Soon after donning their caps and gowns, recent college graduates should develop their first (of many) financial plans to make sure they’re prepared for all the twists and turns of the ‘real world’. This may be the first time many of them are managing their finances on their own, and they may not know where to begin. By following the below tips, new grads will be off to a great start in preparing for a financially successful future:

Create a cash flow: No, not a budget, but a process that will allow you to track money that’s coming in and going out. This may sound annoying, but think of it as a way to find the money to fund your various financial priorities. Most banks offer apps to help track your spending, or you can try apps such as Mint, Digit or You Need a Budget.

Build a balance sheet: This will help you understand what you own (assets, on the left) and what you owe (liabilities, on the right). Assets minus liabilities equal your net worth, which for many 21 year-olds, starts with a minus sign. Don’t worry – time is on your side, but more on that later.

Check your credit report: Get into this habit early by going to and reviewing your credit report. If you find a mistake, notify the credit-reporting agency and stay on top of errors that need to be removed. Be sure to stay on top of credit card and loan payments to build good credit.

Next, try to tackle these goals:

Pay down debt: Take a look at the right side of that balance sheet. Your first priority is to pay off the highest interest consumer-related loans (credit card and autos) and then systematically work your way down to the lower interest ones.

If you are among the nearly 70 percent of 2018 graduates with student debt, understand exactly what you owe. Write down each loan, its interest rate, the payment amount and note whether or not the loan is a federal or private one.

If you think it’s going to be hard to meet the payments for your federal loans, check out to determine whether or not you qualify for an alternative plan, like income-based repayment, which usually results in a longer payment schedule with lower monthly payments. Conversely, if you’re earning enough money, make extra payments to accelerate your pay-off time. And, if you’re headed to graduate school, you may be able to postpone or defer your education loan payments.

Establish an emergency reserve fund of 6-12 months’ worth of expenses: This is the account where you may want to accumulate money for a car, a security deposit for an apartment rental or any other near-term goal. Because this fund is meant to be safe, fight the urge to put it in a risky asset, like a stock mutual fund. Instead, stick to a savings, checking or money market account, or a short-term certificate of deposit.

Maximize retirement contributions: Yes, it’s decades away, but ask anyone older than forty about financial regrets and you will hear “I should have started to save for retirement earlier!” While very few recent graduates will earn enough money to put away the maximum of $18,500 into an employer sponsored plan this year, try to contribute at least up to the organization’s match level (usually 5-6 percent). If you have the choice between a Traditional 401(k) and a Roth 401(k), go with the Roth version. If you don’t have an employer plan available or are working freelance, fund a Roth IRA with as much money as possible, up to the $5,500 maximum.

Here’s how the math works and why starting early is so compelling: If you contribute $100/month for the next 50 years and you earn a compounded interest rate of 5 percent, when you reach age 70 there should be just over $250,000. If you start twenty years later at age 40, by the time you are 70, there would be just shy of $80,000. You can play with various calculators from the Securities and Exchange Commission, which can project how quickly your money can grow!

For more help developing a financial plan, a CFP® professional can work with you to map out an easy-to-follow strategy reflective of your current financial situation to set you up for financial success.