Gifts from the Wedding: What to do with the cash?

You may have scored huge at the wedding registry. But when you receive cash gifts along the reception lines, you can use these five tips to build financial security.

Pay down debt.
Experts estimate that the average married couple carries about ten to twelve thousand dollars in unsecured credit card debt. If you’re in that situation, sacrifice your dreams of a big screen TV and pay off the cards with the highest interest rates. If you and your bride manage your debt separately, split the cash so you can each make some headway.

Start an emergency fund.
Financial planners recommend stashing six months of your day-to-day living expenses in a money market account. Even though this cash doesn’t grow a lot of interest, you’ll appreciate it if you or your bride suffer a job loss or a health scare.

Max out a retirement account.
Once you’ve knocked out your credit card debt, make the maximum contributions to your retirement accounts. If you don’t have an IRA, you can use this opportunity to invest in a no-load index fund to maximize your savings, tax-free. Your wedding gifts could pay off huge dividends in your golden years.

Invest in education.
Once you’re debt free and working on your retirement savings, take advantage of new laws that let you save tax-free for college. Ask your investment advisor about a 529 plan that maximizes your earnings, so you or your bride can attend school or you can send your future kids to a top-notch university.

Pay down that mortgage.
An extra payment on your home loan today could save you four or five times that amount in interest over the life of the loan. If you’re still renting, a bigger down payment on a home can net you lower interest rates and cheaper insurance.

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