Everybody has some kind of financial plan and that plan can always get a boost with extra cash. If you have more money flow than what you need to save, it is the best time to utilize the extra money for greater comfort and luxury. However, no matter how much money you have, never spend it unreasonably as you may not be as lucky tomorrow. Here is how you can utilize the extra cash.
Clear the burdens
Taking loans to lead a better life is now common among many. Many people take a home loan or a car loan and spend a good amount of money every month on Equated Monthly Installment (EMI) payments. If you have regular and sufficient money flow, it is the right time to rid the burden of these loans from your shoulders. Moreover, if you have enough to clear the entire loan, make it your priority. If you can’t, pay an extra amount over and above your EMIs to clear the loan as soon as possible.
Saving accounts are just not enough anymore with their low interest rates. Emergency funds are very important to have as you never know what life has in store for you in the future. An emergency fund will come to your rescue if you have to face difficult situations such as a loss of job or an accident. An emergency fund can secure a safe future for your family. Use your extra cash to create an emergency fund.
Everybody must hold life insurance and medical insurance policies. If you don’t already have them, it is best to use the extra cash to buy insurance policies. If you already hold insurance policies, you can consider changing to a policy which offers better benefits but requires higher premiums. You can add a rider to your existing policy too. Some insurance policies double up as investments. You can opt for these plans and get some returns too.
Deposit some of the extra money which you do not require immediately into a Fixed Deposit. This is because FDs have a certain lock-in period once funds are deposited. One can opt for a premature withdrawal, but that will attract some penalty. FDs give higher returns than a savings account. One has the option to open the FD account in the same bank where they have their savings account. This will make things easy and convenient. Those willing to take risks can put their extra cash in a mutual fund investment as that would help their money grow over a period of time.