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Guide to Spending Extra Cash

Updated: Apr 23

6 ways to spend extra cash to save money and spend wisely

6 ways to spend extra cash to save money and spend wisely

*Poof* you come into some extra cash! Ca-ching! 🤑

Now what?

We often talk about where that next dollar should go. When you consider your budget, that’s all it really is, right? Just like we help you create your budget, we’ll help you determine how to plan for extra cash. With every dollar that comes into your bank account, we’ll help you figure out how to spend it, and how quickly.

Check off living expenses first

If you’re facing financial hardships—can’t make rent, eating ramen for more meals than you’d like, can’t afford child care— you should prioritize using this money to pay for your immediate expenses such as food, utility bills or childcare. After all, that’s what this money is supposed to help you with!

Keep that budget in check

Whether you’re struggling to make rent or feel secure in your living expenses, it’s always a good idea to reassess your budget. Especially when facing a financial crisis, you might want to consider trimming down your budget.

First step to fixing your budget? Separate your wants from your needs. Do you have a gym membership you can cancel? Is there a cheaper cable package you can switch to? These are some of the expenses you could consider either swapping out for a less expensive version, or cutting altogether. We’re not here to tell you what you should spend your money on. Instead, we’re here to help you determine what you want (and need) to spend your money on.

Pay off that debt

If living expenses (food, shelter, child care) are taken care of, next up is tackling your debt. Paying off debt while cash is tight isn’t easy, but it’s doable.

When creating your debt elimination plan, consider tackling your debt with the highest interest first. Making a big down payment will lower your interest rate, saving you money down the line. That way, you’re paying more toward your principal (the amount you actually borrowed), instead of interest. Just triple-check that your lender doesn’t have any early payment fees or rules that could end up biting you in the tushy.

Log onto Pocketnest to create your debt elimination plan and knock out debt for good!

If you’re still super strapped for cash and struggling to make ends meet, remember some lenders may allow you to delay your payments. Some will have better forgiveness offerings than others, so do your homework first. And, don’t be afraid to call your lender and explain your situation. You might be surprised how helpful they’ll be.

Stash some cash in your emergency fund

An emergency cash reserve is always a good idea. Lost your job or got a significant pay cut? Your cash reserve is there to help you get by until you get back on your feet.

If you don’t have anything set aside yet, it’s not too late! Open up an account and aim to save up at least two months of living expenses in this fund. This way, if a life emergency rolls around, you will have savings to help you tread water.

We recommend opening a high-yielding savings account for this reserve if you haven’t already. Larger interest rate = more savings.

If you can cover your bills with unemployment benefits, don’t just spend that cash on HBO streaming and takeout! Moving your extra cash into a high-yielding savings account—or just any savings account—may also be a wise play to help you save more cash for any future issues. We’re always fans of saving for the future.

Put your cash to work in the market

Let’s talk about retirement, baby! Are you feeling good about your debt payments? Do you have enough saved up in your emergency fund? If yes to both, then think about putting that extra cash towards your future.

You might be wondering how much to save for retirement. And we can help—pop into the Pocketnest app and play with our retirement savings calculator.

When it comes to investing in your future and creating retirement savings plans, you have lots of options. You can put the money into your IRA account (or open a new account if you don’t already have one) and start saving for retirement. There are two main types of IRA accounts: traditional or Roth. The main difference between them is that Traditional IRA contributions are tax-deductible; but, after retirement, you have to pay taxes for withdrawals. On the other hand, Roth IRA contributions are not tax-deductible; but, after retirement, you can make withdrawals tax-free. Both have their pros and cons. Figure out which investment plan is right for you and get started!

Save for your kids’ college

If you have kids, you may want to consider putting some of your extra cash into a 529 plan to save toward your kids’ college tuition. Think about putting this money into a 529 plan to start growing your earnings. You will thank yourself down the line (and so will your kids!).

Share the wealth!

If you are in a good place financially and feel like showing your gratitude, why not donate your money to those in need? Do your research and find one that aligns with your values to support. You can also reach out to a local food pantry or homeless shelter and buy them some goods and supplies. Giving back does not stop there. Sometimes, the greatest gift is to give.

Make home improvements

Provided your other critical needs are met—living expenses, high interest debt paid off, retirement savings in place—your extra cash could be a great way to start that renovation you have been dreaming about. Yep, we’re talking about those faded yellow shutters.

Not to say that new shutters are the first place to spend your extra cash! Instead, we recommend using this cash as a way to kickstart a smart home renovation to—potentially—increase the value of your home. Just make sure you stay within budget.

Treat yo’ self!

It’s important to remember to give back to yourself every now and then. So if you want to spend some of your extra cash on dinner with friends or a deep tissue massage, go for it!

Before you decide where your next dollar should go, be sure to consider your current life situation.


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