Depending on where you find yourself in life, it may not have always been easy to set money aside. With high inflation and the cost of living steadily rising, many are struggling to make earnings, let alone put cash aside for a rainy day.
But if you do find yourself with more funds at your disposal than you are accustomed to, then you should ask yourself: What should I do with my extra cash?
The answer, like many, isn’t one-size-fits-all. But there are some ideas that, when taken together, can put you in good financial standing and set you up for success over the long term.
So, for all generations— Gen X, Millennial, or Gen Z alike, it is an acceptable notion that deciding on what to do with extra cash that you have squirrelled away can be daunting. However, with these few tips, you can be sure to make the most of your surplus.
Open an Investment Account
One of the greatest strategies for surplus cash is to invest it for future purposes. The investment could be done for many reasons– as an addition to other investments you already have, as an investment to further your studies or children’s education. Whatever the reason is, investing in the right firm and picking the right investment vehicle is a wholesome way to use extra cash.
At Credlanche, we have various investment options starting from 3 months up till when you decide for such an investment’s maturity. These investment options also take cognisance of market volatility, risk tolerance and even investment goals.
Worthy of note is the fact that you get to decide when you need your returns on investment (ROI) to be sent to you— we know it’s interesting, don’t mention it!
Pay off high-interest debt with extra cash
It may not be an exciting option, but one of the smartest things you can do with a windfall is to pay off or reduce any high-interest debt you are carrying. By doing this, you are preventing such debt from accruing over time.
This is especially important now with higher interest rates, because your credit card, personal loan or student loan debt could become even more expensive if their interest rates are variable, rather than fixed.
Once you have paid off a credit card’s existing balance, put a plan in place to pay off any future balance each month to avoid accumulating more high-interest debt.
Put extra cash into your emergency fund
An emergency fund is important for anyone who wants a financially stable future, because you never know when you might need to cover an unexpected household or medical expenses. I mean, uncertainties happen; you can be sure to guard against such with your extra cash in your emergency account.
The general guideline is to accumulate three to six months’ worth of household expenses. Consider putting it in a high yield savings or money market account, which typically earns more interest than a traditional savings account. We can’t laud it enough but Digitvant microfinance bank can be your sure plug account for emergencies.
Having an emergency fund means that there’s a supply of cash at the ready, so you don’t have to use a credit card or tap your retirement fund if you encounter an unexpected event.
Invest Extra Cash in Yourself
When it comes to investments, one of the best things you can invest in is yourself. An example would be to save up for those extra skills that you have always admired.
We all know that in the workforce, the more professional qualifications you have, the higher your chances of promotion and getting the money.
So, investing in yourself is a super move and it is worth all the money.
Also, if you have entrepreneurial dreams, say you want to open a hair saloon or coding academy for young adventurous minds, another way to use extra cash is to jump start your business and turn your dreams into reality.
Using extra cash lying around lazily will lessen any business loans you might need as you start and grow your own dream company.
Importantly, consider the timing when putting extra cash to work bearing in mind that
When and how you end up with a cash surplus can affect what you decide to do with the money.
For example, if you receive an inheritance as a result of the bereavement of a loved one, it is probably coming at a heightened emotional time. In this case, you may want to take your time and perhaps, put the money aside until you feel ready to make decisions about it.
You can also assess your budget against any big expenses that are coming up or promises and pledges that you have made. By settling it, you are not only freeing your mind but also putting your extra cash to a good use.
More so, you can even consider paying for insurance packages with extra cash and be well assured that your property is safe and secure.
Your extra money may also come in the form of a graduation gift, work bonus or a holiday bonus. While these are meant to be celebratory gifts, it’s still smart to consider all your options before making an impulse buy.
Did we say impulsive buy? Okay, you can buy with your extra cash as well but you can always prioritize your purchases so that you don’t end up buying what you may not use in the future.
Go ahead and treat yourself with extra cash
While there are a number of financially prudent ways to use extra cash, it’s also okay to spend some of it on something fun. So, spread your wings, free bird, and let your money be the air that takes you to your dream haven.
Just be sure to think it through while considering if your spendings aligns with your overall financial needs and goals.
Key Takeaways
- Extra cash from a refund, bonus or other sources should be deposited for a dream investment option that you have always admired.
- Yes, you can treat yourself to one of the most exquisite restaurants or pack your bags and off you go to an eldorado for a dream vacation.
- But, it pays to pause and consider if there is a financially smarter way to use that extra cash. While it may not bring you instant gratification, using an unexpected windfall strategically might set you on the path to fulfilling a long-held financial goal.
- It’s a good idea to sit down with a financial professional to determine what might be best for your specific situation and Credlanche is your GOAT in any financial matters.
- Being thoughtful with money, whether it’s an unexpected windfall or not, is always the best way to achieve your financial goals.
Consider these few prudent tips and be sure that your money is indeed working for you and yours in the near future with tangible benefits for all to see.