New college grads: 5 tips for creating and living on a budget

After years of hard work and commitment, you have your degree in hand and have just been offered a great job. But as reality sets in, you realize you have a whole new set of finances to balance. You may be living on your own now. Perhaps you need a new car to get to your new job, and of course those student loans may be kicking in.

It's time to create a budget and be smart about your money. Simply uttering the word "budget" makes many people tune out, but budgets help ensure you don't get into any money trouble. If you manage them correctly, you should have a bit to save for any future big ticket purchases.

Here are some tips for new grads to follow:

1. Track spending for one month
First, you must identify your spending habits. Do you eat out for lunch every day at the new job? Do you spend more money on gas? Do you like to grab that 3 p.m. cup of coffee at work? All the seemingly small spending you do adds up fast. Track this spending for an entire month on a spreadsheet.

2. Make a list of bills
How much do you pay in bills every month? Make a list and don't forget to include your cell phone, rent, student loans, car loan, and auto and property insurance costs. Some of these bills can be reduced if you shop around. For example, insurance for renters is a must-have, but you'll find when you go to buy renters insurance, policy costs vary greatly. Often times, you can save big on both your auto and property insurance when you combine them with the same insurer. Get an online renters insurance quote and decide what's best for your budget.

3. Evaluate and set guidelines
Once your spending is organized and laid out in front of you, it's easy to see where your cash is going. Note areas that need to be prioritized and others that could be reduced. Identifying wants versus needs is important. Review your budget goals each month to see how you're doing and where you could improve.

4. Don't forget to save
Even if you can only save a small amount, it's important to put money aside each month for emergency or big ticket items you may want in the future. According to CNNMoney.com, you should aim to spend no more than 90 percent of your income. That way you'll have the other 10 percent left for savings.

5. Don't get discouraged if you slip up
Staying on budget can be difficult during some months. Perhaps during the month of your birthday you spent a little more on social activities. During the holiday season you may have to allot extra for gifts and travel expenses. Getting stressed out may make you less likely to follow your budget, so give yourself a break once in a while. This is why saving throughout the year is important, so when these times come, you don't spend more than you have. Look online for a variety of savings calculators, including one from MSN Money, to help you track your savings so you can stay on-budget.