So, you made some extra money but don’t know what to do with it? Rather than wasting it, it’s best to put it where it will benefit you in the long run. Deciding where to put it will depend on your circumstances and your financial goals. Here are some options you can consider when allocating your extra money.
Emergency Fund
Put it in your emergency fund. If you don’t have one, then start making one. An emergency fund is a safety net that will cover your unexpected expenses.
Pay More off Your Debts
If you have debts, it’s best to put your extra money to good work. Pay off your high interest debt or pay above the minimum. Doing so will help reduce your debt and improve your finances.
Make Extra Mortgage Payments
If you have a mortgage, then use the extra money to pay off the principal. Paying down your mortgage will reduce the interest you have to pay over time. This will also shorten your repayment period.
Contribute to Your Retirement
Allocate the extra funds to your retirement savings. The earlier you start saving for your retirement and the more you save for it, the more your investment will grow.
Save for Your Goals
If you have specific goals, whether short term or medium term or long term, then you should put your extra money towards them. This will help you achieve what you want like buying a new house, starting a business or getting away on a well deserved holiday.