As a new graduate or a young professional one of the more difficult adjustments that come with independence and adulthood is financial literacy. While some parents teach good money management to their kids and discuss key issues like budgeting debts and expenses, some young adults are completely unaware as to how to manage their finances once they are finally on their own.

But, for millennials, student loan debt remains one of the most crippling financial burdens. According to Money Habitudes: “37% of Millennial employees have a student loan(s) and 81% of them say that their student loans have a moderate or significant impact on their ability to meet their other financial goals.” Student loan payments greatly impact a young professional’s budget bottom line and may even be more expensive than a car loan payment. Credit Donkey reports that “graduates pay an average of $351 per month for student loans.”

With college debt immediately encroaching on earnings and monthly income, the take-home figure becomes even less palatable after other debts and expenses—like gas, rent, insurance and food. So, for new grads and young professionals who are trying to manage their finances, make smart decisions with their money and, most importantly, make ends meet, how do you keep your head above water and, most importantly, gain financial literacy that will allow you to build savings and equity?

If you’re new to money management, here are a few tips you need to know that will help you stay out of the red zone and even build-up savings and investments for the future.

Everything You Need to Know About Managing Your Money Infographic

Create a Budget

Budgeting is the first step for financial literacy. If you don’t know how much you make and how much you spend each month, then you have no idea how much you can save or invest. Or if you are overextending your finances. A budget gives you the big picture. Sit down and figure out your monthly income. Then create a spreadsheet that lists all your expenses—and be honest. Go through last month’s bank statement and find out how much you spent on all living expenses and bills. This includes fixed monthly expenses (student loan payments, car payments, insurance, rent, cell phone, etc.) as well as variable expenses like food, gas, clothing, entertainment, etc.  Subtract your expenses from your income to get an idea of how much you have left over each month. If your expenses exceed your income, then it’s time to adjust your spending. You’ll need to look at your spending habits to see what you can cut—dropping Netflix or lowering your clothing bill can help take you out of the red zone.

Talk to a Financial Advisor

If you realize that you have a financial surplus at the end of each month, don’t spend it! Instead, think about investing. Stocks, bonds and mutual funds can be confusing for beginners. Do you invest in tech stocks, gold, something safe? These are questions that a professional financial adviser can help you understand. Everyone has unique needs and risk tolerance. When you’re young, you may be more confident in investing in the stock market. Or you could just want to secure safe investments. Nerdwallet has a great article that discusses how to find the best financial advisor for your financial needs.

Buy a (Tiny) Home

While many millennials choose to rent their home, Housingwire reports that millennials make up the majority of home buyers. So how does buying a home help your financial bottom line? A home is an investment and can potentially grow equity as you pay down your loan.

However, buying a traditional home isn’t for everyone. And there are some buyers who want to get out of the rent rut but don’t want to commit to a massive mortgage. There’s another option, though: The TINY HOUSE! While a tiny house might not build up lots of equity like a traditional home, these cute little houses are a lot less money and a great way to downsize your lifestyle.

Why? Tiny homes mean less space. Less electricity. And less stuff. Many people who buy a tiny house want to live a life without all the clutter. You’re forced to make choices on what you need versus what you want.

So how much does a tiny home cost? According to price estimates found at tiny house home builder Rocky Mountain Tiny Houses, a basic tiny house (8×16) would cost around $37,000. However, the builder notes that housing prices can go beyond $100,000! Really, the price depends on what you want.

Still, though, a tiny house may leave a tinier dent in your budget. Plus, you’ll save money in rent…which just pays someone else’s bills.

Put Your Car to Work

Your car could be doing double-duty! Help pay down those car payments by putting your car to work! Yes, you can become a driver for Lyft or Uber. Or maybe just take a job as a delivery person.

If you’re interested in becoming a rideshare driver, though, you’ll need to look into your car insurance needs. Chances are, you’ll need extra coverage. Don’t drive for hire until you talk to your insurance provider about boosting coverage. And make sure that new coverage is active before your first client climbs in the back seat! Also, rideshare companies may offer their own insurance options; talk to your provider to discuss how that coverage would work in tandem with your current policy.

Of course, any money you earn as a pro driver needs to be reported as income, so talk to your accountant about tax implications and be prepared to make quarterly tax payments.

Buy Life Insurance

Most young people don’t think about life insurance. And why would they? You’re young and healthy. Life is ahead of you. But you DO need to think about life insurance. Why? Some life insurance can be an investment if the policy builds equity.

Don’t think of life insurance as just a funeral fund, though. Yes, the policy would help ensure that family members aren’t devastated by the financial costs. But, for you, that policy might gain “cash value.” And the policy may allow you to take a loan out against your policy’s cash value if you need cash.

However, there are many costs associated with borrowing against the policy. Bankrate explains the details in full; but, basically, be careful before taking out a loan! Understand the terms–including and especially the interest payment–of that loan and how it affects your policy and your finances.  According to Bankrate: “any unpaid interest will accrue as income and be added to the loan balance.” You may even owe the IRS!

Take a Financial Planning Class

Clueless about how to budget, save and plan for the future? There are classes for that! Some financial planning courses may be free online. Or you may find a course at a local community college for a nominal price. Regardless, learning the basics of money management will help you understand the bottom line. USA Today compiled several free online courses that will help you gain financial literacy—courses are offered through Duke University, the University of Geneva and the University of Illinois, Champaign and others. While USA Today notes that you may pay for grading, the actual courses are free.

Say “No” to Credit Cards

Do you have a credit card? Don’t abuse it! Use the card only in emergencies and pay it off in full (when you are able). One of the easiest ways to get a grip on out-of-control finances is to look at credit card debt and to manage it before it becomes unbearable. Make a point to only use your card for actual emergency situations and make a plan to pay down your current credit card debt. Using credit cards can help your credit score, however when using your credit card, only purchase items you can pay off in cash at the end of the month. Decreasing your credit card debt or not using that credit keeps you from facing insane monthly payments that puts more pressure on your budget.

Start Your 401K

If your employer offers a 401K plan—and contributes to the plan—take advantage of the employment perk. You can control how much you pull from your paycheck to invest in your retirement, and you should begin saving as soon as possible. Remember, if your employer is matching your contribution, then they are helping you save more money toward your future. Retirement savings is a process that should begin early in your career to ensure that you have all the money you need to relax during your golden years. Unfortunately, according to CNBC, the majority of millennials (about two-thirds) have no retirement savings.

You cannot retire if you don’t prepare. When your employer provides a 401K, start contributing!

Diversify Your Skills

Job security isn’t what it once was. If you are in a professional field that allows you to freelance on the side (writing, editing, graphic design), consider taking on a freelance gig if your employer approves. You never know when layoffs will hit, when you’ll need extra money or when a company will cease operations. Look after yourself and don’t put your eggs in just one basket.

Get a side gig, earn some extra money and put it aside for investments, savings or maybe even a house down payment. Regardless, having a fallback allows you to not feel quite so vulnerable if your job does take a hit. If you freelance, though, be sure to talk to your accountant about tax payments—you’ll need to make quarterly payments. You also may consider setting up a LLC for your business (a lawyer can help with this!).

Be Smart About Interest Rates

Many of your loan payments include interest rates that boost your monthly payment. And, while you can’t refinance your student loan, other loans might be renegotiated. Better yet, make sure you discuss interest rates with your lender before you commit to a loan. This means researching current rates and looking at your credit score (which helps determine your risk and rate). If you’re buying a car and need a loan, shop around. Visit your local bank or a credit union to inquire about their loan options. Don’t assume that a dealership is your best bet. Controlling your finances requires smart decisions, and your interest rate can greatly impact your budget bottom line significantly. Every little percentage point makes a difference—especially on high-dollar purchases.

Buy with Your Head, Not Your Heart

Impulse buys can add up in time. Those seemingly small purchases might not seem like much at the grocery store or even while shopping at discount retailers, but every dollar spent is one less dollar saved. When you’re out shopping for food, clothes or even home items, go to the store with a list. Buy what you need, not what you think you want. Stores are designed for sales, and this means that you may come out with more than you bargained or budgeted for during the trip. Create your ‘must-buy’ items and stick to it! And do NOT fall victim to items that decorate your check-out lane—you don’t NEED that bedazzled cell phone charger!

While many young professionals and new grads were raised with good money management skills, not all parents know that these are lessons that need to be taught. And some parents also might lack these skills, too. But whether saving, budgeting and investing are ingrained or they need to be instructed, everyone can learn to become financially literate and begin to build a nest egg of financial security. Because you never know when a job will end or what tomorrow will bring.

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