Graduating from college is a major achievement and if you're lucky enough to receive some cash as a gift, it can be a great step in the right financial direction. While it might be tempting to splurge on a vacation, shopping spree, or a new gadget, your graduation money could do a lot more than just offer a moment of fun—it could help build a stronger financial future.
So, how should you decide whether to save or spend? Here are five smart ways to use your graduation cash that can set you on a solid path toward financial success.
Start an Emergency Fund
One of the smartest moves you can make with your graduation money is to create or boost your emergency fund. Life after college can be unpredictable and having a financial cushion can give you peace of mind.
Start by setting aside at least $1,000 to cover unexpected expenses like car repairs, medical bills, or a surprise job transition. Over time, aim to build this fund to cover three to six months of living expenses. Keeping this money in a high-yield savings account can help it grow while staying easily accessible.
Pay Down Student Loans
If you graduated with student loan debt, consider using part of your graduation gift to get ahead on payments. Focus first on unsubsidized loans, where interest begins accruing immediately.
Making early payments can reduce your overall interest and shorten the life of your loan. Every little bit helps and the sooner you start, the more you’ll save in the long run.
Jumpstart Your Retirement Savings
Retirement might feel a lifetime away but starting early gives your money more time to grow through compound interest.
Even a small contribution to an individual retirement account (IRA) can make a big difference down the road. And if your future employer offers a 401(k) match, you’ll already be in the habit of saving for the future—something your future self will thank you for.
Begin Saving for a Home
If homeownership is part of your long-term goals, your graduation money can serve as the first step toward a down payment.
Start by researching how much you’ll need, then open a dedicated savings account, money market account, or certificate of deposit (CD) to safely grow your funds. Even a modest start now can put you ahead when you're ready to buy.
Cover Moving Costs or Settle into Your New Place
If you're relocating for a job or starting fresh in a new city, graduation money can help ease the transition.
From hiring movers and renting a truck to covering deposits and furnishing a new apartment, moving can be expensive. Using your gift to cover these costs can prevent you from going into debt right out of college.
Spend or Save? Do What’s Right for You
Ultimately, whether you save, spend, or do a little of both, your graduation money is an opportunity to make intentional financial choices. Start by thinking about your short-term needs, like an emergency fund or moving expenses, and your long-term goals, such as paying off debt or buying a home. By using your graduation cash wisely, you’re not just celebrating your accomplishment—you’re investing in your future.
Want help creating a financial plan that fits your goals? Talk to a financial coach at Credit Union of Denver to get personalized guidance and tools to make the most of your money.