Key takeaways

  • Extra cash from a refund, bonus or other source should be put toward high-interest debt first, such as credit card debt.

  • Yes, you can treat yourself, but a better strategy is to put most of your additional funds to work in a savings or investment account.

Wherever your extra funds might come from — a tax refund, an inheritance, a bonus at work or even just a buildup of money in your checking account — here are a few financially savvy ways to use them.

 

1. Pay off debt

If you have a significant amount of debt, consider putting your extra money toward paying that down or off. “So many individuals carry credit card debt or school loan debt. Using extra cash to pay down debt is a great way to improve your financial future,” says Susan Albrecht, senior vice president and head of Advisory Consulting Services at U.S. Bank. She advises tackling high-interest debt first. 

 

2. Boost your emergency fund

Another way your additional funds can help improve your finances is by increasing your savings. Albrecht suggests prioritizing an emergency fund: “You want to have at least three to six months’ worth of household expenses covered so that you don’t have to use credit or tap your retirement fund if you have an unexpected event.” 

 

3. Increase your investment contributions

If you’re already debt free and comfortable with your savings, consider adding to your investment accounts. Albrecht says a good place to start is increasing your contributions to your employer-sponsored 401(k), 403(b), or individual retirement accounts (IRA). Consider working toward a goal of contributing at least 10-15% of your pre-tax salary each year to your retirement accounts.  

If you’ve maxed out those contributions, consider opening or adding funds into investment accounts such as health savings accounts (HSAs), brokerage accounts and robo-advisors

It’s smart to sit down with a financial professional to determine what might be best for your specific situation.

 

4. Invest in yourself 

“When it comes to investments, one of the best you can make is in yourself,” says Albrecht. If you want to save for your or a family member’s education, she suggests opening a 529 plan.  

“If you have entrepreneurial dreams, you can use your extra cash to jump start your business and turn your dreams into reality,” Albrecht adds.

 

5. Consider the timing 

When and how you end up with a cash surplus can impact what you decide to do with the money. For example, if you receive an inheritance after a loved one dies, it’s likely coming at an unexpected and emotional time. In this case, you should take your time and consider putting the money aside until you’re ready to deal with it. Interest-bearing accounts, including money market accounts or certificates of deposit (CDs), can be a good option for short-term saving. 

You can also gut check your budget to see if you have any big expenses coming up. If you pay your car insurance every six months, for example, could you use extra cash to get ahead of those payments?

Your extra money may also come in the form of a graduation gift or a holiday bonus. While these are meant to be celebratory gifts, it’s still smart to consider all your options before making an impulse buy. 

 

6. Go ahead and treat yourself

While there are a number of financially prudent ways to use extra cash, it’s also okay to spend some of it on something fun — just be sure to think it through.  

A good strategy is to put the money into a savings account and take some time to consider how you want to spend it. You may decide to treat yourself with a small part of it, but use the rest to pay down debt, invest or simply keep saving.

 

Explore ways to start investing.

Take the quiz

Offered by U.S. Bancorp Investments

 

Related articles

4 benefits of an IRA

Look beyond your 401(k) or pension to maximize the power of your retirement savings.

How much should I save for retirement?

While the answer depends on your specific goals and timeline, 10 to 15% of your pre-tax salary is a good baseline to start from.

Disclosures

Start of disclosure content

Investment and insurance products and services including annuities are:
Not a deposit ● Not FDIC insured ● May lose value ● Not bank guaranteed ● Not insured by any federal government agency.

U.S. Wealth Management – U.S. Bank | U.S. Bancorp Investments is the marketing logo for U.S. Bank and its affiliate U.S. Bancorp Investments.

Start of disclosure content

U.S. Bank, U.S. Bancorp Investments and their representatives do not provide tax or legal advice. Each individual's tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

The information provided represents the opinion of U.S. Bank and U.S. Bancorp Investments and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific investment advice and should not be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation.

Start of disclosure content

For U.S. Bank:

Equal Housing Lender. Deposit products are offered by U.S. Bank National Association. Member FDIC. Mortgage, Home Equity and Credit products are offered by U.S. Bank National Association. Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice.

U.S. Bank is not responsible for and does not guarantee the products, services or performance of U.S. Bancorp Investments, Inc.

U.S. Bank does not offer insurance products. Insurance products are available through our affiliate U.S. Bancorp Investments.

Start of disclosure content

For U.S. Bancorp Investments:

Investment and insurance products and services including annuities are available through U.S. Bancorp Investments, the marketing name for U.S. Bancorp Investments, Inc., member FINRA and SIPC, an investment adviser and a brokerage subsidiary of U.S. Bancorp and affiliate of U.S. Bank.

U.S. Bancorp Investments is registered with the Securities and Exchange Commission as both a broker-dealer and an investment adviser. To understand how brokerage and investment advisory services and fees differ, the Client Relationship Summary and Regulation Best Interest Disclosure are available for you to review.

Insurance products are available through various affiliated non-bank insurance agencies, which are U.S. Bancorp subsidiaries. Products may not be available in all states. CA Insurance License #0E24641.

Pursuant to the Securities Exchange Act of 1934, U.S. Bancorp Investments must provide clients with certain financial information. The U.S. Bancorp Investments Statement of Financial Condition is available for you to review, print and download.

The Financial Industry Regulatory Authority (FINRA) Rule 2267 provides for BrokerCheck to allow investors to learn about the professional background, business practices, and conduct of FINRA member firms or their brokers. To request such information, contact FINRA toll-free at 1-800‐289‐9999 or via https://brokercheck.finra.org. An investor brochure describing BrokerCheck is also available through FINRA.

U.S. Bancorp Investments Order Processing Information.

Municipal Securities Education and Protection– U.S. Bancorp Investments is registered with the U.S. Securities and Exchange Commission and the Municipal Securities Rulemaking Board (MSRB). An investor brochure that describes the protections that may be provided to you by the MSRB rules and how to file a complaint with an appropriate regulatory authority is available to you on the MSRB website at www.msrb.org.