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Whether it’s a tax refund, stimulus check or surprise gift from a relative, whenever you come across unexpected money, there are helpful (and easy) steps you can take to maximize those dollars.
Upon receiving an anomalous influx of funds, many of us immediately feel the urge to blow it on something cool. The rush comes on almost as if we just won the lottery. A new motorcycle, those brand-name clothes, that destination vacation – the temptation comes in many forms. And while it’s not necessarily a bad thing to dream of fun purchases, it pays to take a step back!
As hard as it can be, challenge yourself to utilize the money in a smarter way. You’ll be glad you did! Check out these helpful tips on how to make the most out of your newly discovered gains:
Before you make any decisions on how to use the money, it helps to first take a good look at where you stand with your finances: Are you getting a regular paycheck? Do you see a possible change in your cash flow soon? Do you have a big goal you’re saving toward? Once you assess your financial outlook, you can decide what portions to save and what to spend.
If any of these questions spurs a gut check, consider setting aside some (or most) of the unplanned funds – and enjoying the feeling of inching closer to your financial goals!
If you need an emergency savings account, focus your dollars there first! That fund will keep your other financial goals on track if something unexpected happens. If you already have an emergency account and you’re maintaining your debt payments, consider setting part of the money aside for a future goal. You could keep it in a savings account for a big purchase, such as buying a house.
If you’re receiving regular paychecks, using most of your newly-found money to pay down debt is a wise choice. Your monthly payments will decrease, and you’ll improve your cash flow, potentially saving yourself quite a bit on future interest payments! These can really add up, depending on your annual percentage rate.
Remember: It’s OK to reward yourself when you make smart financial decisions on what to do with unexpected money. Research shows that when you do so, you’re more likely to keep on track to reach your financial goals. This doesn’t have to be a large purchase – it can be a treat at your ideal coffee shop or a dinner at your favorite restaurant. Just be sure to be in the moment so you can fully enjoy your reward. You deserve it!
Anytime you receive unexpected money, it can be tempting to spend it all in one place. Considering these smart alternative options will help keep your financial goals on track, rewarding you in the process!
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