What To Do With Extra Money Each Month

Feb 14, 2023 last_updated min_read

Have a little extra money each month from all the ventures we talked about previously? Don’t just let it sit around - use this chance to make your future financially secure. Start by exploring how you can put that additional income to good use, whether saving for retirement or investing in something extraordinary. Maximize what you have, and prepare for whatever life throws you!

Create An Emergency Fund

Having an emergency fund is essential to have financial security and stability. In today's uncertain economic climate, having a reserve of liquid cash stored away for unexpected expenses or events can make all the difference to a household budget.

One of the primary reasons it is important to put extra money in an emergency fund is because life can throw surprise events that are both expensive and necessary. An emergency fund allows individuals and families to address such needs without going into debt or jeopardizing other financial goals.

For example, if a car suddenly breaks down or there’s a medical emergency, an emergency fund would allow for the cost of repairs with minimal disruption to daily expenses. Without one, going into debt may be the only option, and the additional interest payments could affect long-term finances significantly.

Put It In High-Yield Savings Account

Putting extra income into a high-yield savings account is one of the best decisions to secure your financial future. With higher interest rates than traditional savings accounts, a high-yield savings account allows you to grow your money faster and more efficiently, giving you more resources for retirement, investments, or other larger expenses in the future.

green cash bill with white wings

High-yield saving accounts offer much higher returns than traditional saving accounts, which means that your money will grow quickly over time. This creates an opportunity to save for larger future expenses such as college tuition, new cars, or a down payment on a house.

By setting up automatic payments towards your account, you can systematically build up the funds you need for these larger expenses without putting extra strain on your budget. High-yield savings accounts also provide a great way to save for retirement with the added benefit of higher yields than most other investments or savings plans.

Pay Off Debts

One of the primary advantages of using the extra income to pay off debts is the potential savings in interest charges. Paying down high-interest credit card debt or loans sooner rather than later can reduce the interest you owe over time, freeing up more money each month that can be used towards other expenses or even saved for future investments. Additionally, paying off higher-rate debts first will save you more money in the long run if you have multiple types of debt with different interest rates.

Another benefit of using the extra income to pay down debts is improved cash flow management as less money goes towards servicing existing monthly debt payments. This means more flexibility when budgeting for groceries and entertainment expenses without worrying about making minimum payments for your debts.

Finally, paying off debt can provide a sense of accomplishment and confidence. Knowing that you are taking control of your finances and working towards financial freedom can be incredibly rewarding, especially if the debt has weighed on you for some time.

Invest In A Retirement Fund

Investing your extra income into a retirement fund is one of the smartest financial decisions you can make. Retirement funds provide tax advantages and help to ensure that you have enough money saved when it comes time to retire.

grey rocking chair with a large bag of money sitting in it

Investing in a retirement fund also helps to protect your future by providing an additional source of income in case of emergency or unexpected expenses. By investing now, you can enjoy the benefits later in life and be financially secure for years to come.

One key benefit of investing your extra income into a retirement fund is that it allows you to take advantage of the tax advantages of different accounts. Many employers offer 401(k) plans, which allow employees to save pre-tax dollars for their retirement, thus reducing their taxable income each year and lowering their taxes overall.

Other types of accounts, such as IRAs (Individual Retirement Accounts), also offer tax incentives, making them attractive options for those looking to reduce their taxable incomes while still saving for the future.

Open A Brokerage Account

If you have extra disposable income, there are many ways to invest it. One of the best options is to open a brokerage account. Investing in a brokerage account can help you build wealth over time and create financial stability for yourself. It also gives you access to many different types of investments, allowing you to diversify your portfolio and reduce risk while still earning returns on your money.

One of the main benefits of opening a brokerage account is that it allows you to take advantage of compound interest. Compound interest means that when your investments earn returns, those returns are reinvested into the fund so they can continue earning more money for you over time.

This makes it easier for your money to grow faster than if it were invested in a savings account or CD with low-interest rates. Additionally, most brokerage accounts offer tax-advantaged investment plans such as an IRA or 401k, which allow you even greater potential for growth since any earnings from them are not subject to taxes until withdrawn at retirement age.

Another great benefit of investing through a brokerage account is that it provides access to different investments, including stocks, bonds, mutual funds, ETFs, and more. This allows you to diversify your portfolio and reduce risk while still earning returns on your money.

Additionally, many brokerage accounts come with tools such as online trading platforms, which allow you to manage investments in real time. These platforms often provide research, charts, and other helpful information that can help guide your investment decisions.

Invest In Real Estate

investing in real estate can be an excellent way to grow your wealth. Real estate investments often offer more stability than stocks and other financial instruments, as well as greater potential for long-term growth. Plus, numerous tax benefits come with owning rental properties. In this article, we’ll take a look at why investing in real estate is such a great idea and how you can get started on the path to building wealth through real estate investment.

black haired man in a black suit and a ret tie pointing to a traditional looking house

Real estate investments provide unparalleled control over your finances compared to most other forms of investing. When it comes to traditional stock market investments or mutual funds, investors must rely on the decisions made by their fund managers or portfolio advisors, who may not always make the best decisions for their client's interests.

With real estate investments, however, investors can exercise direct control over all aspects of their holdings—from selecting tenants and setting rent prices to managing maintenance issues and taking advantage of local economic trends. This allows them to maximize profits while minimizing risk exposure associated with many other investments.

Finally, real estate investments are typically highly liquid. Investors can easily acquire or dispose of properties to take advantage of attractive opportunities or exit their investments quickly if needed. This level of liquidity, combined with the aforementioned tax benefits and direct control over the asset, makes real estate investing one of the most attractive options for those looking to build wealth.

Save For Something Big

When you have extra disposable income, spending it on small luxuries and treats can be tempting. But there are many benefits to saving your money for something bigger and more significant. Setting aside a portion of your disposable income for long-term savings will allow you to invest in your future, build wealth, and reach financial goals faster than if you were just to spend the money as soon as it comes in.

Saving for something big also allows you to make larger purchases over time rather than all at once, which can help ease the burden on your pocketbook. For example, you could purchase a new car or take a dream vacation by setting aside that extra monthly money. This way, when the time comes to make the purchase, you’ll have the funds available without resorting to credit cards or other forms of debt.

Making the most of extra money each month doesn't have to mean spending it all on things you don't need! You can use this cash wisely—from creating an emergency fund and paying off debt early to investing in yourself and even investing in stocks and bonds—all of which will help ensure that your finances remain healthy now and into the future!

Not sure where to get this extra income? Besides reading our other posts, earning passively is the best way to start. You can do that easily by using Honeygain, a passive income application that earns for you. Register, install the app, and you are good to go!