How To Make The Most Of Extra Money That Comes Your Way
From creating an emergency fund to paying off debt, here’s a game plan to use extra money to make a meaningful impact on your life.
We’ve never heard anyone complain about getting extra money — but we have heard questions about what to do with those unexpected funds. Whether it’s due to a bonus, stimulus check, or other unexpected windfalls, there are ways to make extra cash work for you if you don’t need it for essentials such as food and shelter. Here are some thoughts on making this money work better for you now and in the future.
Be Thoughtful and Spend Meaningfully
First and foremost, look at your money mindset. Take a pause, and if you’re not sure where to begin, start with thoughtfulness. Think about where you are right now and ultimately where you want to be.
Pausing and taking a step back lets you settle the impulsive thoughts of splurging on the latest tech, a shopping spree, or a down payment on a new motorcycle. Stop and ask yourself, “What would be the most meaningful thing to do with this money to put me in the best situation possible?” This mindset might not be as fun in the immediate moment but will help you build a more fulfilling life in the long run.
Really consider if your purchase will add true value to your life. Remember, if you plan on using free money as a down payment, you ultimately create more debt from what you’ll still owe. Instead, consider putting these new funds toward something meaningful that moves you closer to your life goals.
Build An Emergency Fund
Emergency funds can be the foundation of your future financial security. Often, someone can have something unexpected happen in life, whether you blow a head gasket, your furnace dies, or a pandemic stimies your income. These unforeseen events can force even diligent savers to rely on credit or loans. While the event itself might be a one-time scenario, the impact on your finances can have lasting effects for months or even years. Emergency savings help immensely to keep you from digging deeper into a money hole.
For a smart way to start building your safety net, check out our I Can Save account.
Pay Off Debt
Paying off debt is another smart strategy when you’re deciding what to do with extra cash. Paying off debt gets you closer to financial freedom to live the way you truly want. Instead of paying off interest each month, you could help a friend in need, take your mother to lunch, or donate to your favorite charity. We aspire toward so many beautiful acts of kindness, but the burden of debt impedes those actions.
High-interest credit card debt can be a weighty burden, especially if it’s over multiple cards or combined with other sources of debt. In these instances, a personal loan or personal line of credit could possibly help you consolidate all your debt into a lower interest rate. That way, you can put your extra cash toward paying more of the loan principal rather than the interest.
Our Greater Nevada loan consultants can help you better understand your debt and how to restructure it to pay it off faster. They’ll also guide you through the loan process and present the most affordable option tailored to your needs and timeline.
Make Purchases Count
Sometimes, you need to spend that extra money to improve your life. Maybe you need a more reliable vehicle. Perhaps your home needs a new roof, appliances, or upgrades. You might want to invest in your health and use that extra money for a gym membership or a medical or dental procedure. These are all important and valid reasons to take extra money and spend it, especially if you can do so in a debt-free way.
This is the time to evaluate how much this purchase will meaningfully impact your life. If you consistently take thoughtful and intentional actions with your money, you’ll usually be able to find your true north of financial security.
Little or lots, all extra money can work to your advantage
Small amounts of free money are just as good as significant amounts if we make the right decisions with them. Being thoughtful with how we apply extra money makes all the difference.
It’s all about how you think about money, the impact it can create, and the actions you take. So, remember, when that shiny, bright check arrives in your hands, take a step back and think about how this money can add real meaning to your life and to the lives of those you love.
Here at Greater Nevada Credit Union, we are dedicated to helping you find the best path forward so that your finances work for your life.