Graduation is right around the corner and that diploma may not be the only piece of paper graduates are excited to receive. If you’re among them, it’s likely your family and friends are eager to celebrate your accomplishment, and you may be expecting some gifts in the form of checks or cash. As tempting as it may be to go out and spend this money right away, here are a few ways you may be able to put your graduation money to better use.
Begin Paying off Loans
While the stress of tests and papers will soon be off your mind, in comes the anxiety of having to repay those student loans. You’re not alone. Many students rely on loans to help them achieve their degree — the rising student loan debt is proof. Your graduation money may not be able to cover your entire loan, but it could be a good start. Since some loans accrue interest during the grace period, this money may be able to tide you over in the meantime.
You also may want to consider paying down credit card debt. If you racked up credit card debt during college and had only been making minimum payments, now is a good time to pay off any remaining balances so you can begin working on your student loan debt. (You can see how your student loan balances are already affecting your credit scores by using Credit.com’s free Credit Report Summary.)
Invest in Yourself
There are many ways you can invest in yourself after your college graduation. For example, you can pay to speak with a professional like a financial planner or debt attorney. These professionals can help you determine your financial goals and help you sort out your student loans so you can begin the repayment process. Another great investment in yourself is to join a networking group. This can be an opportunity to meet industry professionals and begin making a name for yourself. Speaking of making a name for yourself, consider investing in some professional attire!
Build an Emergency Fund
You may also want to consider “paying yourself first.” Now may be a good time to start saving your money and begin creating the perfect emergency fund. Storing your money away in a savings account can give you time to decide how you would like to best spend your graduation money. Just be careful not to dip into this when you’re looking for quick cash, as you may deplete your savings before you have a chance to put the money to good use!
When starting out in the workforce, things may be uncertain. You may look to change jobs or pursue a different career. An emergency fund can keep you afloat while you’re figuring this out. Consider putting away at least three to six months worth of living expenses.
Consider using your graduation money to make even more money. Investing in mutual funds, stocks, an individual retirement account or other investment tools while you’re young gives your money more time to compound, which can mean even more money for your future! These funds can be used later to help make larger purchases such as paying for a wedding or making a down payment on a home. Before looking to build your portfolio, consider speaking with a financial planner who can place your money in places that align with your financial goals.
You may want to set aside some of that money to treat yourself. After all, you’ve worked hard to earn that diploma and there’s no harm in celebrating this accomplishment with a gift to yourself. Consider using some of your graduation money on a purchase or experience that will remind you of all your hard work in college. This isn’t to say you should blow all this money on a frivolous or impulsive purchase, but life’s accomplishments should be celebrated. Your college graduation is no exception.