10 Smart Things to Do with Your Graduation Money
May 10, 2012
Graduating from high school or college represents the culmination of a lot of hard work, and many grads are fortunate to have their efforts rewarded in the form of cash from family members and friends. Learn about smart ways that high school and college graduates can put monetary gifts to use.
High School Graduates
Cover the cost of college textbooks and supplies.
High school graduates heading to college may have tuition, school fees, housing and food covered by a financial aid plan. Individuals, however, often fail to plan for the cost of college textbooks, course packets, office supplies and other academic essentials. Graduation money can help cover these costs.
Buy a computer for college.
While owning a computer may not be necessary in college, many students do elect to buy one before heading off to school. Laptops and tablet devices are popular because their mobility can allow students to take notes in class and do homework virtually anywhere on or off campus.
Supplement living costs.
Many college students must live on tight budgets designed to make financial aid disbursements or living allowances last the whole school year. Money saved from a high school graduation can help students to avoid completely spartan lifestyles and indulge in cuisine outside of the ramen noodle food group.
Cover student loan interest.
Many student loans accrue interest while individuals are attending college - costs that, added to the principal, can significantly increase the amount paid on an education loan. Many people elect to make loan interest payments while they are in school to minimize the total cost of a student loan.
Bank money in a savings account.
Students who don't need to spend high school graduation money on legitimate college expenses would do well to place their windfall in a savings account. Even if college costs aren't currently outstripping student means, there's a chance unexpected expenses may come up at a future date.
Make student loan repayments.
Most people who earn a degree rely on some form of student aid to cover college expenses. Graduation money can represent a financial reserve for individuals repaying loans. For recent college grads experiencing challenges in a difficult job market, graduation money can help cover loan payments until professional prospects pick up.
Pay off credit card debt.
Many graduates emerge from college with another form of debt that can be even more financially debilitating than student loans. Balances on credit cards often come with high interest rates that can deeply gouge personal finances. Experts suggest that paying off credit card debt is among the most important financial goals to have.
Buy nice interview clothes.
Graduates not fortunate enough to have a job coming out of college typically jump headlong into an employment search. To make a good impression and improve their chances of getting hired, grads will have to look sharp during interviews. Professional attire, then, is definitely a justifiable use of graduation funds.
Allocate gift money to housing.
Whether individuals plan to rent or buy an apartment or home, there are often dramatic costs associated with housing. Rental properties often require first month's rent, last month's rent and security deposit before tenants can move in. That's not to mention the substantial sums often involved in making a down payment on a house. College graduation gifts can help cover these costs.
Invest the money.
Individuals will benefit from making investments as quickly as possible after graduation. A future home purchase, childcare expenses and retirement are only a few of the big-ticket costs many grads will have to cover some day. However, it's important to note that having adequate savings often takes precedence over investing. Experts recommend having three months of living expenses available in the event of a job loss, a medical emergency or another financial hardship.