Editor’s Note: This article is a part of a series on investing advice for recent college graduates, drawing on expertise from financial professionals, university faculty and of course, InvestorPlace’s very own analysts and writers. Read more “Money Moves for Recent Grads” here and check out Top Grad Stocks 2021 for our best stocks to buy for new graduates.

When the caps and gowns are unceremoniously stashed away in closet corners and the confetti has been swept up in stadiums and auditoriums around the country, well, that’s when people stop caring that you graduated.

Sure, they’ll still congratulate you for a few weeks yet. But you know the truth better than anyone. And the truth is, now that you’re done with school, all anyone wants to know is what you’re doing next. Where are you going to live? Have you found a job? Do you know how to manage your money? When are you going to give us some grandbabies?

We can’t tell you where you should live, and we definitely can’t help you explain your love life to your family. But when it comes to advice on acing job interviews, understanding retirement funds and health insurance, refinancing student loans or properly balancing your first portfolio, InvestorPlace has you covered.

Of course, there’s more that recent graduates need to know: how to manage their student debt; learning to budget and reduce expenses; how to resist the temptation of high-risk assets and stick to a financial plan.

Getting a handle on your finances straight out of school isn’t easy, but it’s one of the most important things new graduates can do. Let’s dive in.

First Things First…

There are two things new graduates simply can’t afford to put off. Speaking with InvestorPlace via email,  Splash Financial CEO Steven Muszynski had this to say:

“The first thing new graduates should do to set them up for financial success is to put together a budget. Knowing how much money comes in and what goes out is fundamental to making smart financial decisions.”

If you’re anything like me, figuring out your budget probably feels a bit like guessing how many jellybeans are in a jar. But as University of Maryland Professor Elinda Kiss told InvestorPlace last year, it might not be fun, but “it is important to start and stick to a budget.” She went on to say:

“You can download a personal finance app on your phone (e.g., Mint.com) to track your spending and account balances. You need to understand your living expenses from utilities to rent to transportation; you will face some monthly expenses that previously were negligible or nonexistent. This will be a large portion of your monthly budget.”

And of course, one of those new monthly expenses will be student loan repayments. That’s the other thing new graduates need to handle first and foremost.

InvestorPlace’s own Moonshot Investor Thomas Yeung points out that, “New grads tend to have student debt, so my #1 bit of advice is to pay it down, especially if you have anything over 6% interest.”

Spend Less Than You Make

It sounds like a no-brainer, but anyone who’s ever owned a credit card knows it can be easier said than done. And again and again, financial experts emphasized the importance of living within, ideally below, your means.

Take it from Amanda Gutierrez, a Financial Planning Consultant at eMoney Advisor: “It sounds simple, but the financial habits you instill early will carry you far toward achieving financial security.”

Michigan State University Professor Stephen Schiestel likewise urges new graduates to “live below their means” and pay themselves first by saving.

Lehigh University Associate Professor of Finance Jesus Salas advises that “a graduate’s rent should be no more than a third of [their] gross salary,” while University of San Diego Assistant Professor of Finance Joshua Della Vedova puts it in blunter terms: “you can be functionally poor earning $50,000 per year or $500,000 per year.”

It’s Never Too Early to Think About Retirement

When it comes to saving for the future, it’s never too early for new graduates to get started. Gutierrez says, “invest as soon as your budget allows because the power of compound interest is on your side… Start where you can and increase contributions each year as you make more money.”

InvestorPlace contributor Melissa Brock echoes that sentiment about compound interest:

“As you get out into the real world and begin paying more of your own bills, you might feel like you don’t have the money to spare for investing… But you still should focus on your financial future as soon as you can because of compounding. The longer you let interest compound on your investments, the sooner you’ll become a millionaire.”

Professor Della Vedova says new graduates “should consider themselves and their jobs as part of their portfolio,” and invest accordingly; those with more variable income will benefit from more stable investments, and those with more stable income should invest in higher risk/reward equities.

The general consensus is that new graduates should aim to put 15% of their salary into their retirement fund, though they may have to start with a lower percentage and build up from there.

How Risky Is Too Risky?

If your 2021 has been anything like ours, then you probably know someone who made money off the short squeezes in GameStop (NYSE:GME) or AMC (NYSE:AMC). This author in particular remembers friends talking about Dogecoin (CCC:DOGE-USD) back when it traded for just a single cent.

Forget FOMO. I’m angry I missed out.

But I’m guessing you know as well as I do: trying to catch a falling knife is the easiest way to end up cutting yourself. And when it comes to Reddit hype and volatile investments in SPACs and cryptocurrencies, the experts’ advice is to stay away.

“I consider an all-equity investment to be a high-risk, high-reward investment. Any investment with more risk than an all equity-investment is, in my opinion, gambling,” says Lehigh University Associate Professor Salas. “I understand I may sound boring, but in the long run, the vast majority of recent grads will be content with my boring suggestions.”

eMoney advisor Gutierrez says that, “while it is okay to consider taking some risks at a young age because you have time on your side, it’s important to have a diversified portfolio.” She says that despite the craziness of the stock market in recent months, conventional investing advice still applies, and new grads would be remiss to dismiss it out of hand.

“Unless you are only investing to gamble, high-risk novel assets should not be the sole piece of an investor’s portfolio,” according to University of San Diego Assistant Professor Joshua Della Vedova. “An investment banker with a 100% leveraged position in cryptocurrencies may be one correction away from disaster.”

When it comes to SPACs and altcoins, young investors should exercise maximum caution. As with any investment, it’s critical to do your own research and understand what makes a particular company or cryptocurrency a solid buy. But when it comes to long-shot winners, new graduates should only invest money they’re prepared to lose completely.

New graduates looking for high-risk, high-reward investment opportunities should check out InvestorPlace analysts Luke Lango (Hypergrowth Investing) and Thomas Yeung (The Moonshot Investor).

Student Debt

Colleges are haters. Why else would it be so freaking expensive to live in a broom closet of a dorm room eating half-cold meals in decades-old dining halls?

All kidding aside, the national student debt burden is no joke. And while there remains a possibility of some federal student loan forgiveness, it isn’t something new graduates can rely on. As Splash Financial CEO Steven Muszynski tells InvestorPlace, “any type of loan cancellation is still very much up in the air. If it isn’t enacted now, with the Democrats controlling the White House and both chambers of Congress, it likely won’t occur in the future.”

University of San Diego Assistant Professor Joshua Della Vedova says he doesn’t “believe the federal government will be canceling or acquiring student loans,” instead advising recent graduates to, “look for the best rate, potentially refinancing them and pay them off in due time.”

Associate Professor Jesus Salas at Lehigh University has a more optimistic outlook, saying the cancellation of $10,000 in student debt could come to pass. He says that, for graduates with more than $10,000 in debt, it “could make sense to start paying down some of the college debt. However, it really depends on the interest rate.”

Those with interest rates above 4% should make a concerted effort to reduce their principal, but for those with rates of 4% and lower, it isn’t as urgent.

Splash Financial CEO Steven Muszynski says:

“If you have student debt as a new graduate, you should first make sure to understand your loan. Is it federal (from the government) or private (from a bank) and what’s the interest rate you have. Once you know that, you can make some smart choices. The government offers some great income driven repayment options on federal loans if you can’t afford your monthly payments. Meanwhile, there are some great private student loan refinance companies that can lower your rate. You even could combine both options if you think the government might forgive some student loans — refinance a large portion of your debt and leave $10,000 with the government.”

Keep Investing Simple, Stupid

Here at InvestorPlace, we believe that investing in equities is an easy way to put your money to work for you and make income in your sleep. And while you can certainly invest in volatile equities or hope one of your startups hits it big, buying and selling stocks can be a low-risk endeavor; you might not get rich investing in dividend stocks or mutual funds, but it’s very unlikely you’ll lose your investment.

That being said, there are many different approaches to investing, some more cautious and others less so. MSU Professor Schiestel actually advises new graduates to, “avoid trying to beat the market,” saying, “Buy sensible index funds and you will do great on a long-term basis.”

Lehigh’s Professor Salas said in part:

“In terms of investing, just put your money into a diversified fund – either a mutual fund or an ETF (whatever is easier for you). There is no need to complicate things. Whether you choose a global equity fund or a U.S. equity fund, graduates in their twenties will do just fine in the long run by sticking to an all equity investment for your first 30 or so years after you graduate from college.”

And eMoney Advisor Gutierrez emphasized the importance of making a financial plan and sticking to it, saying:

“When you have a financial plan, you are less likely to make reactionary financial decisions based on market volatility. By realizing the power of financial planning, investors can stay the course in their financial goals, plans and perspectives on what they want out of their lives and how to make their money work for them.”

On the date of publication, Vivian Medithi did not have (either directly or indirectly) any positions in the securities mentioned in this article.