Financial professional Dale McCarty

It's Graduation season, and that means graduation gifts for the graduates! It's a special time, but what do you do with gift money? Financial professional Dale McCarty, President of Retirement Designers Financial shares a few tips for stretching those graduation dollars.

1. What should students and their parents know to help spend (or save) their money wisely?
- It depends on what the student plans to do after graduation. Will they be going to college? If so, you might consider trying to figure out the total expenses and determine a budget. One approach is to use gift money to pay for one thing, such as books, a laptop or the fees that go along with college costs. College cafeterias often aren't open for one meal each week, such as Sunday night. The student could set a budget for what he or she will spend on dinner and use that money to cover the cost of that weekly meal for the semester or the year, depending upon how much gift money they received.
- It can be a good idea to have a savings account. Another option to consider is putting some money in a CD account. (In a CD account, you typically agree to leave your money in the bank for a set amount of time. The interest rates can sometimes be slightly greater than those in standard savings accounts.)
- On the other hand, if the graduate is going into the workforce, they might want to put together a spending and savings plan. It could be wise to use some of the gift money to create a savings account. It can be a good time to create a budget and begin saving in retirement accounts.

2. What about the gift-giver? About how much money should I give to a graduate as a gift?
- Families often have their own guidelines that they use. Only give what your budget might allow.
- Your relationship to the graduate also matters. Is it an acquaintance, relative, son or daughter? For someone not in your immediate family, generally $25 or lower is appropriate.
- You also don't have to give cash. But sometimes gifts can get expensive. Other parents or family members can pool their graduation money to buy bigger ticket items, like a laptop or iPad, that the student can use after graduation.

3. Let's talk budgeting and credit. If they don't already have a checking or savings account, should they? What about a credit card?
- This might be a good time for parents to have conversations with the graduate about proper use of money.
- Teach basic principles of money management. For instance, if considering a checking account that's linked to a debit card, talk to your son or daughter about overdraft fees and teach them how to balance a checkbook.
--- With credit cards, it can be important to talk about paying them off every month – or considering a charge card that doesn't allow them to carry balances month to month.
--- A credit card or charge card can be important for the unexpected, but parents should try and talk to their kids about proper money management.