If you got a year-end bonus over the holidays or found yourself in possession of a little extra Christmas money, being smart about the way you use it can help you earn even more in the long run. There is no rule that you have to spend that extra cash on a vacation to the Bahamas, albeit that does sound nice.
Using extra cash as a means to earn more money can be done in a few ways:
(1) Use the spare cash to plan for retirement
Putting the money into a retirement fund can eliminate the money from being taxed, increasing your savings. In addition, if your employer matches any contributions you make, you could dramatically increase your money in that account.
(2) Pay down credit card debt
Credit card debt is a threat to most household budgets around the nation. Using any extra money to slash the balance of that debt could save you thousands of dollars over the years because of the interest rates.
(3) Increase bank savings
Having a larger sum in your bank account will give you leverage to negotiate rates with your bank. Take some time to do some research on what fees you are being charged to ensure you are getting the best possible deal from your bank.
The point of having some spare cash should be to build and sustain wealth rather than spend on frivolous purchases. If invested correctly, you can save yourself hundreds or even thousands of dollars. Talk to your financial advisor if you are uncertain about what options you might have.