From Frugal to Fabulous in Six Steps

The transition from college student to working professional in the “real world” can be scary. As twenty-something’s face overwhelming choices about career, home, social networks and other adult responsibilities, the one challenge they must tackle immediately is their finances.

Seniors graduated in 2009 with an average credit card debt of more than $4,100, up from $2,900 almost four years ago. Close to one-fifth of seniors carried balances greater than $7,000, according to Sallie Mae, "How Undergraduate Students Use Credit Cards," April 2009. That amount on top of student loan debt is intimidating to anyone – especially those on an entry-level salary.

So, now is the time for graduating seniors to start out on the right foot. The money management habits that young adults implement in their first few years of independence are critical to their future financial security. The following tips are a starting point for young adults who want to successfully support themselves without digging into debt or getting a handout from Mom and Dad:

Manage Your Expectations – Don’t expect to start this chapter of your life at the same comfort level your parents have or better! You’re just starting out and it took them 15-20 years to establish themselves at their current financial level.

Keep Your Expenses Low – Now is the time to live on a shoestring while you’re establishing your career. Share an apartment with friends to save on living expenses, learn to cook to save money by not eating out, and skip expensive vacations - take advantage of free entertainment/events available in your area.

Pay Off Any Student Loan or Credit Card Debt – Start tackling your student loan debt as soon as possible. The most important thing you can do to accomplish this goal, is to always make your payments on time without incurring any additional debt. To really get this burden off your back, try to make more than the required minimum monthly payment. This will speed up the time it takes you to get out of debt and reduce the total cost of debt you generate from finance charges.

Invest In Your Company’s 401K – When you get settled into your first job, invest in your company’s 401(k) plan and never touch the money until you retire. You’ll be amazed at how the money will grow and what a difference it makes by starting your retirement savings at a young age.

Don’t Use Credit Cards – Live within your means. If you want to buy something, but need to use a credit card to purchase it, then you can’t really afford it. Be patient. Rewards are much sweeter when they are earned.

Write It Down – It’s hard to keep track of all those transaction receipts so keep a financial journal of all expenditures. You will be amazed at how the little things really add up and by writing down what you’re spending you can create a budget that works for you. And most importantly, you won’t get in trouble by spending more than you earn.

For more great tips from the Clarky Davis, The Debt Diva, and to download her financial guide, visit You can follow her on Twitter @DebtDiva.