Did you get extra cash, a bonus, a raise or an inheritance? What do you do with the sudden increase in your cash flow?
Here are some things to consider:
1) Pay down debt
Consider putting 20% or more of your windfall to pay down high-interest debt. This will save paying interest and you’ll be finished with this debt sooner than planned.
2) Start saving
Use some of that extra cash to start a savings account. You can set up an automatic transfer from your checking account each month to help it grow.
Say you receive an annual refund of $2,800 and invest this money at 6% interest. If you continue investing this amount each year, you’ll find yourself with approximately $250,727 in 30 years’ time. That’s making your refund work for you!
4) Invest in yourself
Advance your career and increase your earning power by using your extra cash for a work-related conference, additional training in your field or for learning an entirely new skill.
5) Reward yourself
Celebrate with one or two bigger purchases you’ve been eyeing throughout the year.
6) Donate to charitable causes
The bonus cash in your pocket gives you the opportunity to give back to the community in ways you might not be able to afford throughout the year.