The average American spent about $100 on graduation gifts this year. Most of that was in the form of cold, hard cash. That means, all told, most graduates pocket around $1,000.
Figuring out what to do with that money is a great financial “teachable moment” if you will. How recent grads spend (or save) that chunk of money can help set the tone for their future financial personality.
I get that it’s tough not to spend ANY of the money. Experts say if a splurge is in order, keep it to 10 percent of the total cash you received. High school grads may need a new computer for college, while college students may need a new interview wardrobe, for example.
Beyond buying items on sale, grads can get even more out of these big purchases by doing some research and using a gift card purchased at a discount from a gift card resale site like coupontrade.com. They can save an additional five to 30 percent, and even sell their unwanted gift cards for cash while they’re on the site.
It’s always smart to save or invest. High school grads can put the money in a checking account for expenses, such as an apartment security deposit or dorm food plan. College graduates who are lucky enough to have a job lined up would be smart to invest right away in a 401k. If that’s not possible, the money can be used to start up a Roth IRA.
Financial gurus recommend young people start with no-load mutual funds, going heavier on stock index funds (both domestic and foreign) and lighter on bonds (about 10 percent). For more on how to divvy things up, here’s a solid article: thecollegeinvestor.com
College graduates might also use money to pay down debt (starting with the highest interest rate). Carrying around debt — the average is around $23,000 — can really put a damper on a new career. Perhaps the money can go toward a car down payment.
Father’s Day Freebies
Happy Father’s Day! It’s almost here, so I wanted to include a couple of free food ideas. IKEA will offer free breakfast and coffee for dad. Details here: ikea.com
Meanwhile, dad can get a free fro-yo at TCBY on Father’s Day: tcby.com
Dad, you’re the best!
About The Blogger
- In her Brooke’s Bargains blog Brooke Wagner writes about finding bargains and saving money for her family. She calls it one of her favorite hobbies. Blog entries cover everything from the latest steals, deals, and freebies to cheap family activities, saving for college, and what to buy right now. Tweet Brooke your ideas at @BrookeCBS4.