Got extra cash burning a hole in your pocket? Not sure what to do with extra money or where to stash it? Whether you’ve scored a bonus, inherited a tidy sum, or just have some cash sitting around, the real question is: what to do with your money now? Well, you’re in the right place. We’re here to share ways to use your money wisely and help you figure out how to make it work for you.
From smart financial planning tips to clever ways of how to grow your money, here are 10 actionable strategies to get you on the path to financial freedom.
Let’s dive into the best options for your money and make every penny count!
1. Build or boost your emergency fund
Before you dive into the exciting world of investments, it’s time to get practical. So, what to do with extra money? Start by thinking about your safety net—a solid emergency fund is a smart place to begin. Imagine this: your car breaks down, the water heater bursts, or an unexpected medical bill arrives. Having three to six months’ worth of living expenses set aside means you won’t have to panic or dip into your long-term savings to cover the unexpected.
So, wondering where to put your money for emergencies? Smart Cash, a cash management solution that allows you to invest your money in a money market fund, is a solid option. You can earn a bit of interest while your emergency fund sits there, just in case. And let’s be honest, having a bit of a buffer between you and life’s unpredictable surprises is a pretty wise way to use your cash.
Now, if you’ve already got an emergency fund, congratulations—you’re ahead of the game! But if it’s looking a bit slim, consider using your extra money to top it up. This is especially important if your expenses have changed (hello, inflation). Remember, an emergency fund isn’t a static number. Adjust it as your life (and spending) evolves.
Still wondering how to save for the future? Once that emergency fund is padded up, you’re in a much stronger position to look at investing.
2. Pay off high-interest debt
So, you’ve got some extra cash, and you’re thinking about what to do with your money. Before you start dreaming of investments or vacations, there’s one place that absolutely deserves your attention: your debt. Specifically, those high-interest ones lurking on your credit card statements. When you’re paying double-digit interest rates, you’re essentially throwing money away. The best thing you can do for your wallet? Get rid of that debt fast.
Not sure if this is one of the best options for your money? Think about it: the interest you’re paying on credit cards, personal loans, or payday loans is likely far higher than the return you’d get from most investments.
Knock out those high-interest balances before they keep draining your hard-earned cash. You’ll not only save on interest payments but also free up cash to invest and save elsewhere.
Plus, paying off debt is a huge psychological win. Imagine what you could do when you’re no longer weighed down by monthly interest payments. That’s when you can really start thinking about how to invest your money and making the most of those freed-up funds. Consider it step two on your journey to financial freedom.
3. Maximize your retirement contributions
Investing in your future is one of the smartest moves you can make. Whether retirement seems far off or just around the corner, using your extra cash to boost your retirement contributions is one of the best options for your money.
Still figuring out how to invest your money? Diversifying your retirement fund with a mix of assets can help spread out risk and increase potential returns. Many European pension funds even offer ethical or socially responsible investment options if you want your money to align with your values.
Remember, the earlier you start, the more your money can compound over time. And with Europe’s aging population and increasing strain on state pensions, relying solely on government retirement benefits isn’t a safe bet. By increasing your retirement savings now, you’re ensuring a more comfortable future.
4. Invest in a diversified portfolio
Now that you’ve taken care of the basics, it’s time to start thinking about how to invest your money. One of the best options for your money is to create a diversified portfolio. Why? Because putting all your eggs in one basket is a recipe for stress—and potential loss. Diversifying across multiple asset classes helps spread risk and increases your chances of seeing steady returns over time.
Wondering where to put your money? Consider a mix of stocks, bonds, and ETFs (Exchange-Traded Funds). Stocks give you a shot at higher returns, while bonds provide stability. ETFs are a simple way to get exposure to a range of assets without having to pick individual investments. These funds offer a great balance between risk and reward, making them a solid option for those looking to grow their wealth without too much fuss.
A diversified portfolio is especially handy during turbulent times. When one market dips, others might rise. For example, while stocks might be volatile during economic slowdowns, bonds or real estate investments could help smooth out the bumps. It’s all about balance.
If you’re not sure what to do with savings beyond your emergency fund, investing is a great way to put that extra money to work. The beauty of diversification is that it works whether you’re a seasoned investor or just starting out.
5. Explore low-risk investments
If you’re a bit risk-averse or simply prefer to play it safe with your hard-earned cash, low-risk options are worth considering when thinking about what to do with extra money. These investments may not be as thrilling as the stock market, but they offer a steady way to grow your money without losing sleep at night.
So, where to put your money if you’re after stability? Government bonds, high-yield savings accounts, and money market funds are all great choices. While the returns may be lower, they come with much less volatility. These options are perfect if you’re looking to safeguard your savings and generate a small, reliable return. Think of them as the tortoise in the race—slow and steady, but they get you there.
If your goal is how to save for the future while minimizing risks, low-risk investments can help you achieve it. And once you’ve built a stable foundation, you’ll be ready to explore higher-return options down the road.
6. Start or expand your investment in real estate
Looking for what to do with your money that offers long-term stability and passive income? Real estate might be calling your name. Whether you’re considering buying rental properties or investing in REITs (Real Estate Investment Trusts), this investment option has a solid reputation for building wealth over time.
If you’re unsure how to invest your money in real estate, there are multiple paths. You can go the traditional route by purchasing property, which can generate steady rental income and appreciate over time. Or, if you’re looking for a more hands-off approach, passive real estate investing via platforms or REITs lets you enjoy the benefits of real estate without the headaches of being a landlord.
One of the best options for your money in real estate is the potential for both capital appreciation and regular income. You don’t just rely on property values increasing; rental income can provide a steady cash flow while you hold onto the asset. Plus, with a market as diverse as real estate, there’s an opportunity to match your investment strategy with your risk tolerance.
Consider diversifying within the sector. Invest in different types of properties (residential, commercial, industrial), or spread your investments across multiple locations to minimize risks.
7. Consider investing in loans
If you’re looking for ways to use your money wisely beyond traditional investments, it’s time to consider something a bit different: investing in loans. Platforms like Mintos have opened up this opportunity to retail investors, allowing you to lend money and earn interest in return. It’s a smart option if you’re searching for how to grow your money while diversifying your portfolio.
The beauty of loan investing is that it gives you the power to choose the level of risk you’re comfortable with. If you’re thinking long-term and want financial planning tips, investing in loans can offer steady returns without the volatility of the stock market. It’s a win-win: you help borrowers while earning a return on your money.
8. Build a savings plan for future goals
Consider setting up a savings plan for those big milestones ahead. Whether it’s buying your first home, traveling the world, or starting a new business, putting aside funds for future goals is a great way to keep your finances in check while planning for what’s next.
Not sure how to save for the future? Start by setting clear goals. For short- to medium-term plans—like buying a new car or renovating your home—creating a dedicated savings account can keep that extra money separate and growing with interest. If your goals are further out, you might look into flexible, tax-advantaged savings accounts that let your money grow steadily while keeping it accessible when the time comes.
When thinking about how to grow your money, having a strategy is key. The sooner you start setting aside funds, the easier it becomes to reach those big life goals without stress or scrambling for cash.
9. Experiment with different investing strategies
If you’re looking for what to do with your extra money beyond the basics, it might be time to explore various investing strategies to see what works best for you. With so many options out there, from smart beta investing to dollar-cost averaging, trying out different methods can help you find the perfect fit for your goals and risk tolerance.
Want to know how to invest your money in a way that aligns with your style? Start by exploring investment options. If you’re unsure of where to put your money and want to play it safe while experimenting, diversification is always a smart move. By trying out different strategies across asset classes, you’ll learn which approaches align best with your financial goals.
For example, consider researching portfolio diversification and asset allocation strategies. These ensure you’re not putting all your eggs in one basket and help balance risk versus reward in your overall portfolio.
10. Invest in your financial education
The best way to make smarter decisions with your money is by investing in yourself. If you’re still figuring out what to do with extra money, consider boosting your financial literacy. Learning how to invest your money wisely or understanding where to put your money can lead to better long-term returns. From books and online courses to podcasts and webinars, the world of finance is full of resources that can help you make informed decisions.
By deepening your knowledge, you’ll not only feel more confident about your investments but also open up new strategies to grow your wealth. Understanding topics like factor investing, investment risks, or even litigation funding can give you an edge in managing your finances.
Think of it as an investment in your future decision-making. The more you know, the better equipped you’ll be to navigate complex financial choices, ensuring your money works harder for you.
As you look for ways to use your money wisely, remember that your financial journey doesn’t have to be static. There’s always room to experiment. With the right approach, you can keep growing your wealth and preparing for the future. With Mintos, you can put your money to work and start building a portfolio that suits your goals.
