What to Do With Extra Money: 10 Places to Put Extra Cash

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What to Do With Extra Money

In this economic environment, it’s important to save — here’s why some Americans are embracing “loud budgeting,” by downgrading their lifestyle to cut major costs and free up funds for savings and investments. While living that pared-down life may not seem glamorous, financially savvy folks know there’s nothing trendier than keeping more of your hard-earned cash. Give it a try! And when you succeed, here are some ideas for places to put your extra cash to work for you.

1. Build your emergency fund

An emergency fund is like a financial safety net for life’s surprises. Imagine having a stash of cash set aside in case you lose your job, have a medical emergency, or your car decides to call it quits. As for where to stash your emergency fund cash, a high-yield savings account is a great option to earn a bit more interest while keeping your money liquid and accessible. 

Money market accounts also offer good interest rates. Or you could ladder certificates of deposit (CDs) for potentially higher returns. The key is keeping your emergency fund separate from your other accounts so you don’t accidentally spend it for non-emergencies.

2. Pay off debts 

Paying off debt can feel like an uphill battle, but it’s freeing once you conquer it. Here’s why debt is so damaging. When you save money, you earn interest — for example, a high-yield savings account pays the saver about 4% interest in April 2024. When you owe money, you pay interest to the lender, and that rate is light-years higher than any yield you could earn. For example, mortgage interest rates run about 6%, student debt could be at 8%, and credit card debt might be anywhere from 12% to over 22%.

The key is finding a strategy that works for your unique situation and sticking to it. You could try the debt snowball method, where you pay off your smallest debts first to gain momentum and motivation. Or go for the debt avalanche approach by tackling the highest interest rates first to save the most on interest over time. Debt consolidation is another popular option — rolling multiple debts into one new loan, often with a lower interest rate and one monthly payment. 

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $50,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

3.Get your 401(k) match

When it comes to building your retirement fund, your traditional 401(k) is like your superhero sidekick. It lets you sock away part of your paycheck before paying tax on it. Your company may also match part of the money you contribute, up to a certain percentage.

The key is making sure you’re contributing enough to get the full company match. It’s usually something like a 50% or 100% match on the first 6% you put in. If you make $60,000 and your company matches 50% up to 6%, that could mean an extra $1,800 per year into your 401(k) on top of your contributions. It’s an easy way to supercharge your retirement savings without feeling it in your daily budget. 

4. Roth IRA

Here’s how a Roth IRA works — instead of getting an upfront tax break like with a traditional IRA, you contribute wages you’ve already paid taxes on. That money grows 100% tax-free, which means years down the road when you’re ready for retirement, you can withdraw all that cash without paying any tax on it. Make sure you play by the income limits to qualify. By stashing cash in a Roth, you’ll be ahead of the game when it’s time for life after work. It’s a retirement power move.

5. Start investing

Investing is like planting a money tree that could keep growing over time. Even if you don’t have tons of cash to start, putting away a little bit regularly can add up. You could invest in the stock market, choosing individual stocks or diversified exchange-traded funds; buy bonds; or invest in mutual funds. It’s easier than ever to start investing with user-friendly apps and robo-advisors that do a lot of the work for you. You can often open an account with as little as just a few bucks. The sooner you plant those first money seeds, the more time and potential they have for growth. However, growth is not a guarantee. Investing and purchasing crypto currency is subject to risk of loss, including loss of principal so if you are not sure, consider consulting an investment advisor to help build your portfolio. 

MoneyLion offers a fully managed portfolio that requires no management fees or minimums.

6. Pay for insurance

Insurance is kind of like a force field protecting you from life’s crazy curveballs. With the right insurance policies in place, you can breathe easy knowing you’ve got a safety net to cover those costs if something goes sideways. For example, home and auto insurance help protect two of your biggest investments — your house and your vehicle. Travel insurance gives you backup for delays, cancellations, or medical emergencies far from home. The key is assessing your personal risks and assets to determine what coverages make sense for your situation.

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7. College fund for your kids

Starting a college fund for your kids is like giving them a supercharged head start on their futures. Instead of them being saddled with massive student loans later, you’ll have a stash of cash just waiting to make their higher education dreams a reality.

The earlier you start squirreling away funds, the better, as it gives your money more time to grow. Even saving small amounts regularly into a tax-advantaged 529 plan can potentially blossom into tens of thousands of dollars over 18 years as the interest accumulates on top of your contributions.

8. Home renovation fund

A home renovation fund is like a piggy bank for making your dream home a reality. Instead of scrambling to cover costs when those renovation projects pop up, you’ll be ready with a dedicated stash of cash. The trick is setting up a high-yield savings account specifically for this fund, separate from your normal banking accounts. That way the money is liquid and accessible whenever you need it but safely partitioned off from your day-to-day spending. And higher interest rates will give your renovation dollars a boost while you save.

MoneyLion offers a convenient marketplace to compare high-yield savings accounts from our trusted partners that could help grow your money.

9. Vacation fund

A vacation fund is like a passport to adventure and relaxation. Instead of dreaming about exotic getaways, you’ll have a stash of cash saved up and ready to make your travel dreams a reality. The trick is treating your vacation savings like an essential bill you pay each month by automatically funneling money into a separate high-yield savings account. Not only does this prevent you from accidentally spending your travel cash, but higher interest rates will give your fund a little bonus boost while you save up. 

10. Start a small business

Instead of daydreaming about being your own boss, you can use your extra cash for start-up funds to realize that goal. Imagine getting to pursue your true passion, set your own schedule, and watch something you created from scratch start to flourish and grow. With seed money from your savings, you can invest in essential equipment, inventory, marketing, or whatever your budding business needs to get off the ground. If you think a loan is what you need to get started with your small business, MoneyLion can help you compare loan options.

Gotta be startin’ something

You did it! You sacrificed, scrimped, and did without, and the result is extra money that you can use to propel you toward realizing long-held dreams or pursuing new goals. The question is — which ones? The 10 ideas discussed here mark just a beginning; if you’ve been able to get to this financial pinnacle, it’s only a start in your financial ascent. You’ll soon be looking for more ideas for what to do with extra money you’ve generated. Way to go!


Should I spend my extra money or save it?

This dilemma — spend that extra cash on a treat or stash it away for future goals — isn’t easy to resolve. Using most of it for practical reasons but allowing yourself a bit of a splurge offers the best of both worlds because you get instant gratification plus investing in your dreams.

What is the best savings breakdown?

The best savings breakdown depends on your unique financial situation and goals. That’ll help you accelerate progress in multiple money areas at once.

Is $1,000 a lot of money?

$1,000 is a decent chunk of change. But whether that amount qualifies as a lot of money depends on your personal situation. The important thing is making that money work for you.

What can I do with extra money for fun?

With extra cash burning a hole in your pocket, you could splurge on anything from scoring tickets to your favorite band to booking a weekend getaway with friends. The possibilities are endless when you’ve got fun money to spare.

How to make $5,000 dollars grow fast?

You’ve got $5,000 ready to deploy and you want to see that money grow fast. If you’re looking for potential gains relatively fast, you could put the money into a high-yield savings or a short-term CD. You could also consider investing that cash to purchase stocks or crypto. Investing comes with risk, the higher the risk the higher potential rewards, but also you are risking loss, including loss of principle. Speak to a professional to help build that portfolio for potential long term growth.

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