If you were fortunate enough to score scholarships and/or grants in addition to your education loan, you’ll most likely receive a refund after your books, tuition, and housing are paid for. While you may think, “cool now I can afford a new flat screen TV or a new wardrobe,” it’s important that you find some self-control and use your leftover money to help you become more financially stable in the long-haul.
That said, if you want to learn responsible ways spending your financial aid refund check this year, continue reading below.
Clear Your Debt
No matter if you have a student loan to pay off (yes you can start paying back early), a hefty car note, have outstanding credit cards bills or medical bills, library book fines, or simply owe a friend money, it would be wise for you to use your refund check to get rid of your debt. Prolonging the process will only increase your interest which means you’ll end up wasting more money in the end—not to mention companies can get frustrated and report you to collection agencies.
If you’re reported to a collection agency, your credit history will be tainted and you may have difficulty making bigger purchases, such as a house or car, in the future. You’ll feel great knowing that you don’t owe anyone money (or that you’re half way through paying it off).
If you don’t have any big bills to pay off, that doesn’t mean you should spend your money frivolously. Rather, you should invest it so that you or a family member will be taken care of in the future. You could buy a life insurance policy for starters. It may seem a bit morbid to think about death and aging but these things are inevitable and it’s always a good idea to be prepared. You should also think about investing in stocks/and or bonds—this is a great way to build your equity over time.
Put it in a Savings Account
If you already have a nest egg (or would like to start one) contributing partially or all of your refund check into a savings account is an excellent way for you to create a “cushion”.
After all, you’ll never know when you’ll need that money to pay for unexpected medical costs, car repairs, or unexpected course costs and equipment—for instance your lap top may go on the fritz and you’ll need a replacement. That money will also be there in case you don’t get a job immediately after college and need a source of income.
If everything goes smoothly near graduation, you can choose to use that money however you like, perhaps on a much earned graduation vacation. Of course you can choose to use your refund check as supplemental income for food and for minor entrainment throughout the semester if you’re hard up for cash, but just don’t spend it on something that won’t directly help advance your education career.
|Lenore Holditch is a freelance education writer for www.toponlinecolleges.com, a website that covers topics from o traditional to alternative learning. She encourages your comments.|