How To Use Your Graduation Presents To Build Your Financial Future
If you're graduating this May, congratulations (assuming you
survive finals, that is).
You've survived four years of nose-to-the-grindstone
studying, four years of ramen noodle breakfasts and four years of frantic,
last-minute papers. Your family and friends are eager to celebrate your
accomplishment, and one of the ways they know how to do that is with cash.
It may seem crass to plan for gift money you haven't gotten
yet, but it's crass with a purpose. Money you don't have a plan for has a funny
way of turning into concert tickets, electronics and other splurge items.
Making a plan to use your graduation money can prevent you from relying on debt
to cover your lifestyle startup costs. Consider making space in your graduation
gifting for these must-haves.
1. A professional wardrobe
If you have a new employer waiting for you to show up to
work, chances are they won't be as sympathetic to sweatpants and band T-shirts
as your TA was. Getting two or three professional items of clothing will help
you hit the ground running on day one. You won't have to worry about cramming
into dress clothes that did fit before you spent three years eating pizza every
other day. And if you don't yet have an employer, buying a good "interview"
outfit is a wise investment.
2. Start saving for retirement
It's weird to think about how your career will end before it
starts, but it's never too early. Starting a Roth IRA will keep your money
growing tax-free. You'll need to start this some time, and it's much less
daunting to add to a retirement account than to start from zero. Though early
withdrawal of IRA funds should be limited for many reasons, the money is
available for major purchases like your first home, or if you need it due to a
3. Build an emergency fund
Right now, your financial future is very fragile. You've
spent a lot of time and money developing your ability to work and making
yourself more attractive to an employer. What would you do if you found
yourself unable to work for several months? What if you needed car repairs to
get to work? Right now, before you have to worry about a rent payment or a
utility bill, is the best time to start saving for those emergencies. Stashing
away a little money in a rainy day fund is one of the best ways to insure the
significant investment you've made in yourself.
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