The Three-Step Financial Checklist Every College Grad Needs

When it comes to personal finances, the summer after graduating college is daunting. After the rush of graduation starts to fade, reality sets in. Your newfound financial independence means freedom, but it also means responsibility—not to mention uncertainty. You’re in a financial stage somewhere between having a checking account and having a 401(k). Some of your friends may be starting new jobs with six-figure salaries, while others are backpacking on a barebones budget. So, what’s the next stop on your financial journey?

To make sense of this stressful—but hopeful!—time, let’s take a look at three essential steps every fresh college graduate should take right now.

Make a plan for student loan payments

Since you just graduated, you might be in a sweet six-month grace period before you need to start paying back those student loans. Sit down and figure out how much you have in federal loans vs. private loans, compare the interest rates, and make a plan of action for how to best pay these off.

Start taking steps now to get your repayment plan in order. To find your loan amount and providers, go to studentaid.gov. (Note: This is not the same portal you may typically use to make student loan payments, e.g., through a servicer like Sallie Mae.) After logging in, select “My Aid” in the dropdown menu under your name. Your loan servicer(s) should appear in that section. Clicking on “Loan Breakdown” will show you a list of the loans you received, including loans you have paid off or consolidated into a new loan.

And if you’re (understandably) tempted to just say “fuck it,” here’s what happens if you don’t pay back your student loans at all.

Build an emergency fund

Even with student debt on the brain, you should still prioritize saving. Perhaps you haven’t quite landed a stable job with a 401(k) just yet. In the meantime, your focus should be building out your emergency fund.

A recap on what exactly constitutes an “emergency fund,” as opposed to other savings vehicles: Your emergency fund is the cash reserve set aside for unplanned expenses or financial hardship, like job loss, medical emergencies, or suddenly urgent car or home repairs.

How much should you aim to save? As we’ve previously advised, the typical rule of thumb is to shoot for six months’ worth of living expenses in your emergency fund. This includes expenses like housing, food, utilities, insurance, transportation, and debt payments. Non-essential expenses like vacations, entertainment, or dining out don’t belong in your “emergency” calculations.

If you haven’t already, make a list of all the things you spend money on, and consider which non-essential expenses could go to your emergency fund instead.

Build your credit

A good credit history will make it easier for you to rent your first apartment, land better interest rates, and save thousands of dollars throughout your life.

If you had a student credit card throughout college, contact your card provider and inform them that you’re no longer a student. They may allow you to continue using the same card or offer an upgrade.

And if you went through college without a credit card, open a basic one ASAP. Remember that while your goal is to go into a little debt to build up your credit history, you should never spend money you can’t afford to pay off at the end of the month. Read up on the basics of boosting a low credit score, maintaining a high one, even building credit without a credit card.

For more, check out this guide to personal finance for the recent college grad.