college graduateIt’s May, which means soon college seniors across the country will be transitioning from college life to adulthood. They will be going from managing units and grades to managing student loan debt and income. To help you make this transition easier, we’re detailing what a soon-to-be college graduate should know in order to start their post-college financial life on the right foot.

Good credit is essential

As you may have already heard, credit reports are the “report card” of real life, and if you have good marks on your credit reports, you will have good credit scores — the “final grades” of financial life. These scores help determine a lot of things about your financial life and otherwise, including whether you’ll get approved for a loan or credit card, if you’ll be able to get an apartment, your ability to get insurance, a cell phone, utility services and so much more. This means that you’ll need to take your credit seriously in your post-grad life.

To start, you’ll want to make sure you check your credit reports, as you can’t know where your credit stands if you never check it. Our guide to checking your credit reports details how you can do this. It’s also important to note that while the government provides you with access to all three (Experian, TransUnion and Equifax) of your credit reports for free through AnnualCreditReport.com, you will have to pay a fee to view each of your credit scores. If you’re looking for a free way to check them, you may want to consider signing up for a credit monitoring service that offers a free trial, as you can always cancel the service before the trial runs up; although you should know that credit monitoring services are handy to have because they allow you to keep tabs on your credit, which means you can track your growth, and be in the know if something is changed or added to your credit reports — a good defense against identity theft.

After you know where your credit stands, you’ll want to make sure that you’re building and maintaining good credit, so you can boost your financial GPA. There are dozens of ways to build credit, but one of the most common ways to do it is with a credit card. Although credit card debt is something many adults face and something you should be aware of, it can be avoided if you use credit cards responsibly. For example, by only using a credit card to cover expenses you can already afford, like your groceries, then paying off the balance every month, you can be sure that you’re not accruing debt for expenses you can’t completely pay off, which will jeopardize your credit and potentially your overall financial health. It’s only when you use a credit card in this irresponsible manner do you need to fear it, otherwise, you can consider credit cards the starting point of credit building. Visit our guide to the best credit cards for 20-somethings to find the right card for you.

Budgeting and saving go hand-in-hand

Budgeting and saving are probably things that you know you should do, but aren’t completely sure where to begin. Since you can’t start saving if you’re not budgeting, we’ll start by explaining how to budget. First, you’ll want to make a list of everything you are currently financially responsible for, including your rent, utilities bills, student loan payments, health insurance, Netflix account, etc. Something to note is that you may be on the hook for your auto insurance. If you’re moving out and/or you own a car that’s in your name, it’s likely that you’ll lose coverage under your parents’ plan after you graduate. Although there is no hard date by which children are cut from their parents’ policy, once a child moves away from home or has a car in their name, most auto insurance companies require them to get their own policy, which means you’ll want to check with your insurance provider to see if you need to get your own plan. Once you have a list of everything you’re financially responsible for, you should apply your salary to this amount and see how much you’re actually spending. When you have a general idea of how much you’re spending, you’ll want to not only determine how much you can save every month, but also see if you can cut back on any of your expenses — and save even more. It’s important to remember that adjusting your budget is not a one-time deal, as it should be seen as a living document that can change at any time.

After you determine how much you can save, you’ll want to make sure you have a place to set aside this money so you don’t mix it up with your other funds. This means you’ll want to open a savings account. While many individuals use traditional brick-and-mortar banks for this purpose, another option that’s growing in popularity is online savings accounts, which usually offer more competitive interest rates and fewer fees because they don’t have to pay the same costs as brick-and-mortar banks. There are many criteria that can help you make the decision about which online savings accounts work for you, but ultimately the choice comes down to your own needs and preferences.

Understanding credit and building solid budgeting and saving skills are keys to help you start off your post-grad life on the right foot. Keep reading our personal finance blog to learn more about credit, savings accounts, credit cards and more.