7 Smart Things to Do with Your Graduation Money

Congrats, Graduate — you did it! But now that school’s out, you’ve got some big decisions to make, the least of which is what you’re going to do with all that graduation money.

Whether you’re fresh out of high school or a newly-degreed college grad, here are seven smart ways to handle that influx of cash:

Offset College Costs

It may not make a huge dent, but high-school grads may want to consider using their newfound cash to help offset the cost of their college education. It may not seem sexy, but it’s super smart.

Budget It

You probably have dollar signs in your eyes right now staring at that Scrooge McDuck-worthy pile of cash, but this isn’t the time to go on a free-for-all spending spree. You’ve got real-life expenses coming up — so it’s important to budget even your gift money.

“It’s so common to ignore the fact that your spike in income after graduation is maybe and probably temporary,” reminds Nicole Laoutaris of RateHub, a financial service provider. “Gifts from family and friends only go so far, and if you have a new job, you’ll find soon that you have new financial responsibilities that go along with that: moving, higher rent, new clothes for work, travel.”

Spend It — Frugally

OK, so you don’t have to budget all your grad money toward the rent. If you’ve paid your bills this month, treat yourself. Just make sure your stay conscious of how much you’re spending.

“If you’re going to spend a little extra money on that post-graduation trip, be frugal,” Laoutaris says. “Make breakfast at home, bicycle around your city, and continue to socialize with friends at someone’s house instead of overspending at bars and restaurants.”

Pay Off Your Credit Cards

Credit card companies had me pegged from the moment I turned 18. I started receiving phone calls and offers for credit cards, and of course I signed up for all of them — because freeeee mooooneeeeey! That went down like a lead balloon, which is why I’m a personal finance expert today telling you how to manage your money. Live and learn, folks.

If you’re a college grad, consider using that cash influx to pay off your student credit card balance.

Pay Down Your Student Loans

While you should probably put some of your graduation money toward your student loans, just how much is a matter of consideration.

“Be careful about paying a large amount of your student loans back,” says financial planner and investment adviser Jaycob Arbogast. “If you drop below $30,000 in federal loans you’ll no longer be eligible for extended repayment plans. So make sure to choose your payment plan first.”

Invest It

If you were a business major in college, you probably don’t need me telling you how to invest your graduation money. But for all you other majors out there that don’t know the first thing about investing, listen up: Investing is critical to personal wealth building, and there’s no better time to start than the present. There are myriad ways you can invest — stocks, starting a new business, in yourself by furthering your education — but what’s most important is that you’re actively pursuing it.

Put It In the Bank

If you’re at a crossroads in life and unsure of how to manage your graduation money in a positive way, then send it to the bank. Out of sight, out of mind, can be a good thing if all that cash is likely to start burning a hole in your pocket — especially if you don’t have a good-paying job after you graduate.

“Figure out what your major life goals are,” Laoutaris advises. “Then put that extra money into the right type of savings account so you can start accumulating interest right away. You’ll thank yourself later.”

Photo Credit: Mark Ramsay