If you’ve recently graduated from college, it’s time to celebrate your hard work and a job well done. It’s also a good time to start off on the right financial foot. Choices you make now can help establish healthy long-term habits regarding saving money, avoiding debt and reaching your goals.

These days, many college grads are starting out saddled with student loan debt and relatively little money in savings. What’s more, sticky inflation translates to elevated costs for rent, groceries and other essentials.

Fortunately, with some careful attention to your money, you can form a solid financial foundation. Here, we list five mistakes recent college graduates should avoid to help ensure long-term financial success, along with tips from financial experts on staying on top of your finances.

1. Mishandling your student loan payments

The average student loan debt is $27,400 for borrowers with a bachelor’s degree from a four-year public university, according to the Association of Public and Land-Grant Universities. Attending a private university or getting an advanced degree could result in higher amounts of debt.

Potential mistakes when handling student loans can include:

  • Missing or delaying payments: This could negatively impact your credit score, resulting in higher interest rates on future loans.
  • Not paying more than the monthly minimum, when possible: Paying more than the minimum amount each month can help you reduce the overall interest. (Paying extra might only be ideal if you already have a solid emergency fund in place.)
  • Not refinancing when better rates are available: If research shows better rates are available, refinancing may land you a lower monthly payment. Before taking action, however, be sure to weigh the pros and cons of refinancing your student loan.

Those seeking information on federal student loan repayment plans, such as income-driven repayment plans, can find it on the Federal Student Aid website, says Jennifer Finetti, director of student advocacy for ScholarshipOwl. “There are so many different plans, and the one that works best for you will depend on your primary priority.”

If your monthly student loan payment keeps you from making ends meet, an option is to request a deferment or forbearance, both of which serve to pause your student loan payments. These processes only halt your payments, so interest continues to accrue, Finetti says. “And you’ll only be delaying the inevitable — a return to making payments at a later date.”

2. Not establishing an emergency fund

Of U.S. adults who hold or have previously held student loan debt for themselves, 27 percent have delayed saving for emergencies due to their student debt, Bankrate’s financial milestone survey found.

While it’s important to pay down your student loans, establishing an emergency fund should also be a top priority. Not having money set aside for a rainy day can mean taking on debt to handle a pricey unplanned expense, such as a medical bill or a car repair.

The best place for an emergency fund is often a high-yield savings account with a federally insured bank or credit union. This account can be linked to the checking account at your primary financial institution, and you can easily transfer money back and forth as needed. — Greg McBride, CFA , chief financial analyst for Bankrate

For most people, an emergency fund should cover six months’ worth of expenses, while the self-employed, sole breadwinners and those with variable income should aim for double that amount, McBride says. He adds that a good starting place is to set up a direct deposit from your paycheck into an online high-yield savings account.

3. Not living within your means

It’s highly important to live within your means when you’re juggling debt repayment and saving money. Keeping your spending under control helps you to cover all your bills, avoid credit card debt and set aside money for savings.

A key to living within your means is following a budget. This involves keeping track of your monthly income and expenses using a spreadsheet or a budgeting app. Create categories for your monthly income, as well as expenses such as:

  • Rent
  • Food
  • Car payments
  • Student loan payments
  • Credit card payments
  • Utilities
  • Insurance premiums
  • Household supplies
  • Entertainment and other discretionary spending
  • Savings

A budget helps you pay closer attention to your finances, possibly helping you identify ways to cut unnecessary spending. This can free up money to add to savings or pay down debt.

4. Not saving for retirement

Retirement may feel like a long time away, although investing in your 20s for your golden years allows you to reap the benefits of compound interest — which is essentially interest earned on interest. Starting to save for retirement now, rather than waiting a decade or more, can greatly impact how much you’ll ultimately have in your nest egg.

One retirement savings vehicle is a 401(k) plan, which is offered by many employers. You’re able to contribute a portion of your salary each year, and companies often match employee contributions up to a certain percentage. Money is invested on a pre-tax basis, providing a tax break on the current year’s taxes.

Another way to save is through Individual Retirement Accounts (IRAs), including tax-deferred traditional IRAs as well as Roth IRAs, to which you contribute after-tax dollars.

In addition to holding your retirement savings, a Roth IRA can provide some unique benefits. For instance, you may be able to withdraw up to $10,000 from your Roth IRA penalty free to purchase your first home, says Melody Evans, wealth management advisor at TIAA. “The only caveat is you need to be making less than $146,000 as a single individual [to make a full contribution]. That is a high threshold for a new college grad,” Evans adds.

5. Not saving for your goals

In addition to retirement, you probably have other financial goals that you want to achieve much sooner, such as buying a house, getting married or taking your dream vacation.

Your future self will thank you if you start to save for such goals right away. Some savings accounts are designed for setting aside money for separate purposes. For example, Ally Bank savings account holders can create custom savings categories, called “buckets,” and devote portions of their money to each.

In addition to setting goals to help you save for planned purchases, it can help to set goals for paying off student loans or credit card debts. Doing so involves deciding how much you can repay each month and then determining the date you’ll have paid the debt off in full.

Bottom line

Making wise financial decisions as a new graduate can help set the stage for a lifetime of healthy money management. Some young adults prefer soft saving, which involves spending one’s money on the present rather than saving for the future. Through careful money management, however, a healthy balance can be achieved between enjoying life now and saving for future times.

ScholarshipOwl’s Finetti recommends recent graduates meet with a financial advisor, who can be a professional, or a parent or other relative who can offer sound financial advice. “The goal here would be to have a conversation about your overall bills, your student loans and your savings goals, so that you can come up with a plan that works for you.”

By handling student loans properly, living within your means, and saving for emergencies and life goals, you’re setting yourself up for decades of financial success.