You've Earned Your Degree - But Can You Handle Your Finances?

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Remembering back to when I graduated from college, there are many things I wish I could go back and tell my younger self. Some are truisms that you can carry through life –- like avoiding debt -- and others are more palpable at the moment –- like hard work trumping your piece of paper.

I knew nothing about managing money when I graduated college and, sadly, I believe I was not alone in that experience. Most graduates -- and there were 2.85 million in 2013 -- are focused on getting a job, moving to wherever that job is and living in the real world -- not financial literacy.

With that in mind, here are four basic financial steps you should take as a newly minted college graduate. If you're still looking for a job, these steps can still be implemented on a smaller scale.

1. Establish a Spending Plan

As a new college graduate you're going to experience a lot of things you've never dealt with before, especially if you're moving to a new location. They include paying rent, dealing with variable expenses, buying groceries and so forth. To best set yourself up for success, you want to plan out this spending. Call it a budget, call it a personal spending plan or something else -- you want to have something to hang your financial hat on.

The first big reason for a personal spending plan is to avoid lifestyle inflation. You will no longer be a poor college student and thus will be tempted to spend more. Avoid overspending as much as possible. The second reason is a plan will help you establish long-term habits that will help as you begin to earn more income. The key to whatever you develop is to be flexible and find something that works for your situation.

2. Set Up a Personal Slush Fund

A slush fund, as I call it, is money designated for buying whatever the heck you want, such as a nice meal or a fun experience.

This might sound a bit contradictory to the first step, but it's for a reason. Lifestyle inflation, especially as a new college graduate, is inevitable on many levels. Having a personal slush fund, as long as you're disciplined with it, will help you stay on track with your finances and still be able to enjoy life. As with many other things, life is about balance, and this will help you achieve that balance.

3. Start Killing Your Debt

The $1 trillion in student loan debt is a staggering number that must be dealt with. The average 2013 college graduate also had $3,000 in credit card debt when they walked across the stage.

Many college graduates avoiding dealing with their debt because it seems so overwhelming. Many also feel that because they might have a low interest rate on their student loans that it's OK not to attack the debt. Avoid these temptations, as they only enslave you to making payments for longer.

First, tackle your debt from a high-interest credit card, since that will save the most money in the long run. If you're not aware of how credit cards work, they're only going to accrue more and more interest until you pay them off, as opposed to giving you a grace period like with most student loans.

4. Start Investing as Soon as You Can

If you've just graduated college, the last thing on your mind is likely going to be investing. This is understandable if you have no experience with it and/or have debt to pay off. However, this is the very time you should start thinking about it, especially once you secure a job.

If your new job offers a 401(k) plan, along with a match, that is the first option you want to pursue. Not only will this help you start saving for retirement, but the match will also provide you free money in doing so. If your employer doesn't provide a 401(k) or doesn't match, then your best option is opening an individual retirement account though an online brokerage. Many brokerages will allow you to open an account for $1,000 or less and allow for automated contributions. I know retirement may seem too far off to even think about starting now, but by starting soon after you graduate from college, you're taking advantage the best way to grow your wealth –- time. By starting now, even in small amounts, you will better be able to position yourself for the future you want.

I know becoming a new college graduate can bring a lot of overwhelming situations. The best thing to do, financially, is to take small steps and personalize what you're doing to lead you to success.

John Schmoll is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting, and frugal living. John is a father, husband, and veteran of the financial services industry who's passionate about helping people find freedom through frugality. He also writes about wise ways to manage your money at

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Oh, another thing, the school didn't teach you how to pay back the loan without a job, that's where the trouble begins.

May 24 2014 at 9:11 PM Report abuse rate up rate down Reply

Thansk for the financial illiteracy. Students will be in debt to the banksters for their diplomas for life

May 24 2014 at 2:25 PM Report abuse rate up rate down Reply

Why can't our kids have a free or almost free University education like France??

May 24 2014 at 10:11 AM Report abuse -1 rate up rate down Reply
1 reply to's comment

Because America has no third aprty, no unions to fight for them, no mobilizations and no student unions. Until there is resistance generations will be lost

May 24 2014 at 2:26 PM Report abuse +1 rate up rate down Reply

Why are thousands of kids graduating in debt! This is ridiculous! Why are the interest rates so high! This has just become another big business,who cares about education in the USA! We are just going to become a 3rd rate country going downhill faster and faster!

May 24 2014 at 10:06 AM Report abuse -1 rate up rate down Reply
1 reply to's comment

Education has been financialized under capitalism. It's all about predatory lending again.

May 24 2014 at 2:26 PM Report abuse -1 rate up rate down Reply

"Establish a spending plan" LMAO better get a refund on that education.

Establish a savings plan.

Everyone listen up, if your fresh out of high school or college, education or not, CEO or hamburger flipper it does not matter, nature has done you one favor - provided you with time. If you start saving in your teens or twenties you can become a millionaire in your lifetime. You can even make a few mistakes and start over and still achieve financial success because time is on your side.

You only need 2 things:
1. Someone smart enough to know and tell you which I just did.

2. You need to listen and start saving.

It's that simple.......................

Listen to that other guy who LMAO told you to a spending strategy and your doomed.

May 23 2014 at 9:51 PM Report abuse +2 rate up rate down Reply
1 reply to militiaman2013's comment

Yes, work three jobs and save and study during the wee hours of the morning. Thanks for the sage advice. Americans have a negative saving rate. Google it. Americans are broke

May 24 2014 at 2:28 PM Report abuse -1 rate up rate down Reply

Start saving. Don't worry about investing right away. The will come in a few years. More important to save.

May 23 2014 at 6:28 PM Report abuse rate up rate down Reply
1 reply to steinfam's comment

Yes, save your advice for the idiots who will listen. There are no jobs and there is no savings.

May 24 2014 at 2:28 PM Report abuse rate up rate down Reply


May 23 2014 at 4:45 PM Report abuse -3 rate up rate down Reply
2 replies to texastotenmom's comment

Who was in charge of the thousands of Americans with no arms and legs from the last 2 wars and who killed 400,000 women and children in foreign countries while their terrorists run free in Boston and around the World?

Answer: George Bush and Dick Cheney the 2 biggest POS terrorists on the planet.

May 23 2014 at 9:54 PM Report abuse +1 rate up rate down Reply
1 reply to militiaman2013's comment

Jeb will be your next president. War will come again soon, big time. Has too. Look at all the unemployed Americans. War will use them as cannon fodder, the corporate news will sell it and the politicians will represent it

May 24 2014 at 2:30 PM Report abuse -1 rate up rate down

Another reactionary idiot posting. Please, play military video games, drink diet coke and do not forget to take your prozac

May 24 2014 at 2:29 PM Report abuse rate up rate down Reply