If you find yourself with an extra $1,000 that you don’t need to cover your living costs you may be inclined to go on a spending spree to treat yourself. While that may sound like fun, there are smarter things you can do with $1,000 and three of these you will find in this post.
Invest, save or pay off debts with the extra $1000 you may have.
1. Start or Contribute to Your Emergency Fund
If you haven’t set up an emergency fund yet, then those $1,000 would be just the right amount to get started with. Having at least that amount available for emergencies can come in handy when accidents occur that are not covered by your insurance providers. Also, if you already have a small emergency fund but you would like more peace of mind, then adding the extra $1,000 on top of it could also be a smart move. A $1,000 to $3,000 emergency fund should suffice for events such as an unexpected home or car repairs.
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2. Pay Off Outstanding Debts
If you have any outstanding debt, then using the $1,000 to help pay off a part of it is a very smart financial decision. A high level of debt is probably the biggest financial burden that people are facing today. The sooner you can get out of debt, the better as excessive debt will likely hinder your ability to make large investments or start a business venture until most, if not all of it is paid off. Hence, using your extra $1,000 to pay off debt would be a wise move.
If you have already set up an adequate emergency fund and you are already well on your way to paying off your debt or are completely debt-free, then the smartest thing you can do with $1,000 is put it towards your next investment. You could add it to your stock portfolio or put it aside for the down payment for a property investment. The more money you invest today, the more wealth you will have further down the road. So, the sooner you start the better, even if it is only with small amounts.