After four (or more) years of hard work, caffeine-fueled study nights that turned into mornings and more ramen dinners than you can count, you’ve graduated and are ready for the “real world.” But are you really prepared to start off on the right financial foot?

While the prospect of making the most money you ever have is exciting after living on a budget,

establishing smart financial behaviors should be your number one priority. How you manage your money now will either benefit or haunt you in the future. Setting the groundwork to build a solid financial foundation will help you successfully transition from college graduate to full-time professional.

Here are eight personal finance tips for your first year after graduation.

Create a budget. How do you plan to manage your new, hard-earned money? The first step is to identify what your financial goals are, and to create a budget that will help you meet them. Having a budget will also help you avoid common pitfalls like overspending and incurring too much debt and will also help you save.

To map out a budget, first add up the basics—rent, utilities, transportation, student loans and other fixed monthly expenses. Then, list your fluctuating expenses like groceries and entertainment. After you’ve identified all your monthly expenses, decide how much you will spend on each. Once you’ve established a budget for your expenses, commit to saving and/or investing as much of any remaining money as possible. This brings us to our next tip:

Start saving. More money means more responsibility, and for most college grads, it will be an adjustment. Developing a habit of saving a percentage of your paycheck now will pay off generously in the future. If you can, automate your deposit through your employer to ensure you never miss a payment, and to avoid the temptation to spend it (this goes for health care, emergency and any other savings accounts).

Take advantage of employer benefits. If your employer offers health insurance or sponsors a 401(k) plan, you have a valuable opportunity to save and make money. While you may not have worried too much about getting sick or injured in your early 20s, unexpected illnesses and accidents do happen, and insurance will help you pay the medical bills. If your employer offers a match on retirement contributions, invest at least up to the match amount to increase your retirement savings.

Start investing. Investing can be tricky, and your employer won’t (and can’t) tell you how to invest the funds in your 401(k). Pick up a book or two on investing basics to understand mutual funds, index funds, target-date funds and the other essentials that will help you develop an investing strategy that works for you.

Establish credit, carefully. Good credit is a valuable tool when it comes to buying a car, home or other major purchase. But building your credit is a long process, so make sure that you get in the habit of paying your bills on time and spending well below your limit.

It’s important to understand the risks of carrying large amounts of debt and how devastating it can be to your financial freedom. You can lose a considerable amount of money by paying interest and by not growing that money by investing. Let’s look at an example:

Let’s say you have a credit card balance of $6,000 on a credit card with a 17.5 percent interest rate. If you only make the minimum monthly payment of $120, it will take you about 7.5 years (or 91 months) to pay this card off. In that time, you’ve also paid $4,827 in interest, which is over 80% of your balance.

Alternatively, if you would have invested that $6,000 for 7.5 years at a mere 8% rate of return, you would have over $11,000 in your investment account.

From an opportunity cost perspective, that $6,000 credit card actually cost you about $17,000 when you factor in the loss from paying interest and not investing. Viewing debt this way will help you make wiser financial decisions and avoid carrying a significant amount of debt.

Avoid peer pressure. You and all your friends may have been on shoestring budgets in college, but in the real world, salaries vary wildly. Keeping up with the Joneses might be tempting, but while your fellow graduates are busy buying new homes and cars, it’s important to keep your financial goals in mind. Every major purchase pushes you farther from reaching your financial goals, so consider the benefits of saving and your patience will pay off.

Develop an emergency fund. Most financial experts recommend setting aside the equivalent of three to six months’ worth of living expenses in an emergency fund. While you may be making more money than you ever have, it’s unlikely that you’re making enough in your first year to make the prospect of saving that amount of money anything but daunting. Make this a personal goal and be sure to choose a smart place for your rainy-day fund, like a money market mutual fund or a bank savings account.

Give back. Donating a portion of your paycheck to a cause you care about offers several benefits. Not only is giving back personally rewarding, it will also help you maintain a healthy perspective on the importance of money. Qualifying donations can also help save you money and reduce what you must pay in taxes.

Figuring out how to manage your money as a new college graduate can be intimidating, but by using these eight personal finance tips, you’re ensuring your future success, both personally and financially.

Need help managing your student loans or starting off your financial future on the right foot? Contact our team of experts at Latitude 32 Credit Union today!