You’ve graduated–congratulations! People love celebrating recent grads, so you may have received an influx of cash from relatives and family friends. What the heck should you do with your graduation money? We have three simple ideas for you to invest that money rather than spending it.
Open a Certificate of Deposit Account
You probably already have a savings account, but you may not have a Certificate of Deposit. Savings accounts are notorious for having very low interest rates–sometimes as low as .01%. A Certificate of Deposit (CD) is another type of savings product offered by most banks that tends to have a higher interest rate than your basic savings account. Interest rates can range from .4% to 1.5% depending on the bank! One thing to keep in mind is that CDs are for a fixed term, so once you open one up, you have to leave the money in there for the designated amount of time before withdrawing it. The time period can range from three months to ten years, depending on the bank.
Start Your Emergency Fund
It’s important to have a cushion, just in case of emergency. Once you’re not living under mom and dad’s roof anymore, you’re on your own. They may still provide you with help in some ways, but it’s a good time to start preparing a small emergency fund. You should aim to cover anywhere from three to six months of expenses. Put this in a separate savings account and don’t touch it. You may not be able to fill up your emergency fund with enough to cover six months of expenses with just your grad money, but any starter deposit does help.
Plan for College or First Apartment Costs
If you’re heading off to college in the fall your parents may be helping you with tuition, fees, room, and board, but there are plenty of other expenses that crop up along the way. Make sure you’ve set aside some money to cover the essentials. This can include textbooks, a laptop, and dorm room necessities like sheets, towels, kitchen supplies, and bathroom items.
For college grads, your first apartment may come with more expenses than you anticipated. Make sure you’ve planned to pay a security deposit up front. Don’t forget the cost of utilities in your budgeting, and carefully consider what furniture, decor, and kitchen needs are required to turn your first apartment into a home.
Another good early habit is getting a checking account to help manage your income and expenses.
Sign up for an online checking account – a new way to bank!