College graduation is an exciting time full of change and often some anxiety. Learning to navigate the world beyond school involves a sharp learning curve, including handling personal finances. Sticking to some foundational focus points can help you to stay motivated and keep from getting overwhelmed– while also establishing your long-term financial success.

1. Protect your credit score

Your credit score is an important measure of your financial health. A good credit score can make it easier (not to mention cheaper) to take out a loan, buy a car and rent an apartment. In some states, good credit can even save you money on your auto insurance premium.

If you don’t have a credit score yet, an easy way to establish one is to open a credit card and make regular purchases and payments. If you already have a credit score, do everything you can to protect it with smart credit management practices, such as:

  • Paying your monthly bills in full and on time.
  • Keeping your credit card balance low in relation to your credit limit.
  • Spacing out applications for new credit.

You can and should keep track of your credit health by reviewing your credit reports. You can access those reports for free via If you find errors on your credit reports, federal law lets you dispute those mistakes with credit reporting agencies.

Takeaway: Your credit score will ultimately influence your ability to qualify for loans and determine the interest rates on your debt. Keeping track of your score and credit report annually is one pillar of maintaining overall financial health.

2. Make a budget and stick to it

A solid budget is the foundation for maintaining financial health. With an organized budget, you can track every incoming and outgoing expense, optimize the money you have, manage your debt and save for future expenses, like a car or a house.

When it comes to crafting your budget, first conduct a financial audit to set realistic goals that will hold you accountable. If you have a job lined up after graduation, calculate your monthly income after taxes. Then check your bank and credit card statements to see how much you spend on necessary expenses, like rent, utilities, insurance, food and gas.

Next, see how much you typically spend on nonessential expenses, like restaurant dining, entertainment and subscription services. While you don’t have to give up all non-essential spending, it is a good idea to figure out the maximum amount you want to spend on those expenses. If you’re spending too much, look for opportunities to make cuts.

Small spending changes — even canceling a subscription service or two — can add up over time. Cutting expenses can help you find funds to pay down debt, invest in retirement or bolster your emergency fund.

A budget isn’t about doing without; it’s a plan to help you afford the things that are most important to you. One way to budget is to try the 50/30/20 rule:

  • 50 percent of your budget for needs (housing, groceries, debt minimum payments).
  • 30 percent of your budget for wants (vacations, gym memberships, dining out).
  • 20 percent for savings and investments.

Of course, final spending ratios will look a little different for everyone. If you need help creating or managing a budget, a budgeting app could help.

Takeaway: Overall, maintaining a budget can help you to remain aware of your spending and ensure you are living within your means. Designing and implementing a budget that works best for you can help with moderating your discretionary expenses and maintaining progress toward your long-term goals.

3. Start saving

Once you have a realistic budget, you can start saving and investing in your future. Your savings should include a savings account for larger purchases and emergencies and retirement savings through options like a 401(k).

Maria Alcantara, financial advisor and founder of Millennial Money Queens, says that the smartest way to bolster your savings is getting a savings account and automate the process. If you have a hard time saving extra cash, open a savings account separate from your checking that allows you to automatically deposit a certain amount from each paycheck into that account. A high-yield savings account is a great option since you’ll earn some extra cash from the interest accrual on your funds in the account.

When it comes to saving for retirement, new graduates should start as soon as possible, says Annette Harris, financial coach and owner at Harris Financial Coaching. Many employers offer a 401(k) plan, which is a retirement plan that allows employees to contribute a percentage of their salary into a retirement fund – a percentage that is often matched by the employer. “Starting retirement savings immediately establishes [students’] standard of living and budget at the beginning of their careers,” Harris says.

Takeaway: Starting a savings habit early– and contributing consistently– can help you to leverage compound interest in the long run through investments like your retirement account. An everyday savings account can also help to keep you from tapping into credit or over-extending yourself for larger purchases.

4. Get insured

As a new graduate, insurance might be the last thing on your mind. Yet securing the coverage you need to protect you should be a priority. Dental, health and life insurance are often provided by employers, though you may also want to seek out additional coverage for things like life insurance independent from your job.

New graduates should also consider renters insurance and auto insurance to prevent emergencies from becoming financial catastrophes. Renters insurance covers the cost of your belongings if something were to happen to your apartment. Auto insurance, on the other hand, protects you against financial losses in the event of a collision.

Insurance policies do require monthly payments. However, those small payments are negligible compared to the tens of thousands of dollars you could face if you encounter an emergency and are uninsured.

Takeaway: Though insurance adds another item to your monthly expenses, the right coverage will ultimately save you money in the long run. When you need to file a claim, your monthly payment will likely give you access to more coverage than you would otherwise be able to afford.

5. Manage debt wisely

Many new graduates hold multiple types of debt. From student loans to car loans to credit cards, it’s important to manage your debts wisely to protect your credit and avoid further interest accrual.

Here are a few tips to keep in mind when you’re managing debt:

  1. Pay more than the minimum on credit cards: If you pay only the minimum amount, it will take years to pay off your balances, and you’ll waste a lot of money on interest fees. If you can afford it, pay your credit card balances in full every month.
  2. Consider refinancing: If you have private student loans with different interest rates and due dates, refinancing could keep you on track. Refinancing consolidates all of your loans into one loan and might even get you a lower interest rate or a lower monthly payment.
  3. Look into different repayment options: Two popular debt repayment strategies are the debt avalanche method and the debt snowball method. With the debt avalanche method, you’ll start by paying off the debts with the highest interest rate first and work down from there while making minimum payments on the rest. The debt snowball method, on the other hand, has you pay off debt with the lowest balances first and work up, all while making minimum payments on the rest.

Takeaway: Staying aware of your debts, the balances owed, and your current interest rates can help you to stay on top of payments and prioritize appropriately.

6. Start an emergency fund

No matter how carefully you plan your budget, surprises can happen. From car repairs to illnesses to job loss, there are many reasons why you might need more money than you allocated in your budget or have available in your checking account.

Many people have to borrow money when unplanned expenses arise. Yet it’s also possible to plan for financial surprises by creating an emergency fund.

An emergency fund is a savings account with money you set aside for the unexpected. Ideally, you want several months’ worth of expenses in your emergency fund to give yourself some financial cushion if you need it. It can also be helpful to put this money in a separate high-yield savings account so you won’t be tempted to spend it.

Remember, you don’t have to put those funds aside all at once. It’s fine to start small, save what you can afford and build up your emergency savings stash over time.

Takeaway: An emergency fund can offset some of the stress when an unexpected expense arises and help you to save money in the long term by not needing to rely on credit (or the interest payments that come with it).

7. Watch out for lifestyle creep

As you start earning more money, it can be tempting to increase discretionary spending. This temptation may be especially strong if you’ve been on a tight budget with limited indulgences throughout college and during the postgraduation job search period. Before you know it, you might find yourself dining out more, spending more on entertainment and making more frequent shopping trips — either online or in person.

There’s nothing wrong with letting yourself enjoy some benefits from an increased salary. But if you’re not careful, spending too much on the nonessentials can snowball into a bigger issue.

Instead of spending whenever the desire hits you, try planning room for additional purchases in your budget. If your salary allows you to indulge a little more and still reach your financial goals, you might add a “fun fund” into your budget or increase how much money you add each month to the fund you already have.

Most of all, when you start to earn more money, it’s important to decide what you want that cash to do for you. Be sure to think long-term, like debt elimination, savings and retirement. But it’s also okay to put aside some money for travel, hobbies and other forms of enjoyment as long as you don’t go overboard.

Takeaway: Staying mindful of your lifestyle versus your income can help to keep you focused on larger goals, whether they’re in the near future (a vacation in the next couple of years) or further afield (a secure retirement down the road).

8. Invest the right way

When you start earning money after graduation, it can be a good idea to start investing a portion of your income. Investing has the potential to put your money to work for you — helping you build wealth over time and save for the future.

For many people, one of the best ways to start investing is to take advantage of an employer-sponsored retirement plan — typically a 401(k). In some cases, your employer may even match the amount you contribute to your 401(k) up to a certain percentage of your income.

You can also consider investments in addition to your employer-sponsored plan, such as a tax-advantaged investment account like an IRA. If you’re not sure where to start, it may be worth seeking out a financial advisor for guidance.

Takeaway: Investments can be one of the most important things you do with your money. As your investments grow over time, they can be an effective way to build wealth, even if you aren’t contributing large sums.

The bottom line

Graduating from college is a huge accomplishment and a financial milestone in itself. While the realities of the workforce, car payments, student loan debt and general financial management can be intimidating, you can set yourself up for success by taking steps now to assess your finances and establish a budget that works for you.