It was just recently that my wife and I heard that in the next couple of months, she will be getting a staff position at her employer. This means a slightly higher salary than what she has been making. As we currently stand right now, we are making a little bit more than our monthly expenses. This means that we will have more spending money to go towards anything we want. This will be quite a joyous moment. To say that we are excited about her new job, would be an understatement. I was telling a close friend this a few days ago and he immediately asked me “What would you buy?” It was such a good question, that I thought I would ask you all.

what to do with extra money

What Do you Spend Your Extra Money On?

What Would You Buy With a Positive Cash Flow?

Now, I know many of my readers are financially responsible, but let’s imagine that you wanted to splurge. What would be some items that you buy when you get a little extra income or maybe even a bonus from work? Here are some options that pop into my mind:

  • New TV: This seems to be quite the popular answer. I don’t think we will buy a TV because we don’t have cable (and don’t ever plan on it). In fact, we only have the 20 inch TV because my wife’s parents won it as a door prize and it was too small for them. We do watch an occasional movie on it, so it comes in handy.
  • 2nd Car: Right now my wife and I only have one car because we live close enough to the train. While this is tempting for the winter, the cost of buying, maintaining, and insurance are way too expensive to justify a second car at this point.
  • 2nd Computer/I-PAD2: While this may be one of the purchases we decide to go with later (because my wife will most likely start grad school soon), I don’t think this is a necessary item to buy or splurge on.
  • Vacation: This may be the winner for us. My wife and I love to travel. It is usually our one splurge during the year in exchange for living frugally. We love learning about new cultures and people and this is a great way to accomplish both of these.

What’s the Responsible Thing to Do With Extra Money?

Okay, enough dreaming. I probably won’t buy any of those items right when she gets her promotion. I think that is a huge mistake and that you should try to save money before making any major purchases. I also don’t like to see money being wasted. Besides, once you start spending money on one thing, it is easier to make it a habit and develop a shopping addiction. So, what would be a more responsible use of extra money? Here are some ideas that I have in my head:

  • Open a 2nd Roth IRA: I think that the best thing for us to do would be to open up a 2nd Roth IRA. While some people wonder whether it is better to contribute to a 401k or Roth IRA, I am going to do both. We currently have a Roth IRA for my wife, but have yet to have been able to afford one for me. I think this would be a great thing to do in planning for our future. It is also a great time to buy.
  • Buy Life Insurance: One of the things I have been trying to put together over the last few weeks is a whole life insurance plan. I think this can serve as a secure investment as well as a way to provide a little extra income for my wife if something were to happen to me. You can expect a detailed post about this one in the coming months.

What would you do with extra income? What would you splurge on and how would you be responsible with the extra money?

*featured photo provided by Images_of_money