It was just yesterday that I received an email from my supervisor, asking if anyone in our department wanted to work a midnight shift during finals week at the University where I am currently employed. Being a young, ambitious employee (I like to play to my strengths that my youth provides for me) I had already volunteered for another shift. I was extremely hesitant to work a 6 hour shift from 2am-8am, but I decided to do it because a little extra money is always nice.
The true incentive was that they are paying me close to double my hourly rate AND giving me 6 hours of “comp time,” meaning that I can take a full day off with only using 1 hour of vacation days. I elected to take a Sunday morning shift with the intention of working until 8am. Then, I will come home and sleep for 4-5 hours until lunch time. I will use my extra time off the following Monday to recuperate. In other words, I am working a 6 hour shift instead of a 7, using 1 vacation hour, and getting paid for two shifts (or 3 shifts since it’s nearly double my hourly rate). Not a bad deal at all.
The big dilemma when it comes to agreeing to work this shift is what to do with my extra money. It’s a question that I’ve asked before as my wife and I have received raises over the past couple of years. It’s an important question for any young adult to ask, because it will determine your financial success for the future. While it’s no large figure, I will net a fair amount of money considering the time trade off. Like any young adult who loves technology, I couldn’t help but react with this question going through my mind: What can I buy with this extra money?
What to Do with Extra Money?
We all face similar decisions when we get bonuses, raises, or eliminate debt. As we come to these points in our lives where we are forced to decide what to do with this surplus of money, I would guess that we often spend it irresponsibly. We have been dying to have this or that and so we use this as an excuse to reward our hard work. It’s not an entirely irresponsible approach, but I couldn’t help but ask if this is the best thing to do with my money. Before I go into that, let’s explore some of my possibilities.
Night out for Mrs. 20′s and I
It’s probably no surprise to many of my loyal readers that my wife and I rarely go out for fancy, expensive date nights. It’s not that we don’t enjoy doing nice things together, it’s just that we value our time together more than spending lots of money to commemorate a special event. In light of this, one of the things that we could spend this extra money on was a night into NYC. We live just a train ride away from New York City, so we could hop on the train and go see a show on Broadway or something. I’m not a huge fan of musical performances, but I do like concerts.
Buy Backpacking Gear
One of the areas that I splurge (in addition to biking stuff, which is a trade off from the gas and train tickets that I don’t spend money on)is backpacking stuff. For those who have been backpacking, you know that every ounce of weight matters. Companies and their marketing departments know this, making sure to point out how a $400 sleeping bag is worth its value because of its low weight and temperature rating. I’m a sucker for this type of stuff. On my imaginary wish list is a new backpack as mine is one of the older and heavier ones (light in comparison to many, but still) and doesn’t have some of the features that I want. This extra money would give me enough to buy a new pack and then some, but I have been backpacking less and less due to moving away from college friends. (If you are into backpacking, this is the backpack that’s on my wishlist: Osprey Packs Atmos 65 Backpack)
Save and/or Invest
Another great option would be to pocket the extra money for either a rainy day or for future income. While the extra money won’t be that much, if I were to invest it somewhere where I could get a decent return (susceptible to more risk, but since it’s “extra” money, I’m going to be less upset about losing it) it could really turn into something over time. For example, if I got an average annual return of 12%, over 30 years it could be worth approximately 30 times what it is now. That sounds pretty good to me. (1.12^30 = 29.96)
Even if I don’t want to spend a lot of time managing my investments, I can use my Betterment Account that provides ultimate simplicity for investors. With a push of a button, you can adjust your portfolio’s allocation. They also recently adjusted their fees to bring them down to lower than the average investment broker. Try using Betterment to invest if you have a little extra money.
How to Decide Where to Put Extra Money
Lately I have been coming to the conclusion that there are two ways that I can spend extra money. I can save it and invest it for my future, thereby giving me more flexibility in my future, or I can spend it on an evening or things here and now. It’s really a matter of setting financial priorities. I’m still undecided of what exactly I will do, but odds are I will pocket the money so that I can set myself up for a better future.
What do you do with extra money?
If you are looking for a way to track your money, you might want to consider using Personal Capital. It allows you to monitor your income and spending, your investments, and your net worth all in one place. It uses the same security encryption as banks so you can rest easy knowing that your information is safe and secure.