What Would You Do with Extra Money?

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?

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?

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20 Responses to What Would You Do with Extra Money?

  1. Good post. I think one of the first things to do is not just spend it right away. I like to sit back and look at where the money would be used and maximized. I tend to like to take a little of the extra money and use it for something fun and then take the larger chunk and use it for some sort of savings/investing.

    • Corey says:

      That sounds like a well-balanced plan. Do you find that by giving in a little to something fun, you are more likely to buy/spend more in the future? Since I already do some fun stuff with the “regular” money that I earn, I feel that to spend extra money on more fun stuff wouldn’t be responsible. What do you think?

  2. Michelle says:

    We really want to buy backpacking gear. Going on a massive splurge at REI is definitely a dream of ours.

  3. I try really hard not to couple expenditures to income too closely, and instead try to make sure that on long time frames my expenses are notably lower than my income. So in the short term I’d probably do nothing. But I might very well splurge and buy something when no extra income was coming in.

    My last splurge was a new rifle for long range target shooting. No clue what the next one will be.

    • Corey says:

      That sounds like a reasonable choice. The reason why I am connecting the two is that I am choosing to do just a little extra work for an option at a little extra cash. It then forces me to ask what to do with it and by choosing savings/investing, I reinforce my priorities. With that said, there are benefits to just earning more money and not even thinking about it. :)

  4. Christian L. says:

    Corey,
    I’ve been working one or two shifts a week in the food industry just for extra cash. I have no debt so I’ve been saving it, mostly in case I’d like to move. But I’ll still have some in an IRA and emergency fund. My paychecks from those shifts allow me to save but still use my primary job’s income toward necessities…and from time to time, luxuries.

    -Christian L. @ Smart Military Money

    • Corey says:

      Christian, that sounds great. What made you go into the food industry for a little extra cash. I personally don’t think I could handle the constant “go-go-go”. I hope it’s worth it financially.

      • Christian L. says:

        Well I had just graduated college and this gig hadn’t turned into the moneymaker yet. I’m close friends with the owner of an ice cream shop and its employees, so I started picking up shifts.

        I cut back on them once I started working at the office more, but I couldn’t say no to the above minimum wage pay plus modest tips and free ice cream. Now, it’s an extra $200-$300 a month. And it’s ice cream, so it’s not hard or stressful.

        -Christian L.

  5. Good post.

    Do a bit of both, spend and save :)

    That way you can feel good about each one.

    • Corey says:

      I like the balanced approach, but I can’t help but wonder how much I will regret not saving more aggressively in 5-10 more years… but then again, will I regret saving too much? haha. Maybe balance is the answer after all!

  6. Right now, I am really wanting to get rid of some consumer debt so any extra money that I get will be going toward my credit cards.

    • Corey says:

      That’s a great answer. I forgot to include that, but mainly because my wife and I don’t have any debt. Good luck paying it off.

  7. Lately I would say that about 90% of extra money we make goes towards paying off debt. I think that trend will continue for the foreseeable future but I think it will be worth it. We could be completely debt free including our mortgage in 4 to 5 years putting us at ages 31 and 33. We still budget our normal money for fun stuff (quite a bit) and I feel like we are living life and not putting off stuff we want to do.

    • Corey says:

      That sounds great Stan. I would love to own a house and be debt free by 31/33. I might be a few years behind you as I live in an expensive area of the country and I went to Grad School (delaying my career by a couple years)… but good for you. Stay diligent.

  8. Haha, I’m such a big nerd, I would probably just put it all onto debt – maybe buy some nicer groceries and have an exciting dinner at home, but mostly: DEBT.

    • Corey says:

      I like your priorities. I often consider myself a big nerd too. I like the idea of having a nice dinner at home (save money and still make it special). After all, you have to reward yourself in order to keep saving more money.

  9. All my extra money goes toward savings or investing. I’m focused on bringing in more money at this moment.

  10. I like how you did the calculation to see if working the extra shift would be worth it. When I was at an old job, I had to the opportunity to work some overtime. Most times, I wouldn’t, but would on a Friday night. I know it sounds crazy, but if I left at the normal time on Friday, it would take me twice as long to get home because of traffic. Most of my friends were in another city, so unless we pre-planned, we never hung out on Fridays. So I decided the extra money was an easy choice.

    As for your “dilemma”, I would save some and use the rest to treat yourselves for a nice night on the town. You get the best of both worlds: saving for the future and enjoying the now with the Mrs.

  11. My wife and I always did two things: have a nice steak dinner to celebrate the good fortune… and then stash the rest where our itchy little fingers can’t find it. We can always buy the stuff later. The funny thing is the best deals on the stuff don’t happen the day/week we receive our windfall.

    So… we disconnect the windfall from the spending. We have the “fund with no name” (old fashioned savings account). Unexpected windfalls go there (after said dinner, of course) and all purchases get made from it when a compelling need or compelling deal presents itself. Funny thing: when the purchase gets disconnected from the thrill of the windfall it has to work harder to get us to indulge it. When it’s “plain money” as opposed to “thrill money” it’s different. Don’t ask me why, but it is.

    And over the years, that little ploy has saved us thousands of dollars, both in deals and in purchases that never got made…

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