College may soon be over for the class of 2014, but real-world decisions about career, location and how to manage your money is right around the corner. Establish smart money habits now that will set you up for personal financial success down the road.
Here are five money lessons for 2014 college graduates:
1. Money doesn't grow on trees. Money management can be complicated and doesn't come naturally to everyone. Luckily, there are easy-to-use online tools that can help you get accustomed to monitoring your finances. Many automatically categorize your debit and credit card transactions, meaning you can see how much you've spent on groceries, entertainment or nights out on the town, at a glance. You can also set up budgets so you're not spending more than you're earning; you'll get notifications every time you're close to reaching how much you've allocated for the month.
2. Live within your means. For you lucky ones that landed a job right out of school, this might be the first time you're regularly taking home a sizable paycheck. It's easy to look at this influx of cash as an endless resource to spend on the beautiful apartment you've always wanted, fancy dinners or a new wardrobe. Keep in mind, rent, utilities, phone bills and other day-to-day necessities aren't cheap. Ignore temptation, and make a conscious effort to live within your means. It's a habit that will keep you out of debt and give you the freedom to start putting money away toward an emergency fund or retirement. A great way to get started is to set up conservative budgets within your favorite personal finance tool, or establish automatic transfers each month from your checking to savings account. You'll thank yourself later if you need to dip into your savings for a one-time expense you hadn't planned.
3. Pay off student loans. Student debt continues to spiral, and many will graduate with tens of thousands of dollars in loans or grants. The National Conference of State Legislatures estimates 60 percent of this year's graduates (more than 1 million) will leave school owing an average of $26,500 in student loans. While it may be tempting to pay the minimum monthly payment, be proactive and start a more aggressive repayment plan as soon as possible. The sooner you pay off your loans, the sooner you'll have additional income you can dedicate to savings, retirement or investments.
4. Stash away the retirement cash. While retirement may feel like a lifetime away, it is never too early to start saving. The key to creating (and maintaining) a savings plan is to start with an attainable dollar figure that you stash away each month. When that starts to feel comfortable, challenge yourself to increase your contribution. You'll be surprised how much you're able to set aside in a relatively short period of time. If your employer offers a 401(k) plan and matches your contributions to it, take advantage of it. Company matches are essentially free money that you'd otherwise never receive.
5. Be wise with credit cards. If you can't pay cash for it, you shouldn't be buying it. That's a good rule of thumb when you're getting a handle on your personal finances. While credit cards are great for convenience and emergency situations, be wary of using them for big-ticket items that will result in a running balance and rack up debt. Instead, use the plastic cautiously, and aim to pay off credit cards every month. This will help you build a strong credit profile that, in turn, will make it easier to apply for a car loan, rent an apartment or even purchase your first home down the road.
Congratulations class of 2014! The pomp and circumstance of college will soon be a memory, but smart money choices will stay with you for a lifetime.
Holly Perez is a consumer money expert at Intuit and mint.com spokeswoman, a leading Web and mobile money management tool that helps people understand and do more with their money.
More From US News & World Report