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Recent college graduates get a lot of advice from a lot of directions. Mom, Dad, school friends, crazy Uncle Harry, the Internet, Instagram. Get a job, take a European vacation, don’t buy a car, move somewhere new, buy a professional wardrobe, go to grad school, follow your dreams, take that job offer now. But you’ll hear a lot less advice about money — because no one wants to talk about money. About that looming student loan payment. About budgeting. About how to pay for those clothes, or that trip. You have six months before you have to start paying back those loans, why worry about it now?

I’ll tell you why: Opportunities start coming fast and furious in the months following school, and it’s great to try many things as you find your way. But every dream you have right now — to travel, to solve world hunger, to start a family, to buy a dream car — will be enabled, or denied, by money. If you want to follow your dreams, however noble they may be, you’re going to need to have a good, smart relationship with money. So here’s some advice you may not get elsewhere.

  1. Make Small Money Mistakes, Not Big Ones.

The most important piece of advice you’ll get at this time: Make small money mistakes, not big ones. You’ll stumble, you’ll overpay for a hotel room, you’ll forget to a pay a credit card bill. That’s life. The key is escaping your 20s without saddling the rest of your life with a financial ticking time bomb. Don’t stretch to buy a house prematurely. Don’t but a car that comes with a $500-a-month payment; buy something practical instead. Do live with roommates — housing costs are the number one budget killer. Do start saving for retirement immediately, however boring that sounds. (Wait until you see the math in a moment). Do make good headway on paying down student loans, but don’t rush that. A 20-year plan is fine. Don’t take on 6-figure debt to go to graduate school unless you feel assured you’ll have a six-figure job the day you graduate. Do use credit cards, when you have to, to pay for that big move to your new job. But don’t live a life where credit cards are required to get you through the month. And that 3-month European trip? Well, I’ve some bad news for you.

  1. Get a Job, Now. The Good Times Might be Ending

It’s a good time to be a college graduate. Unemployment is at historic lows, companies are hiring for entry level positions, and … it’s summer! A great time forget about the pressure of exams, to bask in your success, and maybe take that long European back-packing trip.

How low is unemployment? It’s just 2.2% for college grads 25 or older, according to Bankrate.com. And the average starting salary for a recent grad is $51,000.

According to CollegeGrad.com, plenty of firms are hiring thousands of college grads this summer: EY, Deloitte, KPMG, PwC — tax and advisory firms — but also places like Bank of America and Amazon.

“Our hiring remains strong as we expand our search for different areas of expertise,” says Blane Ruschak, Executive Director of University Relations and Campus Recruiting for KPMG, in a post by CollegeGrad.com. “In addition to accounting, engineering, computer science and data analytics are becoming critical to meet the demands of our clients’ evolving business needs.” The firm told CollegeGrad.com it plans to hire 3,000 entry level employees this year.

So, that’s good.

Take a deeper look inside all those cheery hiring numbers and you’ll see some red flags, however. Overall, the number of new jobs being added to the economy is shrinking each month. Worse still, the number of college grads expected to be offered jobs shrunk this spring for the first time since 2010, according to the National Association of Colleges and Employers. The dip was just 1.3%, but it could be a signal that the days of easy first-jobs might be coming to a close. After all, the current economic expansion has lasted nine years. Plenty of economists predict a downturn sooner rather than later.

What does that mean for this spring’s graduates? It might not be wise to wait to job hunt. Sure, that Euro trip might be the journey of a lifetime, but there’s no guarantee things will look as rosy in September as they do now. Ask your older siblings and friends how it felt to graduate and job hunt in 2008 or 2009, and they’d all tell you: Grab that good job while you can.

  1. Make a Student Loan Repayment Plan Now.

Graduates generally have six months before they start paying back student loans. (Though remember, interest continues to pile up for most loans). This creates the temptation to put those student loan payment details in a drawer and not worry about them until November. That’s a mistake. Make a plan now. A really constructive way to do that is to study your repayment options and determine what your monthly payment will be — the average payment is about $350 a month for 20-somethings, according to StudentLoanHero.com — and start living on a budget which includes that payment now.

The student loan crisis is real. In 1990, fewer than 5 percent of borrowers leaving school had loan balances above $25,000. By 2014, more than 40 percent of borrowers did, and more than 5 percent of borrowers had balances above $100,000. If you are in that 5 percent, you should start making a plan immediately to address that looming problem. But even the average loan balance of $40,000, which sounds high, isn’t really *that* bad. It’s essentially a car payment every month. Student loan debt isn’t a bad thing. TOO MUCH student loan debt is a bad thing.

  1. So Don’t Over-React to Your Student Loan Payment

If you are worried about paying back your loans, good, that’s constructive. It’s way better than NOT worrying about it. But don’t feel like you have to pay it all back at once. If your college helped you land a $60,000 a year job with real prospects for growth, a $350-a-month payment is a good deal. Low-interest student loans, even if they take 20 years to pay, are a solid investment. Take advantage of plans that let you stretch payments out, because you will need that extra cash flow to follow this next piece of advice.

  1. Save for a Rainy Day Right Now

It is possible, and smart, to pay down debt and save money at the same time. You should do that. Your first goal should be to accrue a rainy-day fund equal to at the very least 3 months living expenses. Take all those family checks for graduation and put them aside for this fund. Every extra penny you find should go into a bank account set aside for that purpose, and kept in cash — not invested in any security that could lose value. Until you have that rainy day fund, you are living a fragile life and will be in no position to quit your job should your boss ask you to do something you feel is wrong, or to make a career change. If you must stretch out student loan payments over more years in order to build a rainy day fund, that’s fine. (But don’t *miss* any student loan payments). Creating this pile of emergency cash is absolutely essential.

  1. Credit Cards Aren’t Evil. Just Dangerous

That rainy day fund will help you avoid getting into credit card trouble. Credit cards are just fine, and often serve as a perfectly helpful 30-day cash flow loan with added benefits (like points) along the way. About half of all credit card users never carry a balance from month to month, which means they are enjoying a free loan, and free gifts. That’s the right way to use plastic. Even occasionally carrying a balance — say, to get that new work wardrobe – is not a big deal. Paying $50 to $75 in finance charges for a couple of months isn’t the worst thing ever. The worst thing ever is making a habit out of that. “Revolvers” are the suckers of our economy. They don’t get grace periods and free loans. They subsidize your precious points. And, like about half the country, they have no rainy day fund, so when an emergency expense arises, they go deeper into debt. Cards come with an average 15% interest, so this is a terrible way to deal with disaster.

  1. Work Hard, but Not Too Hard

Hard work is great. Young people have more opportunities in more industries right now than perhaps any time. Ageism is real; it works to the advantage of new workers. Plenty of businesses have found that they can promote young people fast and pay them much less than 40 or 50-somethings. We can debate the wisdom of that model another time, but young workers can and should seize the opportunities they are offered.

But don’t be a 20-20-20, as they are sometimes called — a 20-something willing to work 20 hours a day for $20,000. Overwork is a real crisis in America, too. Plenty of young people brag about how late they stay at the office; that’s ill-advised. There are several high-profile cases of young adults literally dying from working too hard. Learn early to say no to your boss, even if that puts your job in peril (once you have a rainy day fund). Your boss will respect you, and plenty of studies show people aren’t effective when they work more than 45 or 50 hours a week anyway.

  1. MAX Out That 401(k). And That Means Something You Don’t Realize

When you get a job, you’re going to be handed a whole bunch of forms. You’ll be excited. You’ll be tempted to just sign whatever and go out for a happy hour celebration with your friends. Slow down! Take a few moments to really understand the financial decisions you are making.

One of the most important: Signing up for your company’s retirement plan. Odds are it will be a 401(k). Sign up, right away. Make serious “elections.” Don’t just tick off a few mutual funds and figure you’ve done well. If you don’t have time to research all your options, just put all the money into the lowest-cost index fund your company offers, and do more research later. You can change your elections any time, though many people never do.

How much should you contribute? At the bare minimum, contribute what you must to get your company’s “match” — say 6% of your salary, so the company kicks in another 3%. But don’t stop there! Many people think that’s the “max.” It’s not. Most people can contribute up to $18,500 annually, or about $1,500 a month. That might be too much for you, but consider committing 10% of your salary. The tax benefits alone are worth it. But more important, you have time on your side.

  1. Obey the Parable of The Two Twins.

The best time to save for retirement is in your 20s. And it’s not even close. In fact, a person who saves for retirement in their 20s, and stops at age 30, is basically better off than a person who starts saving at age 30 and saves for the rest of their work life. Really. It seems impossible, but it’s true.

Financial writer Liz Weston calls this the Parable of the Two Twins, and it reflects the amazing power of time over money. There’s lots of ways to do this math, but here’s one example: One twins saves $3,000 every year from age 22-32 and stops. The other starts at 32 and stops at age 62. Assuming average returns of 8%, the first twin will have $437,000 at age 62; the second will have just $340,000. And remember, the 20-something saver only contributed $30,000 while her twin put in $90,000.

Time, and compounding returns, are powerful.

The one piece of advice every college grad should hear is this. Be the first twin, not the second. That way, you’ll be backpacking all around Europe in your 60s!
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