What to do with extra money (2024)

Whether it’s a nice big tax return, a bonus at work, or even one of those months with a third paycheck, there are some great ways to stretch the use of that money to help improve your financial situation for future months, or years to come. Here are five smart things to do during those awesome times when there is extra money in the budget.

Once in a great while, it feels like the heavens are smiling down upon you because you are blessed with an abundance of a cash flow… for me, those times are very few and far between, but when they do happen I try to be as smart with that money as possible so that it will put myself and my kids (single mama of four here) in the best position for months to come…we absolutely don’t just spend it because I know that tough times can happen at any moment.

I thought that I would share with you guys the things that I like to do, the financial checklist, that I go through in my head to stretch those dollars… it literally has saved my bacon time and time again by thinking, and preparing ahead so that when we do fall on tough times…it’s not as big of a struggle as it would have been.

We’re just going to dive right in…

What to do with extra money?

Here are those 5 smart things to do with that money and why:

1. Pay off Debt-Paying off your debt frees up monthly payments. Those monthly payments can now be either more wiggle room or can be used to snowball into the next thing you want to pay off. Debt is lame! Be less lame and pay off your debt!
2. Build Up A Food Storage/ Start Buying In Bulk-Buying in bulk, for the things you use all the time, saves you a ton of money. Also, having a little extra food, to get you by in case of a job loss, is super smart. Remember that any time gas prices go up, so will food prices so buying extra any time you can is just a good idea…whether you have an abundance in cash flow or not.
3. Get Your Cars Tuned- This will not only improve gas mileage, but it will make your car last longer and any good mechanic will let you know if it looks like something else is about to go out in your car…which will allow you to start planning and saving for those repairs instead of being blind-sided by them. Cars that are maintained properly last much longer, so it will save lots of money over time if you do this yearly or as often as you can.
4. Get Your Air Conditioning and Heating Units Tuned- Not only do most companies give you a discount for doing both units at same time, but getting them serviced improves their performance so your utility bills will be less throughout the year than they would have been otherwise. This repair man can also tell you if it looks like you are going to need to replace anything any time soon. Which is yet another thing you can prepare for. I’d say that if your heater and a/c are older than 5 years, they should be tuned annually.
5. Build Up Your Emergency Savings- Yep, I put this one at the bottom of the 5. That is because if you do all of the other things, there will be less emergencies throughout the year. Financial experts say that it’s smart to have at least $1,000 in an emergency savings account. So anything left over from your abundance should go here. Keep building this savings until you have 6 months to a full years worth of expenses saved up… this one’s going to take quite a while, but less time now that the other four things are taken care of. *Also, if one spouse is a spender, it’s a good idea to make sure that they don’t even have access to this money. It needs to be there for what it was intended for, not for selfish purposes.

Whether your financial influx is from a tax return, a a month with a third paycheck, a bonus, a random refund, or even an inheritance, knowing what to do with it is the first step in the right direction that comes with financial freedom.

Having that freedom is when the next fun chapters of life can start with things like paying off your home early, buying a mountain property, or even investing.

These ideas are just to get you going down the right path towards those larger financial dreams (we all have them, but only some achieve them)…we just have to be smart, and disciplined enough to allow ourselves to succeed.

Tax return advice:

I know that financial experts say that no one should be getting a tax return because you are basically giving the government an interest-free loan on all of your money through-out the year, but most people I know rely on that little boost (me included) to help them get a little ahead at the first of every year.

My thoughts on the subject are that if you’re not very good with money, you are going to blow it (spend it on random useless crap) if you’re getting that same amount of money spaced out with a little bit per paycheck.

However, if you get it in one lump sum it’s a little bit harder to justify blowing it all on the little stuff. In this case, a tax return (in a large lump sum) can be a good thing as long you are smart with it and use it to better your situation.

I shared with you guys (those five smart things I listed above)what I believe to be the smartest way to use your tax return to get ahead for the rest of the year. Because frankly, it’s been my experience that most of the times I have been in a hard financial situation is because of either my own bad decisions with money, or an ex-spouse that made one.

I’m working towards my financial goals (it’s hard doing so raising four kids solo, but I do the best I can) and as I am doing so I am hoping to impart a little wisdom on some of you that want to work towards your own financial goals too, because no one is going to make your dreams come true for you, you gotta make it happen yourself!

I know it’s tempting to just spend all the extra money, but your financial situation is never going to improve unless both your thinking AND your habits change. It’s especially important to make good decisions if you’ve got a family to support. No one can afford to be frivolous with their money when they’ve got several mouths to feed.

Plus, if you’re like me and don’t have relatives that could bail you out of a financial jam whether it be by giving/loaning you money, watching your kids for free so you can work, or letting you live with them so your expenses are less… it’s REALLY tough doing it alone so you have to be even better with what money you do come by.

These are just the things that I try to take care of when times are good. They are most likely the big things that most people need to worry about too. However, your situation may be different, in which case I suggest that you just try to look ahead over the year, and think hard about what is going to make the most impact on you financially.

Take care of those things first, and you’ll be glad you did. I promise!

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*Please note that this post was originally published onto this website on March 4, 2015 and has since been updated to improve user experience, and share-ability.