Now that you’ve been working in your career for a few years and paying down your personal debt, making the most of the money you have at the end of the month might be a new, exciting opportunity. Spending your extra cash to treat yourself is a valid option after years of working and saving to stay over those overdraft fees.
However, buying bigger and investing in yourself beyond the latest phone or new piece of furniture you’ve had your eye on can also go a long way in making your extra cash grow for the future. Discover five ways you can take your extra cash even further this year.
1. Invest in a Home
Purchasing a home is easily one of the biggest purchases you can make in a lifetime. From down payments to paying for your real estate agent, there are a lot of upfront costs when purchasing a new house or even commercial property. If you’ve been renting the past few years, considering saving for a real estate purchase has the potential for being a long-term investment.
A clear advantage of purchasing as opposed to renting is that your monthly payment now goes back towards something that you can own and hopefully see a return on someday. Depending on markets, you could potentially make more back in your property sale than your purchase costs.
Are you not quite ready to make the jump from renting to owning? You can still invest in real estate by diversifying your portfolio to include various properties. Discuss this option with your financial advisor to explore how you can strategically invest in commercial real estate and if it’s right for your portfolio.
2. Set Up Your Bills On Autopay
Setting up bills to pay automatically without seeing them might seem like new territory. However, now that you probably have enough to budget with, automatic bill paying options make it simple to stay on top of bills and avoid late fees. When it comes to your fixed expenses like Internet, utilities, rent/mortgage and more, setting up those payments to be done automatically can save you the stress of late fees, wondering if they received your check in the mail and give you the peace of mind knowing that it has been taken care of.
3. Giving for the Next Generation
When it comes to making your extra savings go the extra mile, life insurance is a specific opportunity that can impact the finances of your family and future generations. A life insurance policy can aid in safeguarding your family’s financial well-being in the future by providing a sum of cash for end of life preparations and other personal expenses. Life insurance policies can be purchased at a range of different price points so you can provide coverage for your family at a contributing price that works for you.
4. Explore A High-Interest Savings Account
Opening a savings account is a simple first step in protecting any extra cash you may have from being spent unnecessarily. Whether you’re looking to open a savings account with your current bank or with another federally-backed organization, a high-interest savings account could potentially yield more savings over time than a traditional deposit savings account.
A high-interest, or high-yield, savings account offers more payback for your business that allows you to accrue more interest sooner. This is backed by the Federal Deposit Insurance Corporation (FDIC) to give you the security knowing that your savings account is secure and higher performing.
5.Open a Roth IRA
Opening a Roth IRA should be the next account that you open even if you only have $1,000 to invest. Because you aren't allowed to take tax free distributions from a Roth IRA until it's been open for 5 years, it makes sense to get this account open as soon as possible. Everyone knows that Roth IRAs provide tax free income in retirement and can be a very powerful tool to help you manage taxes in retirement. What many forget is that you can take back what you've contributed to a Roth IRA without taxes and penalties. That means that these dollars aren't locked up until you turn 59 1/2.
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