Managing Your Extra Money
If you've just received that big bonus or have extra money sitting in the bank
, what do you do with it? Do you spend it all on something that you've really wanted? Why not think about how you can get your money to work harder and give you more?
This is especially true if you're currently in debt, the monthly interest incurred by your debt will build up over time, and by the time you realize it might be too much for you to pay! So start by paying off the one with the highest interest rate and slowly work your way down. This way you'll get out of debt sooner as well as paying the least amount of interest possible.
If you're aiming for the newest gadget or an expensive item, one easy way you can afford it is by setting up a special account just to save for that. When you're out of debt, you can then budget your monthly income to include this and deposit an amount from your income monthly, this way it is smarter and more affordable when it comes to buying expensive items
You should also try to aim to save up at least 3-6 months of your monthly income in the scenario that you lose your job. This emergency fund account should be left untouched at all times, when you have that sort of money, move them into an equity fund or even fixed deposit to collect interest for you, at the same time knowing that you can be covered if your get retrenched.
One expense that catch most people off guard is medical expense. We'll never know when we need it and when we do, it might be too expensive! Therefore it is wise to either have an account just for that, or buy insurance coverage that will help take care of any medical needs in the future. Some insurance company even offer a chance to invest, just be sure that your primary goal is to buy medical coverage.
Finally, you would also want to put aside some money for you to use when you retire, money in this account should not be touched except for investing in a relatively safe investment, this way you will be equipped when the day comes for you to retire.
by: Sverre Philips.
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