Challenges and opportunities for the class of 2022

It’s time to celebrate! It’s graduation season. Newly minted graduates have waited for this moment for a long time. And they’ve been on a wild ride. Recent college grads made it through pandemic shutdowns, remote learning and all the other unprecedented moments thrown their way over the last two years.

After years of hard work, this class is entering one of the best job markets in history. Starting salaries for 2022 college grads are expected to hit record highs again, after averaging $55,000 in 2021. For these young adults, dreams of living on their own, making their own money and truly being an adult for the first time are becoming a reality. There’s a lot to celebrate but these students are still graduating into a pretty weird economy.

No doubt the job market is hot, especially for this age group. College graduates are benefiting from higher income opportunities across the board. But the benefits of a larger paycheck at a young age will need to be balanced with inflation and a high cost of living.

Rents in major cities are already up double-digit percentages in the past year.  The cost of basic needs like groceries and electricity are also increasing. And although there’s all sorts of legislation up in the air, your student loan payments will likely start up in the near future. So, while these salaries look good on the surface, it’s important to understand the dollars don’t go as far today as they used to.

First, congratulations to the class of 2022! You’re off on new adventures and ready to build your future. Now is the time to take control of your independent life (and your financial future).

Brace yourself. You’re about to have more expenses than you’ve had before. If that thought alone is a little overwhelming, you’re not alone. It’s normal to not know what managing those costs will look like. Start simple . Jot down a list of what your major expenses will be each month: rent, utilities, groceries, debts. Be sure to include line items for your emergency fund and contributions to your retirement (starting is important, even if you’re starting small).

Don’t feel like you have to reinvent the wheel here. Use the resources out there, like budget templates and college grad budget guidelines to help get started. Once you have your total monthly expenses calculated, subtract it from your income. The amount left is yours to save or spend how you like (we’re big fans of Ally Bank Online Savings Account buckets and boosters , personally).

Lindsey Bell is an award-winning investment professional with a passion for personal finance and more than 17 years of Wall Street experience. Bell’s unique ability to connect the dots between data and real life and craft bite-sized money ideas that people can use and apply stems from her deep background as an analyst, researcher and portfolio manager at organizations including J.P. Morgan and Deutsche Bank. She is known for demonstrating why and how an understanding of all things money improves a person’s finances and overall well-being. An ongoing CNBC contributor, Bell empowers consumers and investors across all walks of life and frequently shares her insights with the Wall Street Journal, Barron’s, Kiplinger’s, Forbes and Business Insider. She also serves on the board of Better Investing, a non-profit focused on investment education.