Now that the glow of graduation is fading, let’s step into the ‘exciting’ world of budgeting!

Graduating from college is a huge achievement — congrats if you’ve recently received your diploma! However, along with the pomp and circumstance, lay a few more serious responsibilities to pay attention to. That includes your budget.

Many students don’t think too seriously about their budget during their college years, either because they’re usually flat broke, or because they spend the money they do have on what they need (and save a little for partying) but don’t have to worry about loan payments, bills (if they live on campus), or savings.

Graduating changes that. For many, finishing school triggers repayments on your loan. Becoming independent requires more bills to look after, such as water, power, internet, and pet fees. Plus, your early to mid-twenties is the time to start thinking seriously about saving for the future.

Today, we’ll walk you through a few steps you can take to get serious about budgeting after college. Follow these steps and see what works best in your life.

Track Your Expenses

Before you can make a realistic budget that reflects the way that you spend money each month, you must get a bird’s-eye view of your regular monthly expenditures. You can do this in a few different ways:

• If you regularly use a credit or debit card for day-to-day expenses, you can easily log into your bank or credit card’s online portal and review your expenses over the past few months. Some credit card companies actually break down your monthly spending into a few distinct categories, so you should definitely make use of that if you see the option.

• If you regularly use cash — or just a confusing mix of different cards, phone-based payments, and cash — it can be more difficult to get an idea of how much you spend. If you still have them around, look through old receipts and put together your spending history.

• Failing those two options, you may have to just be diligent to track next month’s expenses. Keep a log of the various things you spend money on to categorize them. You can also download apps that help you with tracking expenses, too. Then, at the end of the month, take inventory of the costs you accrued over the month.

It might shock how much you send in some categories. Your morning coffee probably isn’t costing you as much as some people warn, but your weekend bar tabs just might be. If you notice any problem areas after tallying up your regular expenses, you know where to start cutting back — or you might see whether you need to pick up a side hustle.

Some expenses just cannot be avoided, however. Gas, groceries, and doctor’s office copays, for example, all come under the necessary expense category. Creating a spending plan will provide help in controlling your wants while minimizing your needs.

Plan Spending Ahead of Time

A spending plan shows the portion of a budget that you expect to spend on certain areas. For instance, you might decide that $300 each month will go toward groceries or $200 toward gas.

You can start your spending plan based on the idealized version of your past month’s worth of expenses. By “idealized version,” we mean the most financially savvy spending plan that still takes into account all of the regular expenses you expect to rack up. Below, we explain what that might look like:

• First, decide how much of your budget will go toward unavoidable expenses. Rent, utilities, bill payments, loan payments, transportation, and medical expenses should all go in this category. This is money you know you’ll have to spend no matter what.

• Next, make a category where things can be more flexible. Depending on your tastes, you can find and purchase groceries pretty cheaply. Tofu, rice, and beans for dinner a few nights a week can save you tons of cash — steak every night will start to add up quickly. Clothes also fall into this category. Decide roughly how much you want to spend on groceries and other flexible-but-still-necessary items, and try to stick to that amount.

• Lastly, allocate a bit of money toward the fun stuff. It’s important to focus on this aspect of your budget. It can be easy to feel peer pressured into going to a concert you may not be able to afford this month. By using your spending plan, decide with confidence whether you can afford to go.

A spending plan should not use up every dollar brought home in a month. You should regard savings as equally important.

Save, Save, Save

Many young adults do not consider saving money a high priority. They have the mindset of waiting until their mid-career years, when they can earn substantially more money, to start worrying about savings. However, saving is actually important no matter your age. The three main reasons below explain why:

• Everyone needs emergency savings. A sudden job loss, car accident, unexpected medical bills, or other unexpected expenses can cost you a small fortune. Aim to save between 4 to 6 months’ worth of expenses of cash in a savings account for emergency savings. Cash is a liquid asset, meaning you can easily and quickly access it. It’s perfect for use in emergencies.

• Save for life events. Major life events such as marriage, purchasing a car, home, or starting a family, demand a lot of time, energy, and money. Life can get pretty expensive, and without cash reserves on hand, the possibility of winding up in debt with a poor credit history increase dramatically.

• It’s never too early to save for retirement. Too many young adults ignore or put off investing for retirement. Sadly, that often means that by retirement, people don’t have enough money available to maintain the quality of life one might hope to achieve in retirement. Compound interest is a powerful thing. By investing early and aggressively, a comfortable retirement becomes a real possibility.

Budgeting as a new graduate can seem difficult, and sadly, not enough schools require classes in personal finance. However, by setting up a solid budget, you can get yourself on track to have a financially healthy and successful young adulthood.