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4 Things You Should Consider When You Have Extra Money


Anica is a professional content and copywriter who graduated from the University of San Francisco. She loves dogs and the ocean.


Here’s an interesting fact: the average person makes a dozen impulse buys each month, and the average total amount spent on these impulse buys is $276, according to SWNS Digital. That’s more than $3,300 a year. It could be argued that there are other, better things to do with the money. If you count yourself among those who made one too many impulse purchases this month and would like to find something different to do with your extra money, here are four tips to think about.

Put It In Savings

Having an emergency fund is always a good idea if you have extra money to spare after paying rent. You can use this fund for anything that pops up unexpectedly, like car repairs or home repair, dental emergencies, and more, without having to take on additional debt. If you decide to use these funds for emergencies, it is recommended to reimburse the fund each time you use it. That way, you always have the funds when it's needed.

Start Your Retirement Account

Contributing even small amounts of money each month can make a big difference over time when it comes to saving for retirement. Accounts like a 401K or a Roth IRA are a fantastic option for most people. If you’re lucky enough to get a raise while still employed, try taking some of that money and putting it toward your retirement account every month before using it to pay off debt or buying something else. Since you have already been living without the extra money your raise will provide, you won’t miss it.

Invest It In A Mutual Fund

One of the most common recommendations for investing left-over money besides a Roth IRA is a mutual fund, which is a stock option where you have a group of companies that are part of the Mutual Fund. Not only are you able to increase your money in a stock, you have a little bit more security in your investment because when one company in your portfolio goes down, it’s likely that another company will go up. Plus, you can choose what type of mutual fund you want to invest in so that you can support the type of companies or products that you care about. If you aren’t sure if mutual funds are for you, consider reaching out to a professional that specializes in wealth management such as TFG Wealth Management. Typically wealth management companies either have a low monthly fee or some even just take a percentage of your investment returns so there is hardly any risk to you. Plus, the company is more invested in you making a higher return so that they can get a higher return.

Put Aside Money for the Purchase of a House

The cost of living is rising. It's not uncommon for people to spend almost half their monthly salary on housing, transportation, and food. As prices continue to increase, it becomes increasingly difficult to save money for other long-term goals like a home purchase. That’s why it’s such a good idea to save any extra money that you have. You'll be surprised how quickly these savings add up.

Money is just a means of exchange, but it has an incredible power to create change. The world is filled with people who need help, and your donation could be a simple way that you can improve someone’s quality of life. You just might be providing medical services for families in need or giving clean drinking water to kids who don’t have it. While there are lots of ways you can spend your extra cash, this might be the most worthwhile.

It’s easy to get caught up in the moment and spend your extra money on things you may not need. However, it is always better to have a plan for your hard-earned cash before you purchase anything. As you think about your budget for this year consider what you want to accomplish with it. Remember that impulse buys are easy to make in the moment but making too many of them might mean that you won’t have the cash you need for important purchases or to put into savings.

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