Six Financial Traps New College Graduates Should Avoid

Tammy J. Smarsh |
Posted on Apr 01, 2017

Next month, thousands of students throughout the United States will graduate from a college or higher education program and launch a career in their chosen profession. In the midst of the excitement that surrounds commencement activities, wishing fellow students well, and venturing out on their own, financial responsibility should be at the top of every student’s post-graduation priority list.

Specifically, the American Bankers Association (ABA) has identified six traps that could hinder new college graduates from securing their financial future.

The financial lifestyle and habits they establish now will go a long way toward deciding their financial future. In fact, if you, or someone you know, is graduating this spring, make sure to avoid the following financial pitfalls:

  1. Not having a budget. Simply put, do not spend more than you make. Calculate the amount of money you are taking home after taxes, and then figure out how much money you can afford to spend each month while also contributing to your savings. Be sure to factor in recurring expenses such as student loans, monthly rent, utilities, groceries, transportation expenses, and car loans.
  2. Forgoing an emergency fund. Make it a priority to set aside the equivalent of three to six months’ worth of living expenses. Start putting some money away immediately, no matter how small the amount. A bank savings account is a smart place to stash your cash for a rainy day.
  3. Paying bills late – or not at all. Each missed payment can hurt your credit history for up to seven years, and can affect your ability to get loans, the interest rates you pay on loans, and your ability to get a job or rent an apartment. Consider setting up automatic payments for regular expenses like student loans, car payments, and phone bills.
  4. Racking up debt. Understand the responsibilities and benefits of credit. Shop around for a credit card that best suits your needs, and spend only what you can afford to pay back every month when the bill is due.
  5. Not thinking about the future. It may seem odd since you are just beginning your career, but now is the best time to start planning for your retirement. As soon as you are eligible, start contributing to your employer’s 401(k) or similar retirement savings account. Many companies and organizations match contributions up to a certain percentage. Be sure to invest enough to qualify for your company’s full match since this is free money. If your employer does not offer a 401(k) plan, then open an IRA to save for your retirement.
  6. Ignoring help from your bank. Most banks offer online, mobile and text banking tools to manage your account 24/7. Use these tools to check balances, pay bills, deposit checks, monitor transaction history, and track budgets.


The road to independence begins the day a student becomes a graduate. College graduates can make their future even brighter with an early focus on sound financial planning. Those who challenge themselves to make financial responsibility a priority over their lifetime are more likely to reap the benefits during retirement.

Tammy J. Smarsh
Retail Office Manager for ACNB Bank’s Fairfield/Carroll Valley Office at 4910 Fairfield Road and Cashtown Office at 10 High Street