Having extra money is a luxury that most of us don’t have, especially when you consider the cold, hard numbers about the average American and savings accounts.
The truth is less than half actually have a savings account, which means you don’t have any peace of mind when it comes to a special circumstance that could require some serious up front cash, a life event as it may be referred to at various times.
But for the rest of the population that dedicates themselves to budgeting, putting money aside and being able to, at the end of the day or work week, put money aside and have the proverbial extra that eludes so many more people.
So the question remains: what exactly should you be doing with that spare money?
The easy answer is to put it into a savings account or set it aside as mentioned earlier for that rainy day or if something goes wrong that you can’t prepare for or when you don’t want to turn to lenders or credit cards to bail you out.
And while you should have money saved and accessible, you can’t or certainly don’t want to overlook the other spots that you money might do better.
For instance, you could take a long, hard look at your retirement and determine if that extra money couldn’t better serve you for your golden years, whether that means upping your investment into your 401K (which means the company will of course match you dollar for dollar or for some companies a 50 percent contribution to your 100 percent). Either way, that money might be better served to gain in that realm of investing versus a standard savings account that isn’t going to gain much in the way of interest.
Think of the options you also have when it comes to health insurance and the subsequent flexible spending accounts. They are invested into on a pre tax basis, and you can use them on those health insurance plans you’re paying into that have higher than usual deductibles. Instead of paying those medical bills with every paycheck, consider being able to set aside money before your check is cut and pay off that medical debt in the form of your flexible account.
Extra money should never be tossed aside or whimsically used for ill advised purchases particularly if you don’t have money saved. While building a savings account is a nice start, don’t forget about the other, more lucrative ways to use extra money if you already have the standard saving spoken for.
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