If you are a new graduate, a college degree is just the first step in the new direction your life will be taking. A new career, potentially a new community to live in and a bit of cash in your pocket to spend – there are a lot of changes happening.

College graduates carry an average of $25,250 in student loan debt, according to The Project on Student Debt, by The Institute for College Access and Success. Compiled with this debt are the potential expenses of job searching, moving, a professional wardrobe and a new car or bus pass. But receiving that first paycheck – and subsequent paychecks – can lead to bad financial management if not properly handled, says John Vaccaro, senior vice president from Massachusetts Mutual Life Insurance Company (MassMutual).

“New graduates should curb their urge to spend freely and think about their future goals to avoid financial setbacks like credit card debt and spending beyond their means,” Vaccaro says.

To help prevent new graduates from sinking deeper into the debt hole, and to look ahead to saving for retirement, Vaccaro has some financial planning tips to help grads get the most out of their new paychecks.

* Develop a budget – Almost half of Americans report they’re living paycheck to paycheck, according to a 2011 CareerBuilder Survey. New graduates should create a budget, including all expenses from rent/house payments, to haircut costs and weekly groceries. Also include space for savings – if possible. Categorize each expense into a necessity category and a discretionary spending category, which will help highlight areas where expenses could be cut – if needed. For example, are payments for cable or satellite TV necessary, or could you survive with free local TV and a less expensive subscription for wireless or mail delivery movie rentals? Setting up a budget can help a new graduate determine if more money from a paycheck can be put into savings.

* Look into work benefits – The first job is a learning experience for many in figuring out benefits and making them work. Recent graduates should take advantage of any employer offered retirement plans like 401(k)s as soon as they qualify. For younger new grads, the combination of time and potential for a retirement account to grow are powerful in planning for retirement down the road. Health, life and disability income insurance are also good benefit options to research. If your company doesn’t offer these kinds of benefits, consider obtaining coverage independently.

* Pay off the right debts first – Debt can occur in a lot of different forms for new graduates. Car payments, student loans, mortgages and credit card accumulations are a few of the more common forms of debt. It’s a good idea to pay off those debts that have the highest interest rates and are not tax deductible first. Ideally, a person should have enough savings on hand to pay off a short term debt, like credit card purchases, on a monthly basis.

* Rein in spending habits – Look yourself in the mirror and identify your spending habits. If you like to impulse buy, try forcing yourself to delay impulse purchases by 24 hours. Also determine if your spending habits are influenced in any way by emotional factors or peer pressure. Once these habits are identified, it’s easier to establish ways to circumvent bad financial decisions.

—(ARA)