retire.

Sign up for the company 401K plan (or pension, depending on the job) as soon as you get a chance. Otherwise, you may be missing out on free money if the company is matching contributions. If the company isn't matching contributions, you should still sign up and get in the habit of saving.

If you are in a position where there is no 401k plan, you can start your own retirement fund using a Roth IRA. In some cases it'll cost you as little as $100 a month.

The mistakes of college grads show us that there is still a lot of work to be done in the area of financial education. From figuring out how to pay for college to simply budgeting, college grads may have to learn some financial chops faster than they expected.

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