10 Things To Do if You’ve Got Extra Money in Your Bank Account
Written by
Melanie Grafil, AI Editor
Edited by
Melanie Grafil
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Discovering extra money in your bank account can be a delightful surprise. It’s an opportunity to make decisions that will positively impact your financial health and future. Don’t think about this as simply having spare cash, though. Consider it a chance to better your financial well-being. Here are some smart ways to use that extra money in your bank account.
Read: Pocket an Extra $400 a Month With This Simple Hack
10 Strategic Ways To Use Your Extra Funds
Any one of these ideas could be mean the difference between going broke and being financially-savvy. Take a look at this and see which one will work best for you.
1. Pay Down High-Interest Debts
One of the most beneficial uses of extra funds is to pay down high-interest debts, such as credit card balances or personal loans. Reducing these debts not only saves you money in interest over time, it also improves your credit score. This makes it one more step toward financial independence.
2. Boost Your Emergency Fund
Financial experts often recommend having an emergency fund to cover three to six months’ worth of living expenses. If your emergency fund isn’t fully stocked, consider using your extra funds to build it. This creates a financial safety net for unexpected events like medical emergencies or job loss.
3. Invest in Retirement Savings
Contributing extra money to your retirement accounts, like a 401(k) or an IRA, can have long-term benefits due to the power of compounding interest. This is particularly impactful if your employer offers matching contributions.
4. Invest in the Stock Market
If your high-interest debts are paid off and you have a solid emergency fund, consider investing in the stock market. Stocks, mutual funds and exchange-traded funds (ETFs) can offer higher returns compared to traditional savings accounts, albeit with higher risk.
5. Contribute to a Health Savings Account (HSA) or Flexible Spending Account (FSA)
If eligible, funding an HSA or FSA can be a wise use of extra funds. These accounts offer tax advantages for medical expenses, and HSAs have the added benefit of rolling over year to year.
6. Fund Your Children’s Education
If you have children, consider putting extra money into a college savings account like a 529 plan. This investment can grow over time and helps reduce the future burden of student loans for your family.
7. Make Home Improvements
The right kind of home improvement project can increase your property value and enhance your living environment. Prioritize repairs and upgrades that offer the best return on investment, such as energy-efficient upgrades or kitchen remodels.
8. Donate to Charity
Donating to charity is not only a noble act but can also provide tax benefits. Contributing to causes you care about can be a fulfilling way to use extra funds.
9. Pursue Personal Development
Consider investing in yourself by funding your education or learning new skills. Whether it’s taking a professional course or pursuing a hobby, personal development can offer both personal satisfaction and potential future financial returns.
10. Create a Fun Fund
While it’s important to be responsible with extra funds, it’s also OK to set aside a portion for the things you love. Whether it’s for travel, dining out or another leisure activity, having a designated fun fund can enhance your quality of life without guilt or financial stress.
Final Take: The Best Way To Maximize Your Extra Funds
Extra money in your bank account presents a unique opportunity to bolster your financial situation and future security. Whether it’s paying down debt, investing in your future or allowing for personal enjoyment, thoughtfully utilizing these funds can lead to long-term benefits and financial peace of mind. Remember, the best use of this money depends on your personal financial goals and circumstances, so consider what aligns best with your long-term plans and immediate needs.
FAQ
- Why is there extra money in my bank account?
- If you've got extra money in your bank account, it could be that there was an incorrect deposit to your account made. It might also be a bank error or withdrawals that simply haven't been authorized yet. Keep track of your account transactions and be sure to contact your bank if you do spot any discrepancies.
- What happens if money is transferred to my account by mistake?
- If you find extra money in your account due to a bank error, it's not yours to keep. The bank might resolve the mistake by using an offset, which means they can deduct the amount from your account if there was a mistake. It's always a good idea to alert your bank about the unexpected deposit.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
