As college graduation is approaching, I’m asked with increasing frequency what my next steps are going to be.  Where am I going to live?  What do I want to do for my career?  How am I going to support myself?  It can be overwhelming.  One thing I do know, though, is that my finances are going play an integral role in my success over the next few years—who am I kidding… for the rest of my life.  So, I asked Get Smart’s financial expert Shannah Compton to help me come up with a few things I can add to my ever-growing to do list to secure my financial future.  Here’s what she came up with:

Shannah: I can still clearly remember graduating from college. For me, that day was almost 11 years ago. I remember being so full of energy and excitement for what the world had in store for me.  I remember having the “senior swagger”, which for me was an untouchable feeling that I was on top of the world.  I also remember having absolutely no clue how I was going to operate in the “real word.”

I always thought that on the day after I graduated a special fairy came down and tapped me on the shoulder and reveled this great plan for how my life was to progress from that point.  The special “graduation fairy” would tell me which job to take, where to live, who to marry.  And of course with that I would quickly have an ever growing account balance and know exactly which financial decisions to make.

I know you won’t admit it, but don’t you secretly wish we did have a “graduation fairy?”

My 20’s were pretty rocky, filled with a lot of trial and error, especially where my finances were concerned.  This learning curve can be pretty steep, especially when you don’t have your peers to turn to for advice—they are experiencing the same highs and lows as you are even if they don’t want to talk about it. So what do you do? How do you know where to start?

Below is my 6 Point Checklist that I wish my “graduation fairy” would have whispered in my ear!

1. Create a Cash Compass:

A cash compass, also known as your monthly budget, is the most essential item you can prepare on a monthly basis to get yourself pointed in the right direction. Would you be surprised to know that many of my million dollar earning clients still don’t have a budget? And even though they earn that much money, they are in worse financial shape than you and me!

My point is that you never have too little or too much money to take this important step.

So where do you start? It’s simple. Create a 12 month excel spreadsheet with tabs for each month.  The sheet should look like this:

Income Expenses

(Income items listed on the left side) (ALL expenses listed on    right side)

Total Income - Total Expenses = Net Income

*Your goal is for Net Income to be positive

There are 2 important rules to your cash compass=

(1) That you always list all of your expenses, even things such as haircuts, groceries, ATM withdrawals, etc.

(2) That any positive net is put into a savings account each month.

2. Build Your Score:

Your credit score is one of the single most important numbers that you will ever possess. This little 3 digit number will dictate how much you have to pay when you buy a car, a house, borrow a loan, etc. I joke that you should first ask your potential wife or husband what their credit score is. If acceptable, then you can marry them!

You need to open a credit card in your name to begin building your score. Like most things in life you need to use credit to get credit. But you must remember to use it wisely and follow these rules:

(1) Always pay off the balance every month

(2) Apply for a credit card that offers some sort of reward program (cash back, airline miles, etc.) You should always be getting something for your money.

3. Savings, Savings, Savings:

Most financial professionals will tell you to open a savings account and aim for saving at least 10% of your take home income every month.  This is your goal, but not where you start if you are new to saving.

I suggest you start with a modest 2-3% of your take home pay for 6 months. Once you are comfortable with that, stretch yourself and see if you can increase that to 5% for the next 6 months. Once you have made savings a habit, increase your savings, if you can, to 8-10% for the following years. You may not always be able to hit this target every month but the goal is to put forth an effort and create a habit.

Always look for ways to build your savings too. Great ideas are if you get a raise, or if you get money back from your tax returns. Another idea is to find ways to use any special talents you may have to make some extra money. For example, I love to cook and could offer weekend cooking classes to friends and charge them $20 each. There are tons of creative ideas once you start thinking about your unique talents.

4. Protect Your Identity:

Identity theft is a real threat, especially since we do so much on our computers. You’re on Facebook- and then Twitter- and then Email- and then back to Facebook. You would be surprised how easy it is for someone to hack into your computer and steal your social security number, passwords, bank balances, etc.

So, not only is it important to create your cash compass, build your credit, and save, but you have to also make sure that you are protected.

There are many different identity theft programs out there. Most offer monthly payments or an annual payment at a discount. Be sure to make this an important item in your expense column for your cash compass.

If you can’t afford an identity theft program, at least take a couple of steps to safeguard your information.

(1) Make sure your computer is protected by a firewall of some sort.

(2) Make sure you change your passwords frequently and keep a list of the passwords somewhere other than your computer.

5. Protect Your Most Valuable Asset- Your Health

Make sure you are still covered under your parents’ health insurance plan once you graduate. You’ve probably never thought about it, but if you were ever sick or hurt and needed to spend time in the hospital, and you didn’t have health insurance, you could have a bill in the 10’s to 100’s of thousands of dollars. It could quickly bankrupt you and or your parents. This is no way to start out your financial future.

Most colleges offer a discounted plan to graduates. If you are not covered by your parents’ plan, check out the plan offered by your college. At least put in place a catastrophe policy- meaning a policy that will cover you in the “oh my god” instances. These types of policies usually have a much lower premium but still provide you with enough coverage should you have a major accident or get sick.

6. Bonus Item- Read These Important Books

1.     Think and Grow Rich, by Napoleon Hill

2.     One Up on Wall Street, by Peter Lynch