Top 10 Things Every College Grad Should Know About Money

For many members of the class of 2021, college graduation this spring will open a whole new world for them: the world where, for the first time, they will have some disposable income.

Employers expect to hire 7.2% more new college graduates in 2021 than they hired from the class of 2020, according to a March report from the National Association of Colleges and Employers. And that means an influx of young people, who in college often had to scrounge around for pizza money on Friday night, with money they're itching to spend.

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But this financial independence should come with a warning sign, financial experts said. With this first big payday for most graduates, the experts advise treading carefully when it comes to spending money.

Read on for 10 things every college grad should know about money. Spoiler: There's a lot of saving involved.

Last updated: May 12, 2021

Young man working at home office.
Young man working at home office.

Create a Budget

When you land that first job and know what your earnings will be, start earmarking how that money will be spent.

“An important financial tip for recent graduates is to set up a budget and stick to it,” said Adam Garcia, the founder and owner of The Stock Dork. “Supporting yourself can be costly, and if you don't set aside time to build a budget, you can find yourself in financial difficulty. Calculate your take-home pay after taxes and determine how much you can afford to spend each month while still adding to your savings. Remember to account for recurring costs including student loans, monthly rent, electricity, meals, housing and car loans.”

And be realistic when setting up that budget, said Joe Wilson, the senior career advisor at MintResume.

“Don’t underestimate how far your salary has to go. Being fresh out of college where accommodation was paid for, tuition covered, parents supported you, it's a very different world. Your paycheck may seem like something to celebrate but before you go spending it, work out your outgoings and put that aside,” he said.

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Shot of a young woman using a laptop and  going through paperwork while working from home.
Shot of a young woman using a laptop and going through paperwork while working from home.

Track Your Spending

Your budget only works if you know how you’re spending your hard-earned cash.

“No matter how much money you make, it's important to start tracking your income and spending as soon as possible. Money seeps into our lives every day, and you'll be able to make confident money decisions — like if you can take that vacation you've been dreaming about — when you know your spending patterns,” said Allison Baggerly, the founder of Inspired Budget. “By tracking your spending, you'll be able to see how much money you have left each month to send to student loans, build up an emergency fund or save for vacations. You will learn more about yourself and your finances when you're willing to track your spending every single month.”

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Shot of an attractive young businesswoman going over paperwork inside her office at work.
Shot of an attractive young businesswoman going over paperwork inside her office at work.

Set Financial Goals

You will have a lot more motivation to save money when you know what you’re saving for. There’s no better feeling than watching the balance grow in the fund for your new car, wedding or house down payment — or another goal.

“Having a goal will help you naturally focus your finances and point you in the right direction financially,” said Mary Elizabeth, the founder of MeMoreMoney, a personal finance website, “Sit down and set what your financial goals are, then write them down. Ask yourself where do you want to be in one, five and 10 years' time financially. Then do the math — what should your budgets be and how will you manage them.

“You can keep adjusting this plan as your circumstances change, i.e., you get a better job.”

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Young man at home, paying bills online.
Young man at home, paying bills online.

Live Within — or Below — Your Means

Sure, you might be able to afford a luxury apartment with a concierge, gym, coffee bar and view of the city skyline. Experts say to pass on it.

“My best financial tip for new college graduates is to continue living and spending money as if you're still in college,” said Jacqueline Sanchez, the co-founder of Parent Portfolio. “It's very tempting for recent graduates to spend a lot of money after accepting their first high-paying job, such as buying a new car. However, with student loan debt and other expenses, it good for them to live within their means and stick to a budget.”

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Begin Paying Student Loans Immediately

In 2019, 62% of college seniors who graduated from public and private nonprofit colleges left school with student loan debt. Among that group, they owed an average of $28,950.

Lacy Summers, the chief marketing officer of Crush the PM Exam, said graduates should start whittling down that debt immediately.

“The majority of student loans have a six-month grace period, so payments won't be due until late fall,” she said. “However, if you can begin making payments sooner, you can save money on interest and develop a payment habit.”

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freelancer, remote worker, work from home
freelancer, remote worker, work from home

Start Planning For Retirement

Yes, you just started your career, but it’s the ideal time to start saving for retirement — especially if your company matches contributions.

“I encourage recent college graduates to take advantage of the retirement benefits offered by their employers,” said Annette Harris, the founder of Harris Financial Coaching. “Once they are eligible to start contributing to retirement plans, they should start. Deferring retirement plan contributions is giving away free money when the employer has instituted a matching contribution program. Investing as soon as possible and taking advantage of the maximum matching contribution can build a solid foundation for a secure retirement.”

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Close up of man holding pink piggybank while woman putting coin in it.
Close up of man holding pink piggybank while woman putting coin in it.

Save – and Save Some More

Putting money into a retirement fund isn't enough. You can't access that money for many years, and you might want to tap into resources to finance an early retirement or another project.

“Wealth comes from your savings rate: the gap between what you spend and what you earn. The higher the percentage of your income that you save and invest, the faster you'll build real wealth,” said Brian Davis, the founder of, which aims to build financial independence through real estate.

“No one says you have to work until 65. I've known many people who reached financial independence and retired by 30. They then went on to travel the world, volunteer, raise children and work their dream jobs that didn't necessarily come with high paychecks. You get there through a high savings rate.”

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Shot of a young woman holding her credit card while using her cellphone at home.
Shot of a young woman holding her credit card while using her cellphone at home.

Make Timely Payments

Your creditworthiness will be essential as you get older and want to buy a house or make another large purchase and need to take out a mortgage or other loan.

“Pay your bills on time. Now and through the rest of adulthood. Why? Making credit card and loan payments on time each and every month is a good financial habit in general and paying on time can help build a strong credit score,” said Amanda Wallace, the head of insurance operations with MassMutual. “In fact, a recent MassMutual consumer poll showed that the majority (77%) of young adults age 18-38 did not know that their history of making payments on time can have one of the biggest impacts on their credit score. This is important as a low credit score can result in high interest rates or difficulty securing a loan.”

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Get a Side Job

Once you’ve settled into your post-grad life and your new job, consider adding a second one.

“It doesn't have to be something that requires 30 hours of work on the side, just something that brings in some extra income,” said Jon Dulin, a blogger at “It should also be something that you enjoy doing. Don't force yourself into a side hustle you don't like, otherwise you won't stick with it long term.”

Why find a side job? To save the money.

“You can build up a large amount of savings and then have options in life,” Dulin said.

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Young woman having problems and drinking coffee at home.
Young woman having problems and drinking coffee at home.

Think Over Big Purchases

It’s tempting to buy that designer handbag or video-game system you’ve always wanted when you start to make real money, but Theresa Bedford, the founder of personal finance and investing blog In the Game Investing, said it’s wise to wait.

“My best piece of advice to a new college graduate is to practice a waiting period for big purchases,” she said. “There are so many things that we buy that we didn’t actually need or want but we didn’t figure it out until we had already wasted the money. Waiting just 24 to 48 hours to purchase anything that costs more than $100 can prevent buyer’s remorse and ensure that you’re only buying things that bring you joy.

“Just remember if you’re spending all of your money on impulse buys, there’s less money to get in the market where the real magic of compound interest lies.”

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This article originally appeared on Top 10 Things Every College Grad Should Know About Money