Having some unexpected money come our way is a great feeling. Whether it’s from a bonus, an inheritance, or selling your old car, you don’t want that unexpected windfall to be useless. But what should you do with the extra cash? Should you invest it all? How do you do that and is it even safe?
Dividends would be a great place to start but you also have to be aware of the ex dividend date with those kinds of stocks.
Should You Spend It on Items for Yourself?
Of course, you could just put the money in your savings account, but that’s boring. So instead, here are three of the best ways to spend that unexpected cash of yours.
How we spend our money depends on individual circumstances and goals, but some general guidelines can help determine how best to use your extra funds.
Just saving the extra cash isn’t going to do anything for you. Instead, it will just sit in your savings account earning no interest and making you feel less hopeful about the future. However, by investing that money, you can make it grow into a considerable amount of cash one day.
If you are looking for a longer-term investment with a great potential payoff, investing in successful businesses or the stock market can be a good choice. Of course, with any investment, there’s always a risk that it will lose money or just not grow fast enough. But by spending your unexpected cash in this way, you can still get an impressive return on your money and maybe even turn that windfall into something substantial over time.
Spend It on Yourself
The most common advice is to spend some of your unexpected money on yourself, whether that’s a new iPad or handbag, going out for dinner and drinks, or taking a needed vacation.
Even though it’s not an investment that will grow over time, purchasing something for yourself can be beneficial in other ways. According to some scientific studies, spending money can even be healthy for you. By spending money on yourself, you give yourself pleasure and avoid some of the pain associated with delayed gratification. Plus, if you are giving yourself pleasure by buying something nice for yourself, it can help you feel more optimistic about the future and more motivated to meet your goals.
Or you can still treat yourself but use the money to purchase something that will have lasting value. For example, instead of going on a shopping spree at your favorite retail store, you could buy an investment piece such as a new wardrobe, a dining room table set, or an engagement ring.
So, in this case, spend some of that money on yourself. It’s okay. Actually, it’s good for you.
Spend It on Others
Think about the people in your life. Which of them might be going through a hard time right now? What can you do for them to make their lives better, especially during this past year dealing with the COVID-19 pandemic? Some extra money can go a long way.
From an evolutionary perspective, seeing others do things that benefit others is incredibly beneficial for society. When people see others doing good deeds, it helps them understand what is essential in life and encourages them to do the same when they have the opportunity. Spending some money on someone else makes their lives better and can make yours better too.
Also, by showing your friends that you care about them, your relationship can improve. Your friend might feel more connected to you when they see that you want them to be happy. So, when you get some extra money, think about all the people in your life who might enjoy a nice gesture from you.
Remember that money is a powerful tool for you to use, and there are many ways to spend your unexpected cash. You can go on a vacation, treat a loved one, buy something for yourself that will last long-term, or invest in the stock market. Whatever decision you make, know that every option has positives and negatives, so think carefully before making any final decisions.