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Make the most of extra income

Create a spending plan for that extra money from a raise, bonus or tax refund before it hits your account.

Insights for inspired money - Next Door® - State Farm®

Here are some ideas on how to create a spending plan with additional income

Get a little something extra in your paycheck recently? Whether it's extra income from an annual bonus at work, a raise, or money from a tax return, getting this kind of extra money doesn't happen all the time, which makes it all the more tempting to spend quickly.

You've probably heard of the things you should do with that extra cash in hand, and you definitely know the things you want to do with it, which might leave you wondering what to do with the extra cash. Here are some tips to help you decide what to do with the extra money.

1. Start by making a spending plan before you get the money

Whether you want to spend it all, save it all or something in between, make sure it's on purpose. Having a plan in place for the money, before it's in your account, can help you resist the urge to spend it before you have it, or overspend. Money can disappear fast, especially when you're not keeping track of where and when it's being spent.

2. Does your plan align with your priorities?

Making decisions about your money should feel good! You should align your money with your priorities. Maybe that means a combination of saving and splurging, or maybe you pay down a debt. The point is, you decide how to use that money to meet your goals and make progress in the direction you've determined.

3. Build up savings

Get a jump start on saving and planning for your future. Here are just a few options to think about when it comes to your savings plan:

4. Focus on your debt repayment

Make a list of all your debts, their interest rates and the remaining balance. Then, prioritize your payoff strategy, either focusing on your highest interest rate or lowest balance first. When you pay off one debt, roll the amount you were paying on it to the next one.

5. Invest in yourself

Interested in starting a side gig or pursuing a new business opportunity? You can invest in your future by upgrading your laptop, taking that accelerated skill course or getting new headshots.

Enjoy your hard earned money by making a plan you feel good about. While most prudent savers balance spending and saving, remember it's all about putting your money towards what's most important to you.

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Financial Friday is a series dedicated to financial education and actionable tips meant to inspire progress toward your financial well-being. Subscribe to Next Door® to get Financial Friday articles delivered to your inbox.

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The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. State Farm makes no guarantees of results from use of this information.

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