Unexpected money is always the best money, but before you run out and spend that money on something frivolous, you need to think about how that money could better be spent.
Whether it’s paying off debt or planning for a vacation, there are things you should do with unexpected money.
Pay Off Debt
First things first. If you have debt, you need to put unexpected money towards paying it off. Is that fun? No, it’s not. However, once your debt is paid off, you’ll have more money to spend each month. Don’t just think about credit card debt either. You might put the money towards your car payment, a personal loan, or even your mortgage.
Start an Emergency Fund
If you don’t have an emergency fund, and have all your debt paid off, use unexpected money to start one. This is an account that is used solely for emergencies. Emergencies might include a trip to the ER, a blown tire, etc. This account is not to be used for home repairs (you should have a separate account for that), a great sale, or something else that isn’t desperately needed.
Get Ahead on Bills
It feels amazing to be ahead on your bills. You can get ahead on everything from your electricity bill to cell phone bill. With services like Netflix or Hulu, you can buy a gift card and apply it to your account so that you don’t have to think about that bill for a while.
Save for the Things You Want
Instead of putting the things you want on a credit card, use unexpected money to purchase or save for the item. That unexpected money can be a nice boost for reaching your goal. It’s a much better feeling to purchase a large item using cash rather than credit.
Plan for a Vacation
Last, but not least, you can also put that money towards a vacation. Depending on how much money you get, you may be able to take a vacation right away. If not, this is a great time to start planning and budgeting for that vacation you’ve been dreaming of.
Unexpected money can be fun to blow, but you’ll be much better off if you use that money wisely. It might be paying extra on your mortgage or getting ahead on bills. Whatever you choose from this list, it will be a better decision that blowing the money on a mega shopping trip.