If you have come into a fair bit of money, whether you just had a raise, been promoted, won the lottery, gained inheritance, or your business is doing well, it’s important that you start thinking about what you’re going to do with it. Of course, you can always spend it or keep the money in your bank account, but if you are more strategic with what you have, you may greatly benefit from your cash in the long run.

So if you’re struggling with what to do with your money, here are some of the simplest and best ideas.

Pay Off Debt

Paying off all your charge cards and other loans may sound like a snooze of a suggestion when you come into extra cash. But there is no feeling of freedom like being debt free. It is a gift that keeps on giving month after month. It also frees up your income to put to better use, more or less providing you with extra cash each month to put to work for you. Put your cash towards the higher interest debt first and then if you have enough cash left over work your way through it all.

Emergency Fund

One way to avoid going into debt every time something unexpected happens is having a side-account reserved for handling such things called an emergency fund. It also plays a critical role in your survival should you lose your job for any reason. It can bridge your income gap between job loss and job started.  Emergency fund recommendations run anywhere from having enough to fund 3 months to 6 months living expenses. Set your cash aside in an easily available savings account. Look for high interest paying accounts.

College fund

If you have children, (or potential grandchildren) and you want to do as much as you can in order to provide them with a bright future full of possibilities, then you should consider starting a college fund. Whenever you have extra money you can add it to the fund, and over time you will have accumulated enough money to be able to put your child through school. Investigate any tax advantage college savings options. Some US State’s 529 plans even have a contribution match that can really help get things going.

Remember that things are changing and unfortunately unless someone is lucky enough to get a scholarship – going to school can end up costing an awful lot of money, so any little bit helps.

Retirement Fund

It may seem like a long ways off but retirement happens to everyone alive. If you’re not yet saving for retirement then coming into some cash is the perfect time to start. Time is your friend when it comes to retirement savings. If your employer offers a pension scheme like a 401K, especially if they match a percentage of your contributions, then get on the stick and start saving for retirement. If you don’t have an employer based retirement savings option then open a retirement account where you bank, through a financial adviser, or online brokerage.

Investing

Whether you are setting aside money for kid’s college or retirement, being an investor is a great way of earning even more off of what you already have to begin with. There are many avenues of investing to consider. There is investing in a business, real estate, stocks, and bonds. Stock and bond funds are popular and spreads your investments over various businesses and business sectors.

A lot of the time picking the right place to invest looks like it’s just luck. But if you have a good eye, you will be able to spot a good investment opportunity from a mile away. Once you have found one, the idea is you put some of your own money into it, and anything they then earn – you get back what you put in, as well as a cut out of the final profit. Always weigh investment risk against potential returns to determine whether to invest or not.  

Some people like to pick individual stocks to invest in for growth or their dividends. If you aren’t quite sure what direction to go in, have a look at some free stock ratings so you have an idea of where to go and what to do.

Forget about it

If you are someone who just doesn’t want to hassle with setting up special funds to stow your cash in but also doesn’t want to just blow it, then one of the simplest, and yet hardest things to do, is to forget you have money. Open a savings account and put all of your extra money in there. Whenever you have any new cash coming in, you can set up an automatic transfer from your regular bank account to the savings account so the number continually increases.

But don’t touch it  or do anything with it. Don’t even look at it, as doing so may make it difficult not to spend it. Forget it even exists and go on with your life. Then one day, there will come a time where you need a lot of money. That may be to buy a new house, or a car, or to go travelling around the world for a year, or retire while you are still young enough to enjoy it – whatever it is, you will then remember that savings account, and you’ll be amazed by the number you have staring back at you. Believe it or not, there may even come a time in your life where you will be ready to strategically put your cash to better work for you as mentioned above and you will have a tidy sum to work with.  

 

Now you have a few ideas as to what you can do with your money, get thinking about what is best for you. If you still aren’t quite sure, then meet with a financial adviser who can help you make the best decision for you.