You’ve just come through four of the most pivotal years of your life and you’re ready to step out and make your mark on the world with your college degree. If you’re lucky, you’ve probably accumulated a few generous checks from friends and family members congratulating you for all your hard work. When so much money is presented to you at one time, it can be difficult not to spend it all at once. Not so fast though. Before you allow yourself to get carried away with fantasies of a new car or a European vacation with your friends, think about the best way to spend this money. If you’re like most recent college graduates, you probably have a fair amount of student loans to pay off, and you really don’t want to spend the better half of your twenties drowning in debt.
I don’t want to be a downer, and I certainly don’t mean to tell you that you can’t have fun! Your twenties should be some of the best years of your life; you’re in that transitory phrase in between adolescence and full adulthood, so enjoy those years while they last. However, you should always be smart with your money so that you’re not met with unneeded financial stress later on. Depleting your life’s savings to buy a new car when your old one is just fine might not be the wisest use of your money when you’ve got student loan bills and monthly rent to pay. So here are some smart ways to spend that much-deserved graduation money, suggested by MarketWatch, and then whatever you have left over, you can think about how you want to treat yourself.
Invest in your career
It’s okay to treat yourself every once in awhile, especially if it will help you out in the long run. If you’re having trouble finding your first job out of college, why not invest some of that money into a professional resume service, job placement agency, or career coach? Once you land that first professional job, you’ll want to look the part, so spending some of your graduation money on new clothes or shoes that you can use for work is perfectly acceptable.
Start paying off student loans
Financial experts advise paying off your student loan debt as soon as possible, so you should opt for the most rigorous payment plan that’s within your means. Luckily, there are modified repayment plans that will not leave you feeling overwhelmed, as well as tax deductions and a six-month grace period to help you get your finances in check before facing these payments. Once you pay off any debt you may have, work on putting together a budget for yourself based on your income so that you never spend more than you can afford and you avoid future debt.
Use it for your main expenses
If you don’t find a job right out of college, you may not have to start worrying about big expenses while you’re still living off your parents. Pretty soon though, you will have to start diverting a large portion of your earnings towards major expenses like rent and car payments. The smartest use of your money may be to make sure that you have enough money to get yourself established. Then, work out a monthly budget for yourself.
The smartest use of your money would be to not spend anything at all. Of course, this isn’t a practical option for everyone, but if you don’t have any immediate expenses when you graduate, it’s worth it to start thinking about your future and start building up savings funds for emergency payments like car repairs and medical bills, and even for retirement. Because of interest rates, the earlier you start saving for retirement, the more money you will have accumulated in the future when it comes time to retire.