Many graduates get a nice stack of cash shortly after graduation. Whether it’s from your family or friends, it is very important to know how to manage this money. Often, recent graduates tend to blow most of the money at their first opportunity. This is exactly the opposite of what you should do!
If you can’t help yourself and you are just dying to go out and spend some of the money, set aside 10% for spending and keep the rest in your bank account. Ethan Ewing, president of bills.com, warns that “cash in hand can be a pretty dangerous thing.” Ewing is right, when you carry around a large amount of your money, you are much more likely to spend it! So take that 10% and have a good time, but make sure you keep the rest untouched!
Some other, more beneficial, options you may consider are provided by Claudia Buck, a writer for The Sarcamento Bee. Getting rid of debt is always a great option. Most graduates today are graduating with thousands in credit card debt in addition to their school loans. Reward your future self by cutting down your debt.
If you don’t want to lose all your money, you should consider saving. It is always a good idea to save money so consider dropping the money into a savings account or short term cd.
Open an IRA or Roth to help plan for the future. Although these options are long term, they are great ways to put away money and gain interest.
Do you have an emergency fund? No? Well, no better time to start than now! Setting aside money in case of emergencies is always a great way to ensure you will be ok if something sudden comes up.
Professional attire. If you are going to spend your money, spend it wisely, and invest in attire that will help you in the future. You do not want to go into interviews looking disheveled and unprepared; you need to stand out in a good way. If you must spend some of that money, invest in some professional attire to help you look and feel more presentable in interviews.
Insurance anyone? This is the best opportunity to get started on a insurance plan. You already have money saved up to pay for premiums in case you don’t find a job. You definitely don’t have enough to afford medical bills though. Weigh your risks, anyone can get sick! Consider a short-term plan if you are confident you will have a job. They are offered up to 12 months and provide great gap insurance!