December 11, 2023
Question:
I just received a $5,000 gift from a relative. What should I do with it? I have a steady job, but I am only a few years out of college so I’m not earning that much.
Answer:
What a generous gift and I am glad that you are open to suggestions on the best way to use it.
The first question I would ask is do you owe any money on your credit cards.
If you do, I’ll bet it is at high interest rates.
Since you are working, I would pay off or pay down high interest credit cards before you do anything else. That will be a great return on your money.
If you don’t have credit card debt, do you have an emergency fund?
If you lose your job or have an unexpected bill, an emergency fund is essential and with money market funds currently paying 5% interest, that is a great place to consider stashing your relative’s gift.
Also, if you have student loans, you can use the gift to cover the monthly payment.
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