It will be possible for anyone to generate extra money through lottery winnings, financial grants, lawsuit, inheritance, gift, and so on.
However, a question might arise in your mind regarding what would be the best way to make use of that extra cash. Below, we will throw light on this topic.
1. Use it for clearing your debts
Our first tip in this list will be to use the extra cash for clearing out your debts if any. This might imply paying off a mortgage or even an auto loan. Although these come with low interest rates, getting rid of these debts will provide us with complete peace of mind.
2. Make charitable donations
It will be a wise idea to donate at least 10% of your extra cash to any charitable organization which will come of use for someone else. Your extra money can help a person in real need of it including any unprivileged youth, an orphan, victims of any natural calamity like flood, and so on. However, make it a point to talk to your tax advisor regarding the implications of this donation. There are several ways for optimizing your charitable donation which will help to lower your taxable income as well.
3. Have fun
Perhaps you are aware of the phrase: all work and no play makes Jack a dull boy. Therefore, it is imperative to enjoy yourself as well while using this extra cash. You can think of going for a vacation to any destination of your dreams where you’ll be able to unwind yourself from the hassles and bustles of the hectic city life. Otherwise, you might also consider purchasing any designer outfit or a pair of trendy shoes depending on the money you have. Eating out along with your near and dear ones at any posh restaurant will not be a bad idea either. Just make sure you’re able to devote time for enjoying yourself by making the best use of this extra money which you have earned.
4. Invest the money
Think about investing the money instead of spending it. For this, you can use several methods like investing in the stock market, real estate, mutual funds, commodities, and so forth. A number of options are available to you, and the method you go for will depend on the amount you are able to invest, the amount of time you can devote, and also whether you want to go for long-term or short-term profits. In case you want to invest the extra cash for a short term along with a decent rate of return, money market investments will be your ideal solution. This will prove to be useful for those investors who like to invest the money in a steady market for less than 1 year.
5. Build your emergency fund
In case you need to spend money for some emergency situation, it will be frustrating not to have it at hand. According to recent studies, it has been found that at least 50% of Americans suffer from this problem. This implies that if they encounter any unexpected dental or medical issues, or if they lose their present job because of any reason, they will be left stranded. However, having an emergency fund will allow you to cope with this type of situation if needed. Therefore, make it a point to build an emergency fund with your extra money that can cover at least a month’s worth of spending in your residence.
Whatever you spend your extra cash for it will be advisable for you to invest wisely. Make it a point not to waste the money or use it for something useless. By planning your expenditure smartly, it will be possible for you to maximize your new earnings and make the best use of it.
