You recently graduated from college – you have your shiny new degree, a great job and are ready to tackle the world.  Congratulations!  Now is the perfect time to think about the best way to manage your newfound income.  Maybe you’re living on your own and need help navigating your expenses. Perhaps you’d like to plan for a well-deserved vacation.  Maybe you’re wondering when you should start saving for retirement. And what about those student loans… Here are four tips for handling your cash flow’s competing interests:

  1. Create a Budget – You can think of this as expense management, allocating your income to different expense types.  Some expenses will be fixed, such as your rent, student loan payments and phone bill. Others are variable, to be enjoyed now, such as eating out, entertainment and clothes. Finally you have a portion allocated for saving towards maybe a vacation or new furniture.  By creating a budget you can plan for your monthly expenses and monitor your spending. is a great free resource; it electronically tracks your bank accounts and log expenses.
  2. Save for an Emergency – It’s not as much fun as saving for a vacation, but you never know when an unforeseen expense may crop up. Your car may need service, or an emergency trip to the doctor’s office could result in a high medical bill. It’s important to have an emergency fund set aside to cover these unexpected expenses. We recommend allocating a portion of your monthly budget to funding your emergency fund.
  3. Pay Your Student Loans – While the balance may seem daunting, it is crucial to stay current on your student loans.  Otherwise, you’ll find the interest will continue building, increasing the amount you owe overall.  Start by taking an inventory your loans, separating private from federal.  Review the federal loan repayment options on, and determine if loan consolidation makes sense based on your situation. Above all, ensure that you’ve included your student loan payments in your monthly budget.If you plan on paying more than the monthly required minimum amount, it may be best to allocate the extra payment towards the loan with the highest interest rate first.
  4. Save for Retirement – Really?  Yes, really!  It may be 40 or 50 years away – but time is on your side when saving!  By saving for retirement at a young age, you will have the benefit of years of compound interest on investment returns.   For example, if you put $2,000 away per year for just 15 years, your $30,000 investment will grow to $210,000 in 40 years, assuming a 6% return.  Alternatively, if you wait 15 years to start saving but save for 10 more years, your $50,000 total investment will only grow to $116,000 in 40 years, also assuming a 6% return.   Compounding means that $30,000 of savings started early will be worth 81% more than $50,000 of savings started later! If you’re eligible to participate in your employer’s retirement plan you can save a portion of your paycheck directly on a tax deferred basis. Your employer may match (up to a certain limit) any funds you contribute. An employer match is essentially free money – so make sure you are contributing enough to receive the full match!