Are you feeling like you have a bit of extra money sitting in your bank account at the end of each month, and you aren’t sure how to use it? You are not alone, and you have come to the right place.
In this article, you will learn seven highly-recommended tips on what to do with extra cash after your bills are paid. Many people have extra money left over each month but don’t use it in a way that helps them move toward their financial goals.
That means you can get ahead of the vast majority of spenders out there buying the newest trends on social media and instead learn some ways to make money work for you and get more out of your hard-earned paycheck each month.
7 Tips on What to Do With Excess Cash Each Month?
1) Begin investing your extra money
Investing your excess cash in the stock market can be a wise decision, especially if you want to get a return on your money over time. By putting your money into stocks, bonds, or mutual funds, you can potentially earn more than what traditional savings accounts offer.
The stock market is always changing, so it is important to do some research and keep an eye on the market trends. However, it is essential to note that investing in the stock market does carry some risks.
It is crucial to have a well-diversified portfolio and to be patient with your investments. With the right strategy and mindset, investing in stocks can be a great way to build extra funds and secure your financial future.
If you are a beginner at investing, you may want to find a reputable financial advisor to help you with your first investment decisions and teach you what to look for with current market conditions.
2) Start an emergency fund
Life can be unpredictable, and expenses can arise when we least expect them. That’s why pretty much everyone needs to have an emergency fund that can cover unexpected costs, such as medical bills or car repairs.
Starting an emergency savings account requires discipline and commitment, but it’s worth it in the long run. You’ll need to set aside at least a portion of your paychecks each month for building your savings.
Having money set aside will give you peace of mind and prevent you from going into debt when you’re faced with unexpected expenses. Start small and gradually build up your emergency fund over time.
With the right mindset and a little patience, you’ll have a safety net to fall back on when life throws you a curveball. The recommended amount to have in an emergency fund is at least three to six months’ salary to keep you afloat if you lose your income suddenly and need time to find a new way to earn money.
3) Pay off as much debt as you can
If you’re looking to ease the financial burden of debt, one of the best ways to start is by paying down debt as quickly as possible. By doing this, you’ll reduce the amount of interest you’re paying each month and ultimately save yourself some serious cash in the long run.
Whether you’re dealing with credit card debt or a high-interest loan, every little bit you pay off counts. Just think about it, every dollar you put towards the principal balance of your debt is one less dollar you’ll have to pay in interest over time.
So, if you have any money left over after living expenses, you should try to reduce your debt burdens. Start by using either the debt avalanche method to decide what to pay off first.
Allocating as much extra cash you have after bills can help you get debt high-interest debt paid off faster and help you grow your disposable income once it’s all paid off.
4) Put some extra cash toward your retirement savings
Do you ever find yourself wondering if you’ll have enough money to enjoy your retirement? If so, you’re not alone. One of the best ways to ensure that you’ll have enough money for your golden years is to start putting extra money towards your retirement savings, such as a 401(k) or a Roth RA. Not only will this give you peace of mind, but it will also allow you to take advantage of tax benefits and compound interest paid on these types of retirement accounts.
By investing in your future now, you can relax and enjoy your retirement without worrying about your financial situation as a senior. That’s why it is so highly recommended that you put any extra cash you have into a reputable retirement account with a high-paying interest rate as soon as you are able to.
5) Start a passive, income-driven business
Everyone needs a break from the daily grind sometimes. That’s why investing in a passive income business is an awesome way to use the extra cash you have lying around each month.
It will help you have more free time, and you can make money while doing other things, like vacationing or taking care of your kids. There are so many ideas for stay-at-home businesses that only require a small investment and can bring in money every month.
Plus, it can help your financial situation in the long run by giving you extra income and potentially allowing you to leave a 9-5 job if that’s your dream. Investing extra cash in a side hustle that can become a full-time business is always a good idea.
6) Make a donation to your favorite charity
Making a donation to your favorite charity is a great way to give back to your community and help those in need. Not only does it benefit the organization, but it also leaves a positive impact on your own life.
Giving to a charity allows you to represent your personal values and contribute towards a cause that you believe in. Whether it’s a one-time donation or a recurring commitment, every contribution aids in creating a better world.
Plus, by making a donation, you can inspire others to take action and make a difference too, and when it comes time to pay taxes, you can claim those charitable donations as tax deductions. So it’s a win-win for everyone involved.
7) Open a new bank account and get a new client bonus
Many banks offer cash bonuses to new clients who open a new checking, savings, or money market account. The best part is that opening a new bank account is a simple process that can be done online or in person.
Along with this, you’ll have access to all the perks that come with a new account, like lower fees, higher interest rates, and better rewards. If you have a large savings account already, some banks will
pay a few hundred dollars to have you bring your money over from a competing financial institution.
The only catch is that you have to wait a few months before you get the payout, and you have to be a new client. But if you’re looking to get a little extra cash, this is a great way to do it, as you don’t lose anything by switching banks now and then.
FAQ
What can I do with large amounts of cash?
There are many things you can do with large amounts of cash. You could invest it in stocks, bonds, and mutual funds. Many choose to invest in the stock market and build a diversified portfolio of stocks, bonds, and mutual funds. However, with market volatility today, you should consider other options as well, like real estate and starting your own business.
When should I start investing instead of saving?
This depended on how much cash you have saved up in an emergency fund. If you are beginning to think it is too much cash in your savings, consider taking a portion out for investing. However, be sure to make smart investing decisions, as you can risk losing your savings if you invest too much in the wrong things.
What to do with excess cash during a recession?
When it comes to excess cash during a recession, the best thing you can do is ensure that your money is safe. You could put some money in a high-yield savings account or put some money into gold and silver. You could also choose to invest in low-risk stocks that pay dividends or invest in real estate. It is important to find the right balance and make sure your money is safe during these turbulent times.
Final thoughts on what to do with your extra money
Now that you have the seven tips for what to do with excess cash each month, it’s time to get started on implementing them. Make sure to keep track of your investments and emergency fund so you can keep an eye on its growth.
Wiping out high-interest debt also affords more financial freedom in the future. And don’t forget to factor in a decent nest egg for your retirement savings, treats for yourself (life is too short not to), charitable donations, and possible business ventures. Most importantly, reward yourself with financial security by making this extra effort now. It will pay off big time in the long run!
About the author
Heather Lipson is a professional ghostwriter, digital marketer, and online business owner who loves to educate and empower women to become successful entrepreneurs.
