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Updated on Wednesday, December 30, 2015
Between paying monthly bills and trying to dig out of debt, it may be hard to imagine an extra $100 lying around right now. But the truth is, at some point throughout the year, most of us will have a spare $100 to spend, whether it’s from a gift, a work bonus or some extra cash we’re bringing in from a side job.
Now — what to do with that $100?
Instead of throwing it away on something frivolous, MagnifyMoney’s co-founder Nick Clements — who spent years working in banking before launching his own small business — suggests some more financially gratifying things to do with it.
1. Open an emergency savings fund
If you don’t already have one because you never felt like you had the money to spare to open one, here’s where that $100 can come in handy. An emergency savings account is there to bail you out of a pickle (which we all get into) so that you don’t have to put stuff on your credit card and go into debt. Plus, some of the Internet-only bank savings accounts have decent interest rates, which means your money will earn you additional savings while you sit there and do nothing. Some might say it’s like turning down money not to open one. (Check out this table for savings account options with the current highest interest rates.)
2. Put it towards credit card debt
Credit card debt is often surveyed to be thousands of dollars for the average American household. With such a high level of debt hanging around, you might not think that $100 makes a dent, but it does. With average consumer credit card interest rates around 17.55 %, every little bit you can pay off counts, and chipping away at it will help you feel better emotionally, as well. If a big goal this year is to really pay down a good chunk of your debt, check out this page for more helpful advice on how to do just that.
3. Treat yourself to a night with a friend
Much different than purchasing the latest PlayStation game or a buying yourself a fourth pair of brown boots, splurging to spend time with a friend is something that you’ll remember for years to come, not just for a short period of time. After all, studies have shown that experiences make us happier than possessions, so keep that in mind the next time you’re at the mall. So, if you have a fully funded emergency fund and no credit card debt, create an experience that you will remember.
4. Put it in an IRA
When all else fails, it never hurts to throw all the extra money you can into an IRA retirement account — it’s the gift that keeps on giving. For example, in 30 years, that $100 could become $1,000, and you’ll be more than happy to thank your younger self for such a generous gift.
5. Give the money to someone in need
When you give, you often get much more in return. And rather than just writing a check, find an organization where you can give and get involved. You just might be surprised at how good it can feel to give.