What to Do With Extra Money: 5 Methods for Smart Saving and Investing

What to Do With Extra Money: 6 Methods for Smart Saving and InvestingIt’s not an everyday thing, right? Having some extra cash in the table?

Just sitting there, looking right back at you!

Now! The obvious question in this scenario is, “What are you going to do with the extra money?

•Are you planning to spend it on something you wanted for so long? The new iPad maybe?

•Are you going to finally plan that trip to Bali?

•Are you paying off your debt with it?

•Or you’re more focused on using it to make more money? And if so, then how?

Regardless of the intentions we usually set in the beginning, all inspired to make better choices and all, most of us end up spending up that amount in buying dumb things!

I am just gonna go ahead and say it,

Most people have no idea what to do with their money!

Spending your extra money on dumb stuff is wastage in itself but if you assume that simply holding onto it will take you to the top one percent status, you’re mistaking! 

Unless you buy a tangible asset that increases its value over time, just keeping the money to yourself won’t do you any good, and if you keep doing this long enough you would be actually losing its value!

Yup! Losing its value!

How so?

Ever heard of the term Inflation?

Inflation is a phenomenon where money loses its value over time due to economic fluctuations!

And as a result, there is an increase in the prices of goods and services over time. It’s an economics term that means you have to spend more for the same electricity you use, buy a pair of shoes, or get a haircut.

Inflation increases your cost of living!

Do you know that the annual inflation rate for the United States is 1.7% for the 12 months ended August 2019 compared to 1.8% previously, as published September 12, 2019, according to the U.S labor department? (Source: US-Inflation Calculator)

Mentioned below are a few ways you can use this extra money to save smartly and invest for the maximum returns

This post contains affiliate links, read the disclaimer for more information.

Below Are The 5 Things, You Can Do When You Have Extra Money–

1. Open a High-Yield Savings Account

Saving your money! This is your first option, to save the entire stash and never speak of it again…Kidding! But it is still a good idea to save it rather than to spend on buying that newly released product!

This option is best for people who don’t want to get into any type of business whatsoever or are afraid to invest (because of the risks involved).

I get it!

But how the way to save your money also makes a great difference!

As discussed above, just keeping your money in a lock at your house will get you nowhere!

To make sure that your extra money is saved & goes to your long term benefit, 

Open a new high yield savings account that provides 2.0% APY or more ( compared to 0.09% national average) which is both impulse expenditure and inflation-proof.

Banks like CIT Bank provides 2.20% APY. Just a savings builder account is all you need to save yourself from the mentioned risks.

Open Account for CIT Bank here!Smart Money Habits of the Rich: What are they & How to Adopt Them CIT bank apy)

2. Start a lemonade stand…Err… Side business

According to a study by the University of Phoenix, 63% of those under the age of 30 want to start a side business of some sort (probably not a lemonade stand though, but you know what I mean).

It is true that starting a business takes an upfront investment, but the barriers to enter the business realm has never been so low!

Ummmm what?

Let me explain: Not every business takes $100,000 investment right out of your pocket, some low-cost businesses such as blogging takes less than $4 a month to start.

  • With sites like Etsy, you can sell your homemade stuff online on a large scale.
  • With platforms like Shopify, you can sell anything (your own stuff or others’s products) at a massive scale without you having to handle manufacturing, storage or shipping.
  • You can learn facebook ads and make thousands a month running other business’s ads.

Another good thing about low-cost business models is the ability to expand its reach if it has been proven to be profitable without the high risk of debt that usually comes with it.

If you currently have a nine to 5 job, starting a side hustle can be an exit ticket for you! Learn how to quit your job in 6 months in this article.

A common phobia most of the folks go through is the risk of losing money if things don’t turn out the way they intended to. What a waste of good crispy money it will be!

But the thing is, they are already wasting money on buying useless junk every day, why not use it for something with potential this time?

Don’t waste another dime buying things you don’t need.

Instead, buy yourself a new stream of income!

Check out these Work from home side hustle ideas that can bring you some side income!


3. Help yourself to get out of debt

If you have any kind of debt (at a rate of 5% or above), your first priority will be to get rid of it, as soon and efficiently as possible!

And since you have the means to help yourself (A.K.A The money that’s sitting in your table), you can use it to pay off your current debt(s) using a few simple strategies:

Paying off a debt by exceeding your minimum monthly payment can save you a ton of money and time.

Let’s say you have a $10,000 debt with an interest rate of 6.8% and a 10 ear repayment period, If we go with the standard repayment procedures, you would pay around  $115 each month.

  • Just adding a $100 could save you $2169 at the end of the term
  • You can save $2754 if added $200
  • $3027 if added $300 and so on.

How To Get Out Of Debt Fast (Even if you’re dead broke)

And that’s one of the ways to get rid of high-interest debt fast and cheap!

For more info on paying off debt, check out this article on how to pay off debt fast.

4. Bulk up your Retirement plan

Compound interest can do wonders when it comes to retirement.

You might not be worried about the money you’ll need a decade or two down the road, but you should be, its actually a good money move!

Moreover, getting an early start means your money has more time to grow.

Opening and investing in an IRA (individual retirement account) used to be a pretty huge pain before!


In today’s rapidly advancing world of online banking and investing, with services like Betterment, you can literally be up and running with a new IRA in a matter of minutes.

This is a move the future you will be thankful for!

5. Invest Wisely

If you’re already maxed out for the year on your 401(k) or IRA accounts, or your first priority is to make more money for yourself without any active work involved, 

Investing might be just for you!

you could earn some interest by investing your money. You could choose to allocate some of the funds to Betterment, a safe investment platform.

You could also work with a Robo-advisor (like Personal Capital) or financial advisor to choose funds and even individual stocks that interest you and build up your investment portfolio.

Instead of spending $10,000 down on a car that, is going to drain your pocket anyway, let’s say you invested it in one really solid blue-chip stock, and you left that stock alone until you were ready to spend its earnings.

If that stock grows at a rate of just 8% over the course of your life: In 30 years, you would have about $132,000 In 40 years, you would have $314,000 In 50 years, you’re looking at a cool $743,000 – over 70x what you originally had.

That’s the power of compounding earnings over time. And it can be an absolute reality if you let it happen

Final thoughts…

No matter what is your current situation is, you need to know how to manage your cash flow such that it will ensure a secure financial future! For now and for many years to come!

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