The biggest graduate money mistakes

graduate mistake©iStock.com/David_Kam_Photography

FOR millions of people, this summer was marked by the popping of the glorious student bubble of lie-ins and mid week partying.

There they are, graduates let loose into the big wide world.

From a financial perspective that means goodbye loans and interest free overdrafts and, for some, hello massive debt.

As the Lloyds TSB Student Finance Report, released last week, revealed it's a problem many students are already acutely aware of.

60% of those polled said they'd graduate with debt of over £10,000 and just under half were worried about their debt levels.

As if that debt burden wasn't bad enough, new graduates have to dodge an increasing number of potential pitfalls including increased costs on everyday expenses and unsecured debt and employment insecurity.

Intern exploitation

Some graduates may manage to step into a high paying job immediately after finishing their studies.

However, a great majority of grads will find themselves working for free or for a very low wage as an intern before they find gainful employment.

Avoid the mistakes

Ask if the company you're working for covers travel expenses if you're not being paid, if not, see if you can arrive slightly later to avoid being hit by peak hour travel fares.

Find more information here.

Realise before you sign up to your internship that this means you cannot claim Job Seekers Allowance (JSA).

To be applicable for JSA you must be actively looking for a job (which you may be doing at the same time) but you also need to be available during work hours, which you won't be.

However, depending on your situation you may be able to attempt to make a claim by calling the Job Centre Plus on 0800 055 6688.

There are a few ways you can stretch the pennies during your internship. Try and bring in your own lunch, also find out if your company includes food in their expenses and if you can, try and live at home to avoid paying rent.

Going home to move forward

Some graduates feel conflicted about moving back home after university, feeling that it's a huge step backwards after living with their friends for three years.

Avoid the mistakes

However, this may be the most sensible choice from a financial perspective.

This will especially be the case if you haven't yet found a secure full time job.

Cutting out rent for a few months or a year is the easiest way to save and to avoid getting into even more debt.

In London for example, rent alone can cost anything from £450+ per month before bills and food expenses.

By living at home for even a short stint you can save up money for a deposit on a house share or use it to repay any unsecured debts.

Overworked student overdrafts

When signing up to a new student account at university, the amount available interest free and, of course, the free toastie maker/T-shirt/goodie bag on offer probably seemed more important than what would happen to the borrowing after graduation.

A recent study from student website Save The Student! revealed that many people find themselves hit with huge bank bills on graduation because they were unaware of the repayment conditions.

One final year student told the site "I hadn't realised that I have just a year to pay back my full £3,000 overdraft, until I got a letter from my bank a few weeks before graduation. New students should apply with caution."

Avoid the mistakes

There are two simple lessons here: first, pay back that overdraft and, second, no really, pay back that overdraft.

Interest free overdrafts are available to graduates as well as students and you are eligible for a graduate account for up to three years after you leave university.

Search for the longest interest free overdraft you can find to save on high interest rates and repay before the promotional rate returns to a high interest rate, just as with a student account.

Find more on overdrafts here.

The end of discounts...

Another part of the end of student life is an end of student discounts.

Before graduation, you were exempt from paying council and working tax so make sure as a graduate you have factored in these extra outgoings from your pay cheque.

Other student benefits you will lose include the beloved high street shopping discount and note that the young person's discount railcard will expire after the age of 25.

Avoid the mistakes

Okay, so far, the money realities of the real world have sounded rather grim but this is the opposite problem.

Everyone knows that students are meant to scrimp, save and try to get discounts whenever they can but the feeling can vanish on graduation: don't let it!

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