08/30/2012 10:57 am ET Updated Oct 30, 2012

Recent Grads Face the Real World of Money Management

Congratulations on finishing your formal education. Presumably, you now have many of the skills and much of the knowledge you'll need to make money. Unfortunately, despite all those time spent sitting in class, you might not have learned much about managing your money -- skills you will realize you need when your student loan repayments begin or when you need cash for an unexpected car repair or last-minute vacation with friends. I'll share with you some tips to help lay the groundwork for a lifetime of financial well-being.

Weatherproof your finances. Once you land a job and start earning income, start building an emergency fund to cover your expenses in the event you lose your job, need to repair your car or run into some other unexpected financial bind. Aim for having enough set aside to cover three to six months of expenses, but realize that even some cash is better than nothing and will help you avoid overusing credit cards to stay afloat. Keep your emergency fund in a safe account that you'll be able to tap quickly and easily, like a savings account at a bank or a money market mutual fund.

Reap the benefits of your new job. As soon as possible after you start your new position, visit the HR office to learn about and sign up for benefits offered by your employer. In addition to retirement, health care, disability and life insurance coverage, check out any other perks that might save you money, like discounts on a gym membership or wireless plan. Consider putting any money you save on these expenses into your emergency fund.

Decide where you'll live. Think about what your living situation might be for the next few years. Will you live with your parents, with one or more roommates, or by yourself? Living with your parents or a roommate will help you keep costs down, making it easier for you to build an emergency fund, but you might face constraints on your freedom or compatibility issues. Living on your own will probably afford you greater independence, but you'll take on greater expenses, too. There are no right or wrong answers here, but understanding how to make tradeoffs that work for you will help you free up the money to start you on the road to financial freedom.

Start saving for retirement. (Yes, retirement.) It's difficult to think 35 to 40 years into the future when you might be concerned about how you will pay all your monthly living expenses today. But if you start putting even a few dollars per paycheck now into a workplace retirement plan or Individual Retirement Account, you'll get into a habit that will serve you well throughout your working years. In addition to that, you'll give yourself more time to take advantage of the power of compounding: the process in which earnings potentially create more earnings, leading to a snowball effect that fuels the growth of your savings. Believe me -- someday, you will thank yourself for getting an early start on saving for your future. Please note that investing carries some market risk.

Meet your match. Many workplace retirement plans feature an employer match, in which your employer adds to your account balance by matching all or a portion of what you put into the account. If your employer offers you a plan featuring a match, try to contribute at least enough to get the full match. If you can't quite manage that, put as much as you can into the plan, because it's always better to save something and build your nest egg over time than to save nothing. An employer match is free money. And bear in mind that most workplace retirement plans are portable, which means you can take your savings with you when you change jobs.

Know your student loan repayment options. If you left school with student loan debt, gather your loan documents and contact the lender to learn about all your repayment options. A standard repayment plan calls for you to pay a fixed amount every month for 10 years, but there are other options as well. For instance, you can opt to have your payments start out low in the early years but then rise, which is a good plan for grads who may be financially strapped now but expect their income to rise substantially over the next decade or so. You can also pick an extended payment plan, which gives you a longer time period to repay the loan and a lower monthly payment. Or you can request a deferment or forbearance of your loan payments if you're unemployed or otherwise can't make your scheduled payments. However, expect some tradeoffs if you choose any option other than standard repayment. For example, you may pay more total interest over the life of the loan and thus increase your overall cost to borrow.

Live within your means. Each dollar you earn ought to come with a warning label that reads, "Handle with care." Don't spend at levels you can't afford. Find ways to do more with less. Avoid all the stress that would inevitably result from mounting debt and oversize bills by deciding, as soon as you get your first paycheck, what your spending priorities are. For example, which would you rather have: a year's worth of cable TV, or the ability to join your former classmates on a trip to homecoming weekend?

These tips can help you gain a clear vision for your financial future and give you the confidence in your ability to get there.