Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or tax advice. Consult a licensed professional for personalized guidance. The information provided is general and does not account for individual circumstances. FinFinancial LLC does not endorse specific financial strategies or outcomes.

The transition from college to career brings both excitement and financial responsibilities. And right now, many new graduates are feeling the weight of those responsibilities more than ever. According to recent data, 60% of 2024 graduates feel somewhat or very pessimistic about their economic future—a significant jump from 46% just last year.

But here's something interesting: While 56% of Americans think college costs have gotten out of control, many still see higher education as key to success. In fact, 65% consider a successful career part of the American dream.

Let's talk about how to turn that dream into reality with smart money moves right from the start.

1. Create a Budget

Money management becomes much more real when you're handling your first full-time paycheck. A good budget is your foundation for financial success, and there's a reason for that. According to research, students with high debt levels often struggle with financial literacy, making budgeting skills more important than ever.

Here's how to set up a budget that actually works:

Start with the 50/30/20 rule:

• 50% for needs (housing, groceries, bills)

• 30% for wants (entertainment, dining out)

• 20% for savings and debt repayment

When setting your budget, keep this in mind: The average starting salary for 2023 graduates was $55,911. But many students expect much more—about $72,580 on average. It's good to be realistic when planning your budget around your actual income. 

Pro tip: consider choosing a different place to live. Some of the most affordable cities in the US are Springfield, IL or Green Bay, WI. Housing, groceries, goods and services (clothing, entertainment, etc.) are prices less in those cities (e.g., in Green Bay groceries are 15% cheaper compared to national average). Saving on basic expenses would allow one to save way more for the future.

2. Build an Emergency Fund

Having money set aside for emergencies isn't just good advice—it's essential. Recent data shows why: 27% of Americans have no emergency savings at all. For Gen Z (ages 18-27), that number is 29%.

Here's how to build your emergency fund:

• Start with a goal of one month's expenses

• Work up to 3-6 months over time

• Set up automatic transfers on payday

• Keep this money in a separate savings account

• Start small if you need to—even $25 per paycheck adds up

Any emergency fund is better than none. The goal is to avoid going into debt when unexpected expenses come up.

3. Prepare for Taxes

Getting your tax strategy right from your first paycheck makes a real difference in your financial health. As a new graduate, the tax system might seem complicated, but taking a few key steps early on can save you stress and money later.

Start by carefully reviewing your W-4 form - this is what determines how much tax gets withheld from each paycheck. Many new graduates actually end up owing money at tax time because they didn't have enough withheld throughout the year. The IRS withholding calculator can help you get these numbers right, and you can always update your W-4 if your situation changes.

If you're doing any freelance work alongside your main job, you'll need to be extra careful with taxes. Setting aside about 25-30% of that income is a good rule of thumb. Keeping detailed records of your income and expenses becomes really important here - good documentation will help you claim all the deductions you're entitled to.

Speaking of deductions, there are several that new graduates should know about. Your job search expenses might be deductible, and don't forget about student loan interest. Work-related purchases and traditional IRA contributions can also help reduce your tax bill. Just remember to keep good records of everything - future you will be thankful when tax season rolls around.

4. Get Health Insurance

Healthcare decisions might not seem urgent when you're young and healthy, but the right insurance coverage is actually one of your most important financial safeguards. Recent data shows a sobering reality: 41% of working-age adults who put off medical care due to costs saw their health problems worsen. That's not a position you want to find yourself in.

Most new graduates have several options for health insurance. If your employer offers coverage, that's usually your most affordable choice. The monthly premiums are often lower because your employer helps pay for the coverage. You might also have the option to stay on your parent's insurance plan until you turn 26, which can be a good bridge while you're getting established in your career. If neither of these options works for you, the Healthcare Marketplace offers plans with different levels of coverage and costs.

When choosing a plan, you'll want to think about more than just the monthly premium. Consider how much you'll pay out of pocket when you actually need care - this includes things like deductibles and copays. Also think about whether your regular medications are covered and if your preferred doctors are in the plan's network. These factors can make a big difference in your actual healthcare costs throughout the year.

5. Start Repaying Your Student Loans

The numbers around student debt can feel overwhelming. Total student loan debt in America now stands at $1.61 trillion, with the average balance hitting $38,005. But don't let these big numbers discourage you - having a solid repayment strategy can make your student loans manageable.

Your first step should be understanding exactly what you owe. Gather information about all your loans, including who services them, what the interest rates are, and when your grace period ends. Knowing which loans are federal and which are private is really important because they come with different repayment options and protections.

Federal loans offer several repayment plans to fit different situations. The standard 10-year plan often comes with the highest monthly payments but gets you out of debt fastest and costs less in interest over time. If those payments feel too high right now, income-driven repayment plans can make your monthly payments more affordable by tying them to your income level. Some graduates also consider graduated plans if they expect their income to increase significantly over time.

One simple way to save money on your loans is to set up automatic payments. Some lenders could offer interest rate discounts when using autopay, however, conditions and amounts may vary. And if you can, paying extra on your highest-interest loans will help you save money over time. Some graduates with good credit and stable income might benefit from refinancing their loans to get a lower interest rate, though be careful with federal loans - refinancing them means losing access to income-driven repayment options and other federal benefits.

6. Start Saving for Retirement

Starting to save for retirement right after graduation might feel strange when you're focused on your first job, but the timing actually works in your favor. And right now, there's room for improvement in how young professionals handle retirement savings. According to recent research, only one in five Gen Zers are setting aside money for retirement at all.

Many young professionals keep their money in basic savings accounts because they're unsure where to start with investing. While 61% rely on their parents for financial guidance, this might actually limit their knowledge about investment options.

If your employer offers a 401(k), signing up should be one of your first moves at your new job. About two-thirds of Gen Z retirement savers use 401(k)s, and with good reason. These accounts offer tax benefits and often come with employer matching contributions. Even a small contribution from each paycheck can grow significantly over time through compound interest.

For those without access to a 401(k), opening a Roth IRA makes a lot of sense. The money you contribute has already been taxed, and your investments grow tax-free. Start with whatever amount feels comfortable — even $50 a month adds up over time. As your income grows, try to increase your contributions. Many financial advisors suggest working toward saving 10-15% of your income for retirement.  The earlier you start, the less you’ll need to contribute later to meet your goals.

Speaking for retirement, check out our post on how to manage your 401 (k) if you’re in tech.

7. Monitor Your Credit Score

Your credit score will affect your financial options for years to come, from renting apartments to getting better rates on loans. The good news? Young borrowers are showing some smart credit habits. The average FICO score for Gen Z is 680, and it's been trending upward.

Recent data shows some encouraging trends. Gen Z borrowers have reduced their credit utilization by 6% year over year, leading to a 13-point increase in average credit scores. This improvement comes from two main factors: carrying lower credit card balances and being mindful about available credit.

You can check your score for free through services like Credit Karma or your credit card provider. And to build and maintain a strong credit score, make all your payments on time — this carries the most weight in credit scoring. Keep your credit card balances well below their limits, aiming for 30% or less of your available credit. When you're just starting out, resist the temptation to open multiple new credit accounts at once. Each application can temporarily lower your score.

If your score isn’t where you want it to be, don’t panic. Building good credit takes time, but consistent, responsible habits can make a big difference.

8. Plan for Housing Costs

The housing landscape for young professionals looks different than it did for previous generations. Surprisingly, 27.8% of 24-year-old Gen Zers own homes — higher than both Millennials and Gen Xers at the same age. And many more want to join them, with 65% of Gen Zers hoping to become homeowners within five years.

Whether you're planning to rent or buy, being strategic about housing costs makes a big difference in your overall financial health. For renters, the traditional advice of keeping housing costs under 30% of your monthly income still works well. This includes rent, utilities, and renter's insurance. Consider sharing housing costs with roommates in the beginning — it can help you save for a down payment if homeownership is your goal.

If you're thinking about buying, there are more paths to homeownership than you might realize. Many young buyers use FHA loans, which need smaller down payments and work with lower credit scores than conventional mortgages. Down payment assistance programs and first-time homebuyer grants can also make homeownership more accessible. Some creative approaches are gaining popularity too — about 70% of Gen Zers would consider co-buying with friends to make homeownership more affordable.

Keep in mind that you need to factor in all the costs beyond the monthly payment. For renters, this means security deposits and moving expenses. For buyers, you'll need to plan for down payments, closing costs, maintenance, and repairs. Building these costs into your budget early helps prevent financial stress later on.

9. Seek Professional Advice

Sometimes, it makes sense to ask for help, especially if you’re a fresh graduate who has just secured your first job. 

After all, seeking advice isn’t a sign of weakness. Rather, it shows that you’re serious about building a secure future.

A financial advisor can guide you in managing your money, creating a long-term plan, and investing from a point of information.

That said, you want to make sure you’re getting advice from an experienced professional. That’s why you might consider leveraging a platform like FINNY to connect with an advisor who has experience advising newly employed graduates.

FINNY aims to pair you with an experienced financial advisor who can help guide you through your financial journey.

The Bottom Line

Managing your finances as a fresh graduate is less about perfection and more about creating a foundation that supports your long-term goals. 

It starts with understanding your priorities: budgeting wisely, saving for unexpected events and planning for the future. 

If navigating this feels overwhelming, services like FINNY can connect you with financial advisors who might provide guidance according to your unique circumstances.

Remember, financial health is a journey, not a sprint. 

Book a demo below to learn more about FINNY and how it might help you get the right financial advice.  Booking a demo provides an opportunity to learn about FINNY’s tools. It does not constitute financial advice or an obligation to use our services.

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