Graduating College in 2019? 3 Essential Money Moves to Make

Congrats on your degree! But now, it's time to get serious.

Maurie Backman
Maurie Backman
Apr 28, 2019 at 7:18AM
Investment Planning

Graduating college is a major milestone, and one to be proud of. If you're about to head out into the real world, here are a few steps you can take to set yourself up for success.

1. Set up a budget

Creating a budget may prove challenging if you're not yet employed. Once you have a job, however, you'll need to figure out how you can afford to spend your paycheck. To that end, a budget will help you manage your money and avoid racking up needless debt.

Setting up a budget is pretty simple. All you need to do is list your monthly expenses (things like rent, transportation, health insurance, food, and utilities, to name a few), factor in once-a-year expenses (your roadside assistance plan, for instance), and compare your total spending to your total earnings, keeping in mind that you should aim to save a portion of your income as well. Having a budget in place might also inform certain decisions you'll make early on after graduation. For example, if you live at home for a while until you figure things out, your budget might show you how much rent you can afford to take on.

Bunch of people in gowns raising caps in the air

IMAGE SOURCE: GETTY IMAGES.

2. Come up with a plan to tackle your student loans

Chances are, you're graduating college with a fair amount of student debt in your name. If that's the case, you'll want to get ahead of those loans to avoid overpaying for them, so to that end, figure out when you'll first be responsible for making payments and how much those payments will entail. Keep in mind that while you might start out by making just your minimum monthly payments, it definitely helps to work on paying extra toward your principal. That way, you'll save on interest and shorten the life of your loans in the process.

3. Build an emergency fund

When you're first starting out in the workforce, you may not have all that much extra cash in your paycheck to work with. But that doesn't mean you're off the hook with regard to building an emergency fund. Without one, you may have no choice but to rack up costly credit card debt when an unplanned expense sneaks up on you, whether it's a problem with your car or a medical issue your insurance provider won't cover.

Your emergency fund should have enough money to cover at least three months of essential living expenses. For better protection, however, you should aim for more like six months' worth of living costs. Furthermore, while it's smart to pay into your student loans to knock them out sooner, you should prioritize your emergency fund above all other financial goals. This means that if you only have $100 left over each month after paying all of your bills and making your minimum loan payments, that money should go into savings until you've established that three-month cushion.

Going from college student to functional adult is easier said than done. These three money moves will help make the transition easier, all the while putting you on a solid financial path.