Welcome to the Real World: A Guide for Money Newbies

Here's what you need to know about personal finance after graduation.

For many young people, college graduation marks the beginning of a new phase in their lives: Financial adulthood. This is the time when many twenty-somethings move into their own apartment, get their first full-time job, start managing a monthly budget, and even begin saving for retirement.

It’s a lot to take in all at once, which is why we’ve put together this guide. Here’s what you need to know about jobs, debt, bank accounts, and other fundamentals of managing your financial life.

Getting a Job

This is the logical place to start, because a steady source of income is the basis upon which your whole financial life rests. Income allows you to pay the rent, put food on the table, and start saving. Additionally, a full-time job often provides benefits crucial to your financial well-being, chief among them discounted health insurance and a retirement plan.

Most people find that their first job is the hardest one to get, and for good reason: You likely have little in the way of real work experience on your resume, and many companies are reluctant to take a chance on someone who’s never held a full-time job for longer than a summer. That’s why it’s essential to know the basics of building a resume, writing a cover letter, and conducting yourself professionally at a job interview.

A full-time job isn’t the only way to secure an income, though. A growing slice of the workforce now participates in the so-called Gig Economy, choosing to cobble together an income through a variety of freelance gigs and part-time jobs.

You likely won’t get health insurance or other benefits if you go this route, but it does allow you to start earning money and getting life experience without the benefit of a robust work history.

Renting an Apartment

You need a roof over your head, and assuming you can't afford a down payment on a home right out of college, you'll probably start off renting an apartment.

That means signing a legal contract—a lease—and being responsible for paying rent on a regular basis. It’s crucial to learn all about lease terms, credit requirements, and security deposits.

Paying Off Debt

Someone once said that college is viewed as a necessity, but priced as a luxury. The unfortunate result: Millions of students have no choice but to take out significant student loans at a young age so that they can acquire the college degree they need to make it in the workforce.

If you’re among them, then you’re entering the real world already saddled with debt. While federal student loans come with a six-month, post-graduation “grace period” before you have to start paying them off, those six months will go by quicker than you think. One of the first big financial goals you’ll need to tackle will be paying off those loans.

There are a number of strategies that will help you do it. And there are also ways to minimize your monthly payments, set a payment schedule that works for you, or even get your student loans partially or fully forgiven.

Banking, Credit, and Budgeting

A bank account is a must. A checking account gives you a place to deposit your paycheck and access your money with ease; a savings account is a good place to park your long-term savings and emergency fund.

While any good checking account will come with a debit card—allowing you to pay with a swipe at most merchants—you’ll probably also want to get a credit card. Many financial newbies are put off by credit cards, knowing that they can be a path to even more debt. But used correctly, they can provide all sorts of benefits, not the least of which is helping to build your credit score.

This score is one of the most important aspects of your financial life, and a good credit score will give you access to rewards credit cards, auto loans, and an affordable mortgage. Knowing how to build and maintain this score is a must.

Finally, there’s your budget. A budget is how you keep it all together—how you take that starting salary and use it to pay your rent and other expenses without running out of money.

There are countless methods for putting together a budget, and all sorts of apps and software programs—many of them free!—that will do the work for you.

But putting together a budget is the easy part. The hard part is sticking to it, and that requires a degree of financial discipline and mindfulness that you might not have needed until now. The goal, now and throughout your life, will be to not only live within your means, but to have enough left over at the end of every month to save toward your short- and long-term goals.

Housing, employment, budgeting, banking, credit, and debt: These are essential elements of your financial life that you’ll need to get a handle on. Unfortunately, most people enter adulthood having never received any formal education on these essentials. Use this guide—and the table of contents on the left-hand side of the page—to get a grip on the basics of personal finance, and take control of your financial life.

Welcome to the real world!