I graduated college in 1990 (for those that need perspective that was before cell phones, laptops and social networks) with two associate degrees and a husband. I needed a career that would provide a good living and would allow me to finish school quickly because I was getting married – – no, it was not a shotgun wedding just a choice. I settled on an Associate of Arts Degree in paralegal studies in addition to the Associate of Arts Degree I had been working on to transfer to a four-year college.
Upon graduation, I received gifts of money from family and friends. At that time in my young life, I had a decision to make – – do we blow the money on an extended honeymoon, buy that shiny new car we wanted so much or invest the graduation money in a home. Thankfully, we chose option number three and used my graduation money as a down payment on our home. In hindsight, it would have been great to spend two or three weeks travelling around the world (something we never have been able to do); however, as I sit in my home now I realize that in just 10 years my home will be paid in full. I know that I did the right thing purchasing a home with my graduation money and I am thankful I had parents who offered me good financial advice.
For those twenty-something college graduates, I cannot recommend a better way to spend your graduation gifts than a down payment on a home but with one exception. If you have a heavy debt load, pay down that debt as much as possible. Especially if you have student loans because I see so many individuals in their thirties filing bankruptcy because they cannot pay their student loans and the heavy debt load that they carry. If you are fortunate and have not accumulated a lot of debt, then use your graduation money as a down payment on a home.
I guess you may be wondering what this has to do with the article title. Actually, I am a college graduate again in my forties. I always regretted not completing my four-year degree and, after having major surgery several years ago, decided to return to college to do just that. I graduated last year and much to my surprise received several generous cash gifts from family and friends. Therefore, I had another decision to make – – do I spend my graduation money on a fantastic vacation (second honeymoon), put a down payment on that new car I have wanted for so long (I am sick of the mommy-mobile) or do I invest the money for my retirement. I gave the matter serious thought over several months because I really wanted that vacation and the new car but I also wanted to do what would benefit me the most. I now have student loans so I could pay those down or I could do renovations to the house that are needed or maybe take the entire family on a smaller vacation. Then I remembered how hard it has been on my parents after retirement. They had to use their retirement savings just to make ends meet when my mother became ill so when they retired it left them with only their social security as income.
It became clear to me that I wanted to invest my graduation money in my future so I opened an IRA and deposited my graduation gifts into a retirement account. It makes perfect sense because my college degree will help me earn more money that I hope to put into retirement savings so why not get a great head start. I did keep some of my graduation money for myself because if I cannot get rid of the mommy-mobile right now, I could at least go and get a fantastic makeover for my new job.
More from this contributor:
To Flip or Not to Flip?
The College Fees That Often Take Parents By Surprise
Fun Ways to Teach Kids About Personal Finances