Wednesday, October 16, 2019
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What to use the Extra Money? | Debts

Many times we associate receiving extra money with winning the lottery or receiving a millionaire inheritance.
We believe that miraculously our financial problems are going to be solved or that with those “additional billetics” we can access everything that we have been denied: a very expensive watch, a long-awaited trip, a modern car or a remodeling of our home. However, this additional amount that we receive cannot be converted into pocket money but must be transformed into a key tool that allows us to achieve the financial tranquility that we are looking for so much.

On the one hand, it is important to be aware that we do not have this money periodically and permanently and therefore we cannot base our budget on these extra income. On the other hand, when we receive it, we must evaluate the financial situation we are going through and define the best use we can give it.
Depending on the financial needs we have, when an extra amount of money reaches our pocket we could choose to use it in:

 

Start an emergency fund

Start an emergency fund

Inadvertent situations do not wait. The ideal is to have savings that allow us to cope with times of crisis, that is, to survive without affecting the quality of life between three and six months in case of not receiving or generating income. If we still don’t have a contingency fund, this extra money could be perfect to start building it.

 

Pay debts

Pay debts

If the interests of our debts have burdened us, this additional income could become our ransom. Taking advantage of this extra money to pay off debts or reduce the amount of liabilities is a good alternative for our peace of mind and that of our pocket.

 

Invest

Invest

Thinking ahead will always be a wise decision. Investing this money, or part of it, in a voluntary savings fund or an investment fund will allow our personal finances to be sustainable over time.

 

Buy insurance

Buy insurance

Prevention is one of the keys to the success of our finances. If the extra money we are about to receive has not found its destination, the purchase of life insurance, medical, school, etc. It will never hurt when it comes to anticipating eventualities.

 

Reward yourself

Reward yourself

If you have been disciplined with your finances, you have no debts, your savings and investment funds are covered and your assets are insured, you can take pleasure in using this extra money on a vacation, a new car or any other pleasure that you consider yourself worthy for having an impeccable order in your finances.

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