What Are Some Smart Financial Moves to Make When You Have Extra Money?

Encountering a surplus of cash can often be an exciting event. But without careful planning, it’s easy to squander such opportunities on short-term gratification instead of making strategic financial moves that could support your financial future. Harvest Wealth Partners is committed to providing the resources individuals and business owners need to make informed decisions. Let us help you build a wealth management plan that matches your goals.

Pay Off High-Interest Debt

One possible option is to use the extra cash to pay off high-interest debt. This may not be the most glamorous option, but it can potentially save you thousands in interest payments over time. For instance, if you’re carrying a balance on credit cards with high variable interest rates, using your surplus to pay off these debts could make a difference to your financial health.

Build Your Emergency Fund

An emergency fund is a cornerstone of financial well-being. It serves as a buffer for unexpected expenses like sudden medical bills or unforeseen car repairs. Plan on having three to six months’ worth of household expenses saved up. By putting your extra cash into your emergency fund, you’re effectively investing in your future well-being.

Increase Your Investment Contributions

If you’ve already established an emergency fund and paid off high-interest debts, consider channeling your extra cash into investment accounts. For example, increasing your contributions to your Individual Retirement Account (IRA) or adding to your Health Savings Account (HSA) can offer significant tax advantages while also preparing you for retirement.

Invest in Yourself

Investing in yourself is a suitable decision you can make. Using your extra cash to further your education or start your own business can lead to long-term benefits and potentially higher earnings. For instance, you might consider a tax-advantaged savings plan that’s designed with a goal to encourage saving for future education costs.

Timing Matters

The timing and source of your cash surplus can influence how you should use it. If it is an inheritance coming at an emotional time, it might be wise to take some time before making any major financial decisions. On the other hand, if you notice a buildup of cash in your checking account over time, consider moving it to an interest-bearing savings account or using it to pay ahead on upcoming expenses.

Treat Yourself (Responsibly)

While it’s important to make financially responsible decisions, it’s also okay to treat yourself with a small portion of your extra cash. The key is to align your spending with your overall financial goals. Consider placing the money into a savings account while you decide on the right way to spend it.

Contact Us to Discuss Your Financial Goals

Making smart decisions with extra cash can set you on the path toward your long-term financial goals. Whether it’s paying off high-interest debt, building an emergency fund, increasing investment contributions, or investing in yourself, each step brings you closer to financial independence.

At Harvest Wealth Partners, we understand that everyone’s financial situation is different. We’re here to help guide you through these decisions, providing personalized service tailored to your needs. Reach out to us today to discuss your financial goals and how we can help you pursue them.