5 personal finance tips for new college graduates

Each year, a new crop of college graduates heads out into the world to face a variety of financial challenges — from applying for credit cards to deciding how much to start saving for retirement.

The choices you make early on can set you on a path to financial success later in life, and your credit score, earning ability and budgeting skills all play a role.

Below, CNBC Select shares five tips from financial experts to help new graduates make smart decisions with their money.

The 50/30/20 strategy is a rough guide for how you should budget your money: Aim to spend 50% of your money on essentials like housing, food, health insurance, car payments and student loans.

Another 30% of your budget can go to nonessentials, like eating out, shopping and travel.

Try to put the last 20% of your paycheck toward savings and investments, like contributions to your 401(k). This chunk also includes your emergency fund, which addresses unexpected costs, like paying rent if you lose your job.

Ideally, your emergency account should have at least three to six months' worth of living expenses, but even an extra $200 is a good start.

For more help, check out our picks for the best budgeting apps.

Most new graduates have a grace period before they have to start making federal student loan payments. (Some private loans also have a grace period.) Before that pause ends, look at your budget to see if you can realistically make your payments in full and on time.

Make sure your loan servicer has your current information and, if you have steady income, enroll in autopay. Besides ensuring you won't miss a payment, many lenders offer a modest interest rate reduction with autopay.)

If you have extra money in your budget, you may want to prioritize putting more toward your student loans. After all, the faster you clear that debt, the less you'll pay in interest.

If your loans have high interest rates, look into refinancing.

If you're dealing with serious financial hardship, you can request deferment or forbearance. You may also qualify for an income-driven repayment plan, in which your federal loan payments are adjusted to a certain percentage of your discretionary income each month.

Beginning to save for retirement straight out of college may feel premature, but it can instill good financial habits that will last through your working years. The earlier you begin, the bigger your nest egg: A 22-year-old who starts investing $5,000 a year will have nearly twice as much saved by age 67 as someone who waits till 32.

Experts recommend investing 12% to 15% of your income for retirement, but you can start with any amount and work toward increasing your percentage.

If you've gotten your first job, you may be eligible for a 401(k) or other employer-sponsored retirement plan. Contributions lower your taxable income now and grow tax-free — you're taxed when you make withdrawals in retirement.

Many employers offer a company match to their 401(k) plan based on their contribution amount. But roughly 20% of workers fail to maximize their match, according to Michelle Perry Higgins, a principal and financial advisor at California Financial Advisors.

"This is free money that you're turning away if you fail to participate," says Higgins. "I have never met an employee who would turn away a bonus, so why turn away a 401(k) match? 

She recommends having your 401(k) contributions withdrawn automatically from your paycheck, so you're less tempted to spend money allocated to your retirement goals.

You can also open a traditional individual retirement account (IRA) or a Roth IRA, which isn't tied to your employer and allows you to invest in stocks, bonds, mutual funds and other financial assets.

With a traditional IRA, your money is not taxed until it's withdrawn at retirement. A Roth IRA, however, is funded with contributions that are already taxed, so you won't be charged when you make withdrawals. (A Roth IRA is a good option if you expect to be in a higher tax bracket when you retire.)

There are income limits on who can contribute to a Roth IRA, however, and both traditional and Roth IRAs have contribution caps that change annually.

You'll be penalized for withdrawing from either before age 59½, but there are some exceptions — including for a first-time home purchase, medical bills and qualified higher education.

Your credit score is a three-digit number that financial institutions look at to determine how likely you are to pay off a debt. Having a good credit is essential to this new phase of your financial life, whether you're renting an apartment, taking out a car loan or opening a new credit card.

There are two credit scoring models, FICO and Vantage, although FICO is much more widely used. Your FICO credit score is determined by a combination of factors:

• Payment history (35%): Whether you've paid past credit accounts on time
• Utilization rate (30%): The total amount of credit and loans you're using compared with your total credit limit.
• Credit history (15%): The length of time you've had credit
• New credit (10%): How often you apply for and open new accounts
• Credit mix (10%): The variety of credit products you have, including credit cards, installment loans and mortgages

If you don't have a credit history yet, there are many ways to start building your credit, including with a secured credit card. A secured card doesn't require a credit history, but you have to put down a security deposit that acts as collateral and your initial credit limit.

Some credit cards geared toward credit-builders don't require a security deposit, though, like the Petal 2 "Cash Back, No Fees" Visa. is a good option for new graduates: It has no annual fee and a credit limit of up to $10,000. You can earn 1% cash back on eligible purchases right away, and up to 1.5% cash back after you've made 12 on-time monthly payments.

Becoming an authorized user on someone else's card is another way to increase your credit score if the primary cardholder has good credit habits.

Make sure you have a clear agreement with them, though. You don't want to put their credit score at risk by not paying off the balance on time each month.

If you think you can get your financial education from social media, be careful: A lot of the personal finance advice found on TikTok is false or misleading.

When searching for sound money advice online, check the experts' qualifications. Look for people who are registered certified financial advisors (CFAs), certified public accountants (CPAs) or registered investment advisors (RIAs).

There are also great podcasts for sound financial guidance: Future Rich is hosted by CFP Barbara Ginty, who gives advice about everything from handling money in a marriage to helping your side hustle take off.

Another great listen is NPR's Planet Money podcast, which breaks down complex financial topics like the debt ceiling and subminimum wage.

If you're more of a reader, Ramit Sethi's "I Will Teach You To Be Rich" is formatted like a six-week boot camp that covers everything from debt manangement to banking.

In "Get Good with Money," financial influencer Tiffany Aliche imparts tips for beginners, like determining your "noodle budget," curbing your spending and handling life events like a job loss or home purchase.

Simran Kaur's "Girls That Invest" is a good primer for anyone who feels like investment experts speak another language, with solid info on how the market works and how to start building your portfolio.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every student loan review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of student loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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