You’ve studied hard over the years, and now it’s finally time to don your graduation cap and gown. As “Pomp and Circumstance” plays and you march out of school for the very last time, you’ll be greeted by friends and family members with warm hugs, heartfelt congratulations — and envelopes containing checks and cash.
So what’s the best course of action for using all that grad money? Save it, invest it, pay off debt, spend it? Experts say it’s actually all of the above. Let’s explore those options, one by one.
Save as much as possible
Establishing an emergency fund, preferably in a savings account, should be of utmost importance for the simple fact that, well, life is expensive! Unexpected expenses like auto repairs, medical bills, or accidents can come out of nowhere and sideline you if you’re unprepared. The last thing you want to do is end up having to scramble in those cases. Having that emergency fund on hand and continuing to build on it is key to future financial success, as well. Putting at least $500 away is a good start, but saving up enough to cover three to six months of expenses is a good goal to set for down the road.
Saving for retirement may sound a bit absurd when you haven’t even entered the working world just yet. But even a modest contribution now can grow exponentially over the years and net you a huge return by the time you hit retirement age. This also gets you in the habit of investing for retirement early so that you don’t have to worry about money when it’s time to retire.
Pay off debt
Liberate yourself from debt and start with a clean slate! If you’ve racked up any debt over the past few years, pay it off as much as you can now. Debt can be debilitating and will suck the fun out of the life you’re wanting to build for yourself, so if you have money to throw at it, now’s a great time. If you don’t have credit card debt but know you’ll be facing student loan payments in the near future, you might also consider setting aside some of your graduation money to give yourself a head start.
You should be able to enjoy your graduation money by spending a bit of it on yourself. After all, the work you put into school should come with a reward. After crossing off savings, investing, and debt payoff from your list, whatever’s leftover should be fair game for having a little fun.
And don’t forget, your friendly neighborhood bank is here to help you with whatever financial goals you may want to pursue! Whether you need a savings account for your emergency fund, a checking account to deposit your shiny new paychecks into, or something else entirely, just reach out online or stop by one of our many branches and we’ll be happy to help. We can’t wait to be a part of your bright future!
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