5 Best Ways To Spend $500 That Will Boost Your Financial Health
Written by
Nicole Spector
Edited by
Molly Sullivan
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When we think of ways to boost our financial health, the idea of spending money doesn’t exactly rush to our minds. But there’s something to the notion of spending money to make money. Take an unexpected or excess $500. Should you throw it into savings or put it to work by spending it? You should save it (in a high-yield savings account) if you don’t have an emergency fund that covers at least six months, but if you’re well covered there, maybe you should spend it. But how?
GOBankingRates spoke with financial experts to learn about the five best ways to spend $500 with the goal of boosting your financial health.
Put It Toward Eliminating Credit Card Debt
If you’re buried in, say, tens of thousands of dollars of credit card debt, you may think that throwing $500 at it won’t make much of a difference. Think again.
“If you have credit card debt and you’re making minimum payments, your $500 balance could result in $1,000 in payments over time,” said Melanie Musson, a finance expert with Clearsurance.com. “So, eliminating high-interest credit card debt will save you money on interest, help you get out of debt more quickly and free up room in your budget for investing.”
Make an Extra Mortgage or Car Payment
If you don’t have high-interest credit card debt, think of paying down other debt saddling you down.
“You could make an extra $500 car or mortgage payment,” said Erika Kullberg, a personal finance expert, attorney and the founder of Erika.com.
Invest In Career Development
You may be perfectly happy with your job, but are you happy with the trajectory of your career? Are you thinking about adding a side hustle to the mix? One of the best ways to spend $500 is to use it to invest in career development.
“There is no investment tool that will bring you more money and financial stability than continuous employment or promotion,” said Mabel Oza, an adjunct professor at the University of Illinois Chicago for blockchain and cryptocurrencies and the founder of ChaChing Social. “Investing in your career development could range across multiple things depending on your career. It could be anything from taking a certification test (i.e., Google Ad Words Cert, PMP), enrolling in a course, to getting a career coach.”
Buy Into the S&P 500
You should also think about using $500 to invest in stocks — but not just a single or a couple. Instead, look into an index fund — primarily the S&P 500 — which will spread your investment across a vast portfolio of top-performing companies.
“In the last 20 years the world shifted drastically, we’ve had various administrations and world events, but the S&P continued to increase,” Oza said. “So if you invested $500 in the S&P 500 in 2004, today you would have roughly $2,227 (excluding dividends), and if you reinvested the dividends, you would have $3,683, assuming an average annual return of 10.5%.”
Purchase or Upgrade Insurance Policies
Good insurance is integral to your financial health. Consider using $500 to purchase or upgrade insurance policies across the board.
“$500 spent on insurance upgrades could save thousands in the event of an emergency,” said Josh Richner, founder and senior debt advisor at FaithWorks Financial. “For instance, adding uninsured motorist coverage or increasing liability limits on your auto policy could prevent significant out-of-pocket costs after an accident. Assuming your auto and home or renters policies are all properly covered, consider using the $500 toward a short-term disability policy.”
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