Transitioning from school to the working world can seem daunting enough without having to think about all the other responsibilities that come along with it. But don’t stress—here are our top tips for managing your finances after graduation.

1. Understand Your Money Patterns

Before embarking on this new phase of life, it can be helpful to take a moment to reflect on where you’ve come from and where you’d like to go. Understanding your past spending and saving habits is a good first step in being able to navigate this time of major financial change.

Maybe you have a tendency to spend more than you would like to in social situations, like when you’re out with friends. Perhaps you reward yourself after stressful situations by online shopping or ordering in dinner. Maybe you have a tendency not to spend much money at all, and you faithfully track your transactions and watch your account balance like a hawk. 

None of these are good or bad things, per se—they’re just preferences and habits that people develop around money and spending. However, more self-awareness is never a bad thing, so taking the time to think about and identify your money personality can be helpful in anticipating your spending patterns, and if required, changing them to suit your current financial situation.

2. Make (and Stick to) a Budget

A budget is simply a plan for your money, and when it comes to money, it’s best not to wing it. That doesn’t mean you can’t ever be spontaneous, and it doesn’t have to be perfect, but you should know roughly the amount of money going into your account(s) vs. the amount of money coming out. This way, you won’t spend more than you would like to, or incur unnecessary debt by spending money that you might not have. 

There are many different methods for budgeting, but at their core, they all help in figuring out the answer to this question: what are your financial inputs, and what are your financial outputs? Put differently, how much do you make, and how much do you spend? Once you get organized, you’ll be better able to anticipate what your finances will look like on any given day.

Use this free budgeting calculator, take a look at some apps and software, or try out the straightforward 50/30/20 rule for creating a budget. You can also break things down into the short term and long term to help with big expenses and financial goals. A good first step is making a list of your recurring bills and their payment deadlines, and keeping everything in one place, whether it’s consolidating paper bills in one folder or having all e-bills sent to a dedicated email address.

3. Make a Savings Plan

One way to think about saving is to frame it as paying yourself first: your future self, your vacation self, yourself in an emergency—you name it. It’s helpful to incorporate savings planning into your budget by regularly setting aside a portion of your income, but you can also conduct a quick exercise at any time to assess your current finances and make a plan to save up. 

Another way to think about saving is to divide it into short-term and long-term goals. Short-term saving can focus on things like going on vacation, or building up an emergency fund in case you lose your job, experience a medical emergency, or have to pay an unanticipated expense. Long-term savings goals could be buying a home or planning for retirement.

Saving isn’t just about setting money aside, however. You can also take advantage of different types of savings accounts that will help you save on tax, such as an individual retirement account (IRA) or a 401(k). Many employers will even match contributions to retirement accounts, which provides a great incentive to save. As the Internal Revenue Service (IRS) puts it, “You may be walking away from free money by not contributing to your employer-sponsored retirement plan.”

Another way to save is to invest, so that your money grows over time. Maybe you’ve heard buzz and discussion over meme stocks like GameStop Corp. (GME) or AMC Entertainment Holdings Inc. (AMC), and while the excitement that those generate can be tempting to be a part of, it’s best to start slow and steady with something like an ETF or a mutual fund. If you’re eager to jump right in and figure out the stock market, try a simulator tool so that your real, hard-earned money or future financial well-being isn’t on the line.

4. Pay Back Your Student Loans

Another big post-graduation priority should be paying off your loans. Most student loans give the borrower a six-month grace period after graduating before they have to begin paying back their loans.

Make sure you understand how much you owe, which types of student loans you have (federal vs. private), whether they are subsidized or unsubsidized, and which repayment options are available to you. Then make a plan to pay it back. Tools like the Department of Education’s student loan calculator can be helpful resources. 

Your payment plan, like your budget, can be flexible and should be evaluated according to your current and future financial priorities and situation. For example, you might have a high-paying job lined up for after you finish school, or you might be planning to pursue further studies at some point in the future. These two different situations would likely result in different decisions regarding the duration and frequency of repayment amounts, and the method of paying them back. 

In considering your payment plan, it’s also worth finding out whether you can deduct a portion of your student loan interest payments on your federal tax return, whether it might be beneficial to consolidate or refinance your loans, or whether you can consider loan deferment.

5. Job Hunting: Know Your Worth

When looking for a job or before accepting a job offer, make sure to research the typical market salary for your position so that you know what your experience is worth and what a reasonable (or even better, a generous) offer looks like.

It’s also important to read up on the benefits offered by the companies you are applying for and weigh them against the salary offer. This includes things like health insurance, retirement plans, employee perks, and paid time off. In some cases, it may be worth it to accept a slightly lower salary if it comes with better benefits, depending on your situation. If it’s not possible to negotiate your salary, there may also be other perks that you could negotiate as part of an offer. For example, some companies even offer help with student loans to entice potential employees.

Try creating budgets around different net salaries (this could simply be a spreadsheet with a couple different columns) to understand what a typical month at a certain income level might look and feel like for you. Even if a certain salary is not realistic for the time being, it can be a motivating thing to work towards in your career, and a reminder to ask for a well-earned raise or negotiate your salary if and when possible.

6. Understand Your Health Insurance

Lastly, make sure you understand any health insurance plans that you might have. If you are under the age of 26 and your parents have a private health insurance plan, you can be covered as a dependent until you turn 26 years old. If you have an insurance plan through your employer, make sure you read through it to understand your health benefits and use them as much as possible—think of it like leaving money on the table if you don’t.

If you’re young and healthy and don’t go to the doctor often, you may benefit from choosing a high deductible health plan, as these won’t cost as much when it comes to your paycheck and you won’t be spending much on doctor’s appointments. You would want a low deductible health plan if you go to the doctor often, as it would save you money over the course of the year even if it costs more per paycheck.

7. Practice Small, Good Habits

Lots of good financial habits can be thought of like flossing your teeth: small tasks that, when done regularly, can have a great preventative impact on your (in this case, financial) health. These are things like:

• Checking your bank account balance regularly
• Knowing your credit score and checking it regularly
• Paying off your credit card(s) as often as possible, at the highest amount possible
• Making regular debt or loan repayments, as applicable     

The first two can help you gain insight on your spending patterns as well as help prevent or identify identity theft if you notice any unusual transactions. The latter two will help your credit score as well as your overall financial well-being in the short and long term.

The Bottom Line

Although it may seem daunting to transition to life post-college, managing your finances, paying back your student loans, and understanding expectations for your first job are actually quite manageable if you come in equipped with as much knowledge as possible. Having a plan and learning as much as possible about these new challenges will make this transition much smoother.