5 Financial Tips Every Grad Should Know

by the editorial team at Citi |August 1, 2023

You've got your diploma; now, how about some guidance to help you start good money habits? Read on for a wealth of useful info all in one spot.

Illustration of smart money tips for new grads

Want to print this out? Click here.
For a Spanish version, click here.

Smart Money Tips for New Grads

Following this advice in your late teens and early twenties can help set you up for financial success.

Separate Your Needs and Wants Maybe you need a new laptop for school. But do you really need a top-of-the-line gaming computer? Understanding which expenses are unavoidable and which are worth saving for is key to smart money management. Create a savings plan for items that are on your wants list.

Track Your Expenses To boost your savings, download a budgeting app from a trusted source and log what you spend at the end of every day or week. Over time, you may see patterns that can help you decide where to cut back.

Open a Bank Account Once you've saved up some money, you'll want to open an account, or maybe two. Checking account = spending money for everyday expenses. Savings account = money you don't need right away. Separating your day-to-day spending from your long-term savings will keep you organized and on track to meet your goals.

Start a Rainy Day Fund Life is full of surprises, including unexpected bills (think car repairs, broken cell phone). Reserving money in your savings account for emergencies is Adulting 101. Start small and grow your rainy day fund as your earnings and expenses increase. A good goal is to save at least 10% of your earnings, such as graduation or birthday gifts, or part-time employment income.

Understand Debit Cards vs. Credit Cards A debit card is an easy way to pay for stuff directly from your bank account. With a credit card, you can borrow money to pay for purchases until the end of the statement period. You must be at least 18 years old to apply for a card from a credit card issuer, who evaluates your payment history along with other factors; if it's approved, a credit card comes with a spending limit and may have an annual fee and interest. It can be useful for emergencies, but you will owe interest if you don't pay off the full balance on time, and there is a danger of overspending if you aren't careful. However, a credit card can be an important first step in building your credit score.

What's a Credit Score? Your credit score is based on many factors, but one of the most important is your history of paying bills on time. One way to find out your score, if you have one, is through a credit reporting agency that maintains a history of your borrowing and payments. Bad scores lead to higher interest rates and can make it harder to rent an apartment or buy a home. A good score can help you get a better cell phone plan, cheaper car insurance or even a job!

The content reflects the view of the authors of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.

This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.