10 Essential Money Tips for New College Grads

While there's a lot of debate about the merits of a college education, if you've just finished with school, you're in a good position to earn more money over your lifetime. Pew Research reported data from the Bureau of Labor Statistics for 2021 that showed full-time workers ages 22 to 27 with bachelor's degrees earned a median annual salary of $52,000, compared to just $30,000 for those of the same age who had only a high school diploma. And Zippia found that the average starting salary for a college graduate last year was $55,260.

If you've got your diploma in hand, let's take a look at some key money moves you should make now.

1. Think about the future

You've got your entire (financial) life ahead of you as a new graduate. Your money goals could (and likely will) change over time, but the sooner you consider your options, the better. Why? If you're only in your 20s, you have a lot of time to save money to make your dreams a reality. If you know you want to be able to buy a home someday, you can start setting aside money now. Want to live overseas? Or retire early? Have kids and be able to pay for their college education? The possibilities are endless.

2. Consider your career path

When you're a fresh grad, you're likely looking at entry-level roles, and could be feeling discouraged about the minimal job duties (and matching salary). Don't be, though. We all had to start somewhere, and even if your first (or second, or third) job out of school isn't ideal, it will at least teach you skills you can take forward into your career. At the very least, you'll learn what you don't want to do for a living. Consider pursuing work that's more interesting to you via a side hustle or even an internship, if you have the time on top of the work that pays the bills.

3. Learn how to budget

Nobody likes the b-word, but giving your money a job and learning how to manage income and bills now is a sure way to set yourself up for future success. Remember, a budget doesn't just tell you what you can't spend; it also tells you what you can spend. And spending some of your money on things you enjoy is important. Check out the best budgeting apps to find the system that works best for you, or if you like spreadsheets, build yourself the budget spreadsheet of your dreams.

4. Start saving an emergency fund

Along with budgeting, having a solid emergency fund is another piece of personal finance 101. Aim to save enough cash to cover three to six months' worth of bills, so you can sleep easier at night knowing that if you lost your job or suffered another financial hiccup, you could get by without going into debt. A good high-yield savings account is an excellent place to put your emergency fund. Some accounts with online-only banks are paying 4% APY or better right now, too.

5. Evaluate your checking account

While you're looking at new bank accounts, don't forget to check up on your checking. You may currently have a student checking account that doesn't charge you any fees, but it might also not offer a full range of perks and benefits. Thankfully, there are great low or no-fee checking accounts available that can make it easy to pay your bills and reimburse you for ATM fees -- and some of them even pay interest on your cash.

6. No credit? Begin building it

If you graduated college without much in the way of established credit, you might wonder if it's too late to start. Definitely not! If you're no longer a student, getting a student credit card may not make sense for you (and some issuers require you to be a current student anyway).

The good news is that secured credit cards are available to you. They require a security deposit, which becomes your credit limit. It's best to keep your credit usage low, ideally under 30%. So if you have a secured credit card with a limit of $1,000, you'd keep your balance under $300 at any given time. Pay your bill on time (and even better, pay off your whole balance every month), and your card issuer may upgrade your card to an unsecured one.

7. Make a plan to pay off any accumulated debt

Perhaps you've graduated college with an existing credit history, but also some debt you need to pay off. The sooner you can become debt free, the easier it will be to start saving for those goals we talked about above. There are several ways to pay off debt, but you may not yet qualify for all of them. For example, a balance transfer credit card or a debt consolidation loan often require credit in the "good" range, and you may be too new to using credit to have gotten there.

Instead, consider tackling your highest interest rate debt first (this is the avalanche method), as it will help you save on interest. If you're worried about staying motivated to keep making those payments, try the snowball method instead. Speaking from experience, the wins you get from paying off your smallest debts first can be a great help in the process of becoming debt free.

8. Get a life insurance policy

Life insurance could well be the last thing on your mind right now, but this is actually an excellent time to consider it. If you're young and healthy, you can get a term life policy for a very low cost, and if you sign on for a term of say, 30 years, you'll have affordable coverage that could help support your future spouse and children (if you end up having them) in the event of your death.

9. Speak to a financial advisor

It's likely that talking to a professional about your finances is also pretty low on your list right now. But here's the wonderful thing about financial advisors: They can help anyone, at any stage of life. If you have questions about insurance, bank accounts, investments, budgeting, and beyond, your "money coach" can be a great resource.

10. Start investing

Now is the absolute best time to start investing, because you have many years to benefit from compound interest. You can certainly open a taxable brokerage account at this stage of your life and begin learning about stocks and other types of investments.

But if you've just landed a new job that offers a retirement plan like a 401(k), definitely sign up to contribute, especially if your employer will match a certain percentage of what you save. This amounts to free money, and it's worth going after.

If you don't have a retirement account option at work, you can open an IRA account instead and save for retirement while lowering your taxable income. If you'd rather save on taxes in retirement, a Roth IRA might be the right option for you instead.

Graduating from college and getting to start your adult life is exciting. Lean on the above tips to get your finances in order and set yourself up for future success.