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Our Graduation Gift to You – Advice to Make the Most of Your Money

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

Congratulations! You’ve graduated from college, you’ve got that hard-earned degree in hand and you are ready to take on the world. But can you afford it?

While it’s exciting to get your first post-college job—and even more exciting to get that first paycheck—being out in the real world without a safety net means you need a plan. Our financial experts gave us their top tips for new college grads:

Negotiate Your Salary

“You absolutely have to know what you’re worth,” said Mike Watts, vice president of One Wealth Management in Santa Monica, California. “And that just means doing your homework.”

Nabbing a top starting salary can not only mean more money in your bank account up front, but will lead to exponentially more later on, when you are in line for pay increases and promotions.

While you may decide what’s best for your financial profile, Watts recommended starting your homework by comparing the industry you want to work in with the area where you live. Then see where you can get the most bang for your buck.

“It’s expensive to live in New York City, Chicago, Los Angeles, or San Francisco,” he said. “Your cost of living is less in Oklahoma City, Tulsa, or Santa Fe.”

Check out online job boards or sites like Glassdoor to get an idea of what your starting salary could be. And ask around. It’s a great opportunity to start networking while gaining valuable information.

“Try to find other people in the profession that you are trying to get into,” Watts said. “and reach out them and go, ‘Look, I’m starting out but I’m trying to get a sense of what I should be making right out of the door.’”

Read more: How to Prepare for an Interview

Check Your Credit Score

This is a critical piece of your financial health as you start building up your credit, paying student loans and, eventually, securing lines of credit for major purchases such as a car or your first home.

“It’s key to look at the credit report to make sure you have all your student loans tracked down,” said credit expert Jeanne Kelly, the author of “The Credit Makeover.”

“I have college grads coming to me where they thought they had their loans under control,” she said, “but then there was this one they took out that they forgot about, and they had everything going to their parents address because when they left high school they used their parents address for a lot of the applications.”

Make sure your information is up to date and you have all your loans accounted for. A missed payment could mean a hit to your credit rating, which can take time to rebuild.

Kelly recommends everyone check their credit report at least once a year and check carefully for mistakes.

Set a Budget

This can be a tough task for graduates who aren’t used to having to think about rent, utilities, car payments, loan payments, and other expenses their parents may have taken care of before.

“Embrace technology right from the start by using budgeting programs and apps such as Mint.com,” said Jennifer E. Myers, a certified financial planner and president of SageVest Wealth Management and SageVestKids.com in McLean, Virginia. “The system literally tells you when you’re on track, being good or being bad.”

Budgeting is especially important, Watts said, when you haven’t yet landed that first job, or you have only recently started work. Take just 30 minutes, he said, to review your expenses.

“It’s really important to sit down and have an honest conversation with yourself about, ‘What do I need? How am I spending this money on a month to month basis?’” he said.

That doesn’t mean you can’t enjoy life, Watts and Myers said. Want to go clothes shopping for work? That’s okay, Watts said, within reason. Eating out every night? That’s money you could be saving.

Don’t fall into the keeping up with the Jones trap. Start your career by being yourself and living within a budget you can afford,” Myers said.

Maintain a Healthy Credit Score

Many grads make the mistake of being afraid of credit, Kelly said. In reality, credit is healthy for your financial future as long as you don’t abuse it.

“You’re using the credit card to invest into your credit report,” Kelly said. “You want to show on your credit report not just the student loans, but your credit cards and to show you know how to use them.”

Kelly uses the MyFICO Loan Savings Calculator to show her clients how much a good — or bad — credit score can impact your future loan payments.

As an example, if you take out a 60-month new car loan for $18,000, according to the loan savings calculator, your monthly payment would be $342 if your credit score was between 720-850, which is very good. Your interest rate would land around 4.5% and you’d pay about $1,420 in interest over the life of the loan.

But if you’ve got a lower credit score of between 500-549, that same car loan will cost you $434 per month with a 17.1% interest rate, which means you will pay $5,821 in interest over the lifetime of the loan.

Read more: Budgeting for Short-Term and Long-Term Goals

Start Saving for Retirement

It may seem strange to start thinking about the day you stop working before you’ve had your very first day of work, but the earlier you can start saving for retirement the better off you might be in your golden years.

“It’s not sexy and it’s certainly not something that 22-year-olds think of when they get out of college,” Watts said of retirement planning. “If you have the ability to put 6% of your check away and your company matches a quarter of that, so 1.5%, that’s free money. They’re literally giving you free money.”

While how much you put away will depend on the current state of your finances, there is no denying that the earlier you start saving the longer you have to put money away. If you start at 22 versus waiting until you are 32, that’s an extra 10 years of free money and investment growth.

“The more time you give yourself to build up that nest egg, especially when some of it is free money coming from your employer,” Watts said, “you absolutely have to take advantage of that.”

Sarah Netter is a writer whose work has appeared in The New York Times, The Washington Post and ABC News.

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.