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By Jill Schlesinger
May 10, 2016

As college graduations start wrapping up, it’s time to give the class of 2016 a postgraduate financial boot camp.

Your first priority, if you are a new grad, is to assess where you stand. Create a two-column list, writing down what you own (assets) on one side, and what you owe (liabilities) on the other. On the liability side, break down the type of debt you’re carrying (credit car, auto, student loan) and the interest that you are paying.

At this point, you probably owe more than you own — so your next step is to create a plan to pay it down. Start by paying off the highest interest loans (usually credit card and autos), and then work your way down to the lower interest ones. If you are among the nearly 70% of 2016 graduates with student loans AND you have separate consumer debt, pay the minimal amount on your student loans while you whittle down your consumer debt. If your only debt is a student loan, though, feel free to make extra payments to accelerate your payoff time. (The average student borrower takes about 20 years to repay his or her loans. Don’t be average.)

Track your spending to understand how much money you can allocate toward paying down debt. Take advantage of apps like Mint, You Need a Budget, Digit, or Level Money: They can help you understand what you’re spending and where you can save.

In addition to paying off loans, you also want to set aside a little bit of money each month to establish an emergency reserve fund; eventually you’ll want to have six to 12 months’ worth of expenses. Find an interest-bearing savings account, and use this as well to accumulate money for near-term financial goals: a car, your first and last months of rent for a move, or any funds that you plan to access within the next year.

Many recent grads ask whether they should save for retirement or pay down debt. The answer is: a little of both. If your company matches your retirement contribution, then save at least up to the matching level. But even if your employer doesn’t match, it’s still good to get into the habit of saving for the long term, even if it’s a small amount. While your income and tax bracket are still low, it’s smart to put that money in a Roth IRA. If you’re young, single, and making less than $117,000, you can contribute a maximum of $5,500 to retirement accounts in 2016.

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

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