Despite the last year being extremely challenging for most of us and the world’s economy, there were many industries and business ventures that thrived as a result of the pandemic. This has led to quite a number of windfalls for people through business profits, attractive bonuses at work or spectacular returns on investments in the share market. You might even have made some extra money through side hustles you were able to take up due to more free time due to more time spent at home. All this coupled with reduced expenses (like outings, vacations, traveling costs etc.) might have left you with a bit of extra money than usual that you might be itching to do something with.
If you’re part of the very lucky few with cash to spare, here are some ways you can put that money to good use.
Pay Off Debt
If you have a mountain of debt (or even a medium-sized pile), utilise your extra money towards paying this off. Even though seeing your extra cash being poured into boring, old debt settlement might be a terrible feeling, think about how being debt-free would feel like, when a huge chunk of your monthly income doesn’t need to be dedicated to repaying debts. Taking measures to settle debt would make a world of difference in the long run in terms of less interest paid as well as overall less money to pay back going forward. If you ever find yourself in a tight spot in the future, you will thank your past self for having lessened the repayable amount when you were able to. (Read here: Pros and Cons of Settling Debt Early)
Build an Emergency Fund
There’s no better way to prepare for the future than building an emergency fund when you can. Even though you have a little extra money right now, there might come a day when you are badly strapped for cash. At times like these, it is never a good idea to dip into your savings; most people know this and this is why they would rather approach payday loans provided by companies like OnCredit.lk. However, needing to borrow money when you find yourself in a tight spot can be avoided if you had had the wherewithal to build an emergency fund when you had the means to do so.
Invest in the Stock Market
If you don’t have any outstanding debts and you already have a sizable savings and/or emergency fund, the thought of possibly growing your money might be an exciting prospect for you. What better time to risk a bit of cash for a potentially-giant payoff than when you have extra cash in hand? Start small by investing smaller amounts for shorter periods across diversified industries until you glean some hands-on knowledge about the ins and outs of investment. Once you have enough experience navigating the waters of the stock market (probably having lost just as much money as you have made), you can look at investing larger amounts of money for higher payoffs. (Read here: Is Investing in the Stock Market a Good Idea)
If you’re not a risk-taker by any means and the thought of risking your money in the stock market doesn’t feel like the right fit, purchasing assets that will only increase in value or will not depreciate in due course is the next best thing. Although they might require a larger initial investment, these assets’ value will appreciate over time at which point you can sell it or generate passive income for you. It’s important to differentiate between real money-making assets and things which seem like assets but are really liabilities (e.g. mobile phones, personal vehicles etc.).
Real estate is a great avenue to invest your money in. The value of land will never reduce, only increase. You can sell it in a few years or use it for any business purpose (agriculture, building and renting etc.). Real estate also includes buildings and office complexes which you can earn a lot of passive income from if managed properly.
While the price of gold fluctuates, the inherent value of it as a commodity has been stable throughout history. Buying gold ensures that the money you invested in it will retain their value despite poor economic conditions and inflation. Gold investments are more of a long-term investment even though you always have the option of selling or pawning your gold if you need cash urgently.
Finally, don’t forget to treat yourself by splurging on something you’ve always wanted. Try to avoid extravagant luxury purchases that are not worth their price tag. That being said, spending money to increase your happiness is never money wasted. After all, you earn money to spend money.
There’s no better feeling than having extra cash in hand to do various things with. Tucking it all away in savings is not always the best thing you can do with this money; investments are also an essential financial activity you need to look at. The worst things you can do with this money are spending it all, purchasing high-value consumer items that depreciate over time (expensive mobile phones and cars, for instance) or putting your money in “Get Rich Quick” investments.
With a little bit of restraint and wise thinking, you can ensure that you make the most of your extra cash and see it go a long way.