What would you do if you had $1,000 extra dollars?
1. Pay off debt.
Paying off debt, specifically credit card debt, is one of the most effective ways to spend extra money. Many personal finance experts advise using the extra $1,000 to pay down the balance of cards with the highest APR first in order to see the greatest financial benefit.
Another effective way of paying down debt is to use Dave Ramsey’s “debt snowball” method of lining up your debts from smallest to largest and paying off your smallest debts first. Many find this technique creates momentum for faster debt elimination as it allows you to see immediate results by paying off your smallest balances first. For those who like to mark things off lists, this technique is especially emotionally satisfying.
2. Plan a vacation or unique experience.
Take your cue leading research and invest your extra $1,000 in experiences that will pay long-term dividends. Research from San Francisco State University shows that people are happier and gain greater long-term enjoyment from spending money on experiences rather than things. The study specifically found that people had a longer positive impact from spending money on socializing with friends and family, experiencing new things, focusing on their physical and mental health and wellness, and increasing their knowledge base through learning opportunities.
While you may gain immediate pleasure from spending $1,000 on the latest tech gadget or wardrobe shopping spree, using your extra funds to explore a new city or go on a once-in-a-lifetime wildlife excursion will give you memories that bring you a lifetime of enjoyment. If you’re interested in staying closer to home, consider enrolling in a class to learn a new skill or hobby, or pamper yourself and spend the day de-stressing at a local spa.
3. Increase your emergency savings.
If you don’t already have an emergency savings account, $1,000 is a great start to help you take care of unexpected expenses like car repairs or replacing broken appliances. If you already have an emergency savings in place, consider building up to your next landmark goal. The ideal emergency savings goal varies by each person’s situation. According to CNBC, depending upon your circumstances, you may need as little as 2 months’ emergency savings or as much as two years’ expenses.
You can give your emergency savings an extra boost by depositing it in a high yield savings account like AimBank’s AimElite Savings Account. You can open this high-yield account for as little as $1,000. For current interest rates, contact your local branch to speak with a personal banker to help find the right account for you.