A New Graduate's Guide to a Better Financial Life

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Millions of Americans are expected to walk across the stage in college graduation ceremonies this summer.

Once the photos are taken, the loved ones are thanked, and the dorm rooms are cleared, these newly minted graduates will be expected to be productive citizens in the "real world." Unfortunately, many lack basic financial knowledge to thrive after graduation.

When the newly minted graduates pick up their degrees this year, many will not have taken a class on basic financial management. And it shows. The "Money Matters on Campus" report, which surveyed more than 89,000 college students each year between 2012 and 2015, has found "significant decreases over time in nearly all of the responsible fiscal actions that students might take." What does this mean? College graduates often aren't performing many basic money management activities, such as following a budget, paying credit card bills on time, and building an emergency fund.

It's unlikely that new grads can afford professional financial advice when they're starting out, so here's some quick advice from financial planners to help grads hit the ground running:

Get organized. 

"Create a spending plan—I hate the word budget, reminds me of the word diet—know where your money is going and be a conscious spender," says Ed Gjertsen II, a certified financial planner in Northfield, Illinois, and the chairman of the Financial Planning Association. Many great mobile apps—including Buxfer, Mint and Personal Capital—can help grads stick to a spending plan. These apps track all spending and savings across multiple accounts in one place, which automatically categorizes transactions and organizes expenses into charts and graphs to help users identify spending trends.

Review your student loans. 

The average college graduate will leave school with $35,000 in student loans. "Know everything about your loans: private versus government, fixed interest rate versus variable interest rate, consolidation options versus refinancing options," says Austin Lewis, a certified financial planner in Fort Worth, Texas. "You can save thousands by knowing this information early." In fact, at CommonBond, you could save thousands over the life of your loan by refinancing. Fortunately, new graduates have some time to review their student loan refinancing options. Borrowers with federal student loans have a six-month grace period before they have to begin repaying their loans. Graduates can refinance before the grace period on their federal student loans ends and a handful of lenders, including CommonBond, will honor the grace period so that borrowers can refinance to a better rate and still wait to begin repayments. Check out CommonBond's guide to learn more about how student refinancing may lower monthly payments and reduce interest rates on student loans.

Prepare for the unexpected. 

"Start a savings account earmarked as emergency reserves," says Juli Erhart-Graves, a certified financial planner in Indianapolis. "This account would be a source of funds in the event of a job loss or medical disability that prevents you from earning income." Most financial planners recommend having three to six months of living expenses in a savings account for emergencies. Go to Bankrate to find savings accounts that earn a higher than average rate of return.

Put your spending and savings on automatic. 

"The best advice [for grads] comes from my grandfather: 'Spend what you have to, save what you can,'" says Michael Resnick, a financial planner in Deerfield, Illinois. One easy way to do that, Resnick says, is to set up automatic payments for bills and automatic contributions for savings and investment accounts. Some companies will even give a discount if customers pay directly from their bank accounts. For example, CommonBond offers a 0.25% discount if borrowers sign up for autopay.

Invest early and often. 

"Participate in your employer's [retirement] plan as soon as you are eligible," Erhart-Graves says. This is especially important if an employer offers matching contributions. One in four employees don't contribute enough to their retirement plans to earn the full match, missing out on more than $1,300 each year. Investing in your 20s can give you greater peace of mind in your 30s and beyond because more time in the market means investment returns compound longer. Take this scenario: A 25-year-old and a 35-year-old each invest $200 monthly into a retirement account that earns 7% annually. If they both retire 65, the person who started investing at age 25 will have more than $479,000 in the account and person who started at age 35 will have less than $227,000. That extra decade of investing more than doubled the nest egg for the retirement saver who started at 25.

The real world isn't like college. But it doesn't have to be a drag if graduates take steps to secure their financial future.

A version of this article was originally published in Forbes.com.

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