What to do (and ways to save) when you get a gift of cash

High school graduate celebrates monetary gifts with parents

What do you do when you get a money gift? Take our poll, then learn ways to put that generous gift to good use.

Receiving money as a graduation gift, as a holiday gift, or from a generous relative can be a great way to kick-start your savings plan. By setting the money aside, you’ll be able to plan for future college costs or even emergencies. In fact, according to a study by the University of Michigan, 17% of teens are saving half or more of their earnings for college. The study also reports that saving for or paying for a car is the second place teens put their money.

Whether you’re saving for a specific goal or to just have money in the bank, learning how to save money now can provide you with financial security as you move beyond high school.

Five tips to kick-start your savings

After treating yourself to a well-deserved gift, you may find that you want to save the rest of that generous check from Grandma. No matter what you’re saving for, there are some simple ways you can start to snowball your money. Here are some ideas:

1. Try a no-spend challenge. We all know impulse purchases aren’t great for our wallet, so why not try to avoid all unnecessary purchases? A no-spend challenge forces you to think about what you’re spending money on: For example, making lunch instead of buying it at a restaurant. Whatever you don’t spend, put into savings.

2. Make saving automatic. There are a few ways to do this. First, if you’re making a regular paycheck, you can set up automatic transfer to move a lump sum from your paycheck to savings. Another option is to consider something like a Way2Save® savings account. If you link your Wells Fargo checking account, every time you make a debit card purchase or pay a bill online, $1 automatically moves from your checking account to your Way2SaveSavings account. Those dollars can add up over time!

3. Take advantage of discounts. As a college student, you likely get discounts to a variety of restaurants, retailers, and more. Take advantage of those and track the savings. If you can, move that money into your savings account. And if you’re in college, take advantage of other cost-saving perks, like free gym access and cheap event tickets.

4. Open a high-interest savings account. If you get a large amount of money (say, an inheritance from a grandparent or relative), you should look into high-interest savings accounts. If you have $5,000 in an account with a 2% annual percentage yield, you could earn around $100 in one year. Over time, that will grow even more through compounding interest!

Learn more about ways to fuel your college savings with our Preparing and Paying for College Webinar Series.

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