It’s not often that you have a spare $1,000 lying around. But if you do, what should you do with it? Sure, you could spend it on something fun, or you could use that money to improve your financial future. Investing $1,000 once or twice a year is a small sacrifice that can lead to big rewards in the long run. So, if you have an extra $1,000 and are looking for ways to put it to good use, then we’ve got some ideas for you.
In this article, we’ll go over six smart money moves you can make if you have an extra $1,000 so that you can put that money to work for you and secure a brighter financial future.
Pay Off Unsecured Debts
If you have an extra $1000 and want to put it toward something that will make a difference in your financial situation, consider paying off some of your unsecured debts.
Unsecured debts are those that aren’t backed by property or collateral, they’re just a promise from one person to pay another. The most common examples are credit card debt and personal loans.
If you haven’t been making consistent payments on these debts, then you may be paying a lot more than the original balance every month. And in many cases, the interest rate on these types of loans can be quite high, sometimes as high as 20%!
So, if you have an extra $1000 lying around and no other pressing expenses, then consider using it to pay off some of this debt because by doing so, you’ll save a ton of money in the long run.
Create an Emergency Fund
It’s not something that you want to spend a lot of time thinking about, but every so often, life throws you a curveball. You might get laid off from your job or have an emergency medical situation. Having an emergency fund helps alleviate the stress of these unexpected events.
While there are no set rules for how much money should be in your emergency fund, it’s important to have enough cash available so that you can cover any unplanned expenses without having to rely on high-interest debt such as credit cards or payday loans (which are often predatory).
Ideally, you’ll have enough money in the bank to cover three months’ worth of living expenses, but at the very least, make sure that you have enough cash set aside to pay for bills and other necessities if you experience sudden unemployment or illness.
Open a High-Yield Savings Account
A high-yield savings account will earn you interest on your money. If you don’t need to use your $1000 right away and can wait for it to grow, this is a great way to invest your extra cash. With interest rates at an all-time low, it’s more important than ever to find a place where your money will grow faster than inflation.
Opening a high-yield savings account is easy and can be done online or in person at most banks and credit unions. You can choose from any number of different accounts depending on your needs. You can even set up automatic deductions from your paycheck to go directly into one of these accounts so that it’s there, ready for any emergency that comes up!
Opening a high-yield savings account gives you peace of mind knowing that if anything does happen unexpectedly, there is someplace safe where you can store your extra cash until it is needed again, and $1000 is a great starting point for this type of savings account.
Invest with a Robo-Advisor
If you have an extra $1,000 to invest, robo-advisors are a convenient and efficient way to do so. These online services use algorithms to build and manage investment portfolios based on your goals. You simply answer a few questions about your age and risk tolerance, and they recommend investments (usually low-cost index funds) that match your needs and goals.
It’s important to mention that robo-advisors aren’t necessarily the best option if you want to maintain control over how your money is allocated in each fund or if you regularly trade individual stocks. However, for those who want simplicity with little maintenance required from them personally, robo-advisors may be worth considering as an option for building wealth over time.
Also, if you are new to the concept of investing in general and really have no idea where to begin or what to invest in, then a robo-advisor might just be your best bet. Financial advisors are typically very expensive and, in many cases, require that you have a lot of money to begin with, often more than $100,000. But you can get started with a robo-advisor with any amount of money, even $1000.
Double Your Money with Your Employer-Sponsored Retirement Account
The more money you can save for retirement, the better off you’ll be. If you’re able to double your money, that’s two times the amount of money to use when you retire. And if you’re able to triple your money, well… that’s three times the amount of money! But how do you do it? It’s actually not as hard as it sounds.
Let’s say that your employer offers a 401(k) program where they will match whatever percentage of your contribution up to 6%. So, if you contribute 6% of your salary into the 401(k), your employer will contribute another 6% on top of that, for a total 12% contribution.
That means if you contribute your $1,000 into that 401(k), then your employer would contribute $1,000 on top of that, for a total contribution of $2000. Congratulations! That’s double your money. The best thing about these employer-sponsored programs is that you can usually double your money like this every time you get paid.
Some people don’t like the idea of contributing money towards their retirement when they are young and feel like investing their $1000 in this sort of program is a waste of money because they won’t see any return on their investment for many years. But taking advantage of this opportunity to double your money regularly can be the difference between a great retirement and never retiring at all.
Buy Life Insurance
If you have an extra $1000 that you don’t need at the moment, then you should consider buying life insurance. It is the best financial investment that you can make for your family, and it will provide them with much-needed financial security in the event of your death.
Life insurance is a great way to protect your family from the financial consequences of your death. If you are married, a standard policy generally covers your spouse and any children you have. The reason that life insurance is such a good investment is that it is guaranteed to pay out if something happens to you.
The most common types of life insurance policies are term policies and whole life policies. Term policies only pay out if something happens to you during the term (usually 10 or 20 years). Whole life policies, on the other hand, maintain their value over time and pay out whenever you die. It’s not something most people like to think about, but it’s the right thing to do if you want to protect your loved ones.
Conclusion & Recommendation
There are many ways that you can make extra money, but these six money-making strategies are among the best ways to go about it, especially if you already have an extra $1000 that you don’t need for anything right now.
If you do have extra money lying around, these simple strategies can help you make the most of it and boost your financial status and overall well-being. Plus, they can also help you save your money so that you can spend it on other more important things later on in life.
The best part? You don’t have to be a financial genius in order to take advantage of these smart money moves. All you need is a little time, a little know-how, and an extra $1000 to get started.