LIFESTYLE

3 Things that you should do with extra money

If you have some extra cash that you don’t know what to do with, there are certainly worse problems in the world. But with such a myriad of different choices that you can make, it can be very challenging to know which one is right.

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To give you a helping hand, we will be running through three things that you should be aiming to do with your extra money.

PREPARE FOR THE UNEXPECTED

The first thing that you should do is to prepare for the unexpected. You never know what life is about to throw at you, and having that safety net of money is important. For example, just a few of the things that could go wrong include getting fired from your job, encountering a medical emergency, your car breaking down or some sudden maintenance on your home.

The amount that you need to have in your emergency fund depends on whether or not you have a family, and the total amount of debt you have. Ideally, you should be aiming to accumulate a fund that covered three to six months of living expenses. Another important part of preparing for the unexpected is having the right insurance provisions in place, which will cover you in numerous emergency situations.

PAY OFF DEBT   

Debt is a burden that is only going to hold you back financially in the future, so you should be looking to get this paid off at the earliest possible opportunity. Tackle your high interest loans first as these are costing you the most. Credit cars, car loans, personal loans and payday loans are examples of some of the most common of these. Low interest loans tend to consist of things like student loans and mortgages.

INVEST IN THE FUTURE

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Once the emergency fund is sorted and you have cleared your debts, the time has come to invest in the future. It is a good idea to get some professional advice from financial specialists who can advise you what you should be doing with your money or you could also look at getting a personal capital app. A retirement fund or pension is always a good idea to protect you in your old age. Other options include stocks and shares, bonds, and business investments. Everything depends on how much money you have set aside and what you are prepared to risk. It is a good idea to diversify your investment so that all your eggs aren’t in one basket.

When it comes to the management of your extra money, you should always be looking at the bigger picture. You should review your financial situation on a regular basis to ensure that you are comfortably on track. You will also need to reassess this if you experience any major changes in your life such as an adjustment in your income. Goal-setting is an important part of life, and this should certainly be the case in the financial arena. Manage your money and it will be so much easier to manage your life.

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