Tuesday, June 6, 2017

How to Use Your Graduation Presents To Build Your Financial Future

If you’re graduating from college this year, congratulations! As a college graduate you’ve survived four (or more) years of nose-to-the-grindstone studying, years of ramen noodle breakfasts and 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 by giving you cash.

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 to build your financial future 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. 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 medical emergency.

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. You could even open a separate Community Financial savings account to accomplish this goal.

Congrats to all of the 2017 graduates! We wish you a bright financial future.

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