It is difficult to decide what to do when you get extra money. Many people’s immediate reaction may be to purchase something they’ve been wanting, while others may dream of building up their savings. So, what should you do when you get a bit of extra cash? Here are a few ideas.
Put Money in Savings
The first thing to consider when you get extra money is putting it into savings, especially if you don’t currently have an emergency savings fund in place. It is known that about two-thirds of Americans wouldn’t be able to cover a $1,000 emergency if something were to happen. This is why anytime you have some extra cash you should stash some away before considering making any other purchases or decisions.
Make a Big Purchase
If you decide to use your extra money to buy something, make sure it is something worthwhile. For instance, if you get a bonus and have been in need of a new refrigerator you may want to consider making that large purchase with your newfound money. Or, if the cash isn’t enough to cover the big purchase you had in mind, keep it as savings towards the item or money down on a loan for it.
You can always take any extra money you have and invest it. New investing apps, like Acorns and Robinhood, make it easy to invest just a couple dollars at a time (or thousands at a time, it is up to you). Taking the extra money and investing it is always a great idea because it gives you the opportunity to generate passive income.
Pay Off Debt
Maybe you aren’t in the position to make any large purchases, save or invest right now because you have a significant amount of debt to pay off. If that is the case, decide which debts you’d like to tackle. Make sure you pay at least the minimum monthly payment every month and, if you are trying to pay debts completely off, you should always take care of your higher interest debts first. Then move on to the lower interest cards and loans.
Try Your Luck
Lastly, if you come into a bit of extra money you may want to consider trying your luck in gambling or playing the lottery. You may consider trying your luck in small games or lotto tickets. Some people have had success in winning on lottery tickets repeatedly. Similar to investing, gambling can provide you with a way to expand your cash in the blink of an eye. However, gambling poses a much higher risk and has a much lower success rate overall.
No matter what amount of money it is, having extra cash is never a bad thing. Deciding what to do with it can make all the difference though. You could place the money in a savings account for your first home and get one step closer to your goal. Or, maybe you’d like to pay off some debt and try your hand in investing. Whatever the case may be, having a plan in place for your extra cash is a good idea.
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