You’ve been steadily saving your money and now you have a nice sum of $1,000. What should you do with your $1,000? There are all kinds of answers to this question and before you decide what you are going to do with it, you need to first ask yourself a few questions. Once you do this, you can better understand the right thing to do with your $1,000.
Questions To Ask Yourself First
You could go on a nice vacation or go on a shopping spree with your $1,000 but are they the smartest things to do with the money? Before you give in to your urge, ask yourself a question.
What is more important to you right now? Are you fried from working 80 hour weeks and need to get away? Are you stressed because you are struggling to get by because of credit card debt? Do you dream of running your own business? Are you looking to retire early?
All of these questions will help you to decide what you should do with the money. But don’t just decide based on the first question and answer come up with. Give yourself some time to really think about things.
For example, you might be fried from working 80 hour weeks. But you might be doing this because money is tight due to debt. If you take a vacation, nothing has changed other than you relaxed for a week. If you instead put that money towards debt, you might no longer be living paycheck to paycheck and as a result not have to work 80 hour weeks.
Paying off the debt would go a lot farther towards your happiness than relaxing for a week. This is why it is so important to take a little bit of time and to really think about the best use for the money you saved. You worked hard to save the money, so you want to make sure it goes to good use.
Things To Do With $1,000
In the event you are stuck and don’t know what to do with the $1,000 here are 10 ideas to get you thinking and hopefully get you to use the money that makes the most sense for you.
#1. Start an emergency fund
If you don’t have an emergency fund, you need one. Use the $1,000 as a cushion should something happen.
#2. Pay down debt
If you have credit card debt or student loans, you could put the money towards paying off the debt. Even if you don’t pay off the debt completely, the extra money will help you save on interest.
#3. Invest in an IRA
If you are behind on your retirement savings, use the $1,000 to invest in an IRA and allow the money to grow tax deferred.
#4. Buy a new wardrobe
If you are still wearing the same clothes from 15 years ago, maybe it is time to buy some new clothes. You can get a couple of staple pieces and build a wardrobe around those.
#5. Start a side business
Have dreams of starting your own business? Use the $1,000 as seed money to start a business or to get you the skills you might need to be successful.
#6. Hire a career coach
Unhappy with your job? Not sure what you want out of life? Use the money to hire a life or career coach and they can help guide you towards your passions.
#7. Take a vacation
If you are burnt out, a nice vacation may be what you need to relax. If you travel during non-peak times you can get more bang for your buck.
#8. Beef up your emergency fund
If you have an emergency fund but could use some more money in it, consider using the money to beef it up. After all, you can never have a big enough cushion.
#9. Buy a dividend paying stock
If you want to retire early or just want something that affords you more money, look into buying a dividend paying stock. It will pay you quarterly based on the company’s earnings.
#10. Use it for Christmas gifts
Do you end up in debt because you don’t save for Christmas gifts you buy? Keep the $1,000 in a savings account and use it to buy gifts this year so you can avoid going into debt.
Hopefully these 10 ideas will get you thinking so that you can better understand how you should spend the money.
However, when you have saved $1,000 and are unsure what to do with it, you need to first do nothing. Nothing other than think about things. The worst thing you can do is to quickly spend the money and then regret what you did with it. Instead, take the time to know for certain how you want to use the money and then spend it.