20 Smart Ways to Make the Most When You Have Extra Money

Have extra money and not sure where to start? This guide lists 20 smart ways to make it work for you. Learn how to strengthen your financial position and explore investment opportunities.

Build Your Emergency Fund

An emergency fund serves as your financial safety net, providing peace of mind by equipping you for unforeseen expenses. Whether it’s a sudden medical bill or an urgent car repair, having your own money saved can prevent debt accumulation.

High-yield savings accounts are perfect for this purpose. They offer higher interest rates compared to a traditional savings account, which means your money grows faster while still being accessible when you need it. Plus, these accounts are insured up to $250,000, so your savings are safe even if the bank fails.

Starting an emergency fund can be simple. Initiate small, automatic transfers from your checking account to a high-yield savings account. Over time, these contributions will accumulate, creating a strong financial cushion.

Pay Down High-Interest Debt

High-interest debt, such as credit card debt, can significantly drain your finances. Interest payments alone can consume a substantial portion of your income, hindering your financial goals. Using extra cash to pay down this debt saves on interest and improves overall financial health.

Personal loans, particularly peer-to-peer lending, can be a viable option for consolidating high-interest debt and potentially lowering interest payments.

Paying more than the minimum monthly payment on high-interest debts helps reduce the principal balance faster and saves on interest over time. As you decrease your debt, your credit score may improve, leading to better interest rates on future loans and credit cards.

Reducing high-interest debt can help save money and frees up cash for investments or savings, further enhancing financial stability.

Invest in a High-Yield Savings Account

High-yield savings accounts make your money work harder by offering a higher annual percentage yield (APY) than traditional savings accounts, allowing you to earn more interest.

High-yield savings accounts often have no monthly maintenance fees, making them cost-effective. They also allow flexible access to funds without penalties, unlike certificates of deposit (CDs).

Although interest rates on these accounts can fluctuate with the Federal Reserve’s monetary policy, they generally remain higher than traditional savings accounts. Choosing a high-yield savings account protects your emergency fund while earning more interest as interest rates rise.

Start Investing in the Stock Market

Investing in the stock market can significantly grow your wealth over time. A brokerage account allows investment in various assets like stocks, bonds, ETFs, and mutual funds, providing flexibility in building a diversified portfolio.

Diversifying investments is essential for managing risk and maximizing returns. Mutual funds and ETFs spread investments across multiple companies and sectors, reducing the impact of poor performance from any single investment. Bond ETFs offer stable income and can act as a hedge during market downturns.

Consistent stock market investing allows you to take advantage of compound interest, potentially leading to significant financial growth over the long term. Ensure you do thorough research and consider consulting a financial coach to develop a strategy aligned with your goals.

Contribute to Retirement Accounts

Planning for retirement is a crucial financial goal. Contributing to accounts like 401(k)s and IRAs helps build a substantial nest egg. Employer-sponsored 401(k) plans often include matching contributions, significantly boosting savings.

Tax-deferred accounts like 401(k)s postpone taxes on contributions and investment growth until retirement withdrawals, enhancing savings over time. Conversely, Roth IRAs require upfront tax payments, but qualified withdrawals, including investment growth, are tax-free, offering long-term benefits.

Regular contributions to retirement accounts ensure a comfortable and financially secure future. Take advantage of employer matches and consult a financial coach to optimize your strategy.

Create a Passive Income Stream

Passive income is money earned with minimal effort, generating revenue without constant work. Investing in rental properties is a popular method to earn passive income, though it may involve more effort than expected, such as tenant management and maintenance, but rental income can be substantial. Potential investors should ask a few questions about market demand and tenant reliability to safeguard their passive income when investing in rental properties.

Acquiring local businesses can also be a lucrative way to generate passive income. Established companies often provide steady cash flow and niche opportunities, but thorough vetting and consultation are crucial to avoid pitfalls in the acquisition process.

Peer-to-peer lending is another option, earning interest by lending money to borrowers. Carefully select borrowers to minimize risk and maximize returns. Dividend-paying stocks provide regular cash dividends and can also pay dividends, with preferred stocks typically offering larger dividends than common stock.

Multiple passive income streams can significantly enhance financial stability, providing extra income to generate passive income for investment, savings, or enjoyment.

Save for Short-Term Goals with CDs

Certificates of Deposit (CDs) offer a secure way to grow savings with guaranteed returns. FDIC-insured CDs generally provide higher interest rates than regular savings accounts, making them ideal for short-term goals. Investing in CDs eliminates market risk, ensuring your initial deposit remains safe.

Choosing a CD with a suitable term length offers predictability in returns for short-term goals. CD terms vary, allowing selection of periods that align with financial goals. This flexibility makes CDs a smart strategy for saving for specific near-future objectives.

Diversify with Bond Funds

Diversifying investments is crucial, and bond funds play an essential role in achieving a balanced portfolio. Bond funds generate income through interest payments, providing steady returns.

Municipal bonds are attractive for higher tax bracket investors as they offer tax-free dividend income. A bond ladder strategy involves purchasing bonds maturing at different intervals, reducing reinvestment risk and providing predictable income.

Incorporating bond funds into your portfolio provides stable interest income and reduces overall risk.

Explore Real Estate Crowdfunding

Real estate crowdfunding offers a lower financial barrier to entering the real estate market compared to traditional investment routes. Crowdfunding platforms allow investors to pool money to fund projects, sharing revenue without active management.

This approach diversifies investments by spreading money across multiple projects, reducing overall risk. Crowdfunding platforms typically vet investment opportunities thoroughly, ensuring only credible projects are listed.

Investing in real estate crowdfunding can generate significant passive income, making it a valuable addition to your investment strategy.

Monetize Your Skills Online

The internet provides numerous opportunities to monetize your skills. Freelance platforms like Upwork and Fiverr connect you with clients seeking various services, from writing and design to virtual assistance and data entry.

Setting up profiles on platforms like SmugMug and Etsy can be done in just a few hours, making it easy to start monetizing your creative work.

Having a significant following on social media platforms like Facebook and Instagram can help you become a go-to resource for brands in various niches, such as fashion and home décor. This positioning allows influencers to partner with businesses seeking exposure and collaborate on marketing initiatives.

Learning search engine optimization (SEO) can enhance your freelance writing services and attract more clients, maximizing earning potential. Setting up profiles on platforms like TaskRabbit can help you find various gigs, allowing you to earn extra money on your schedule.

Leveraging online platforms can turn your skills into a steady income stream and help you make money, all from the comfort of your home.

Start a Blog Or YouTube Channel

Starting a blog or YouTube channel allows you to share your passions and expertise while earning income. Creating valuable content attracts an audience, enabling you to monetize through ads, affiliate marketing, and sponsored content.

Affiliate marketing, promoting third-party products for a commission, can be a lucrative income stream if done correctly. Sponsored posts from brands also provide income through social media presence.

Having an active social media account is crucial for driving traffic to your blog or YouTube channel, enhancing your online presence and boosting your affiliate marketing efforts.

Building traffic for your content takes time and effort, but with dedication and a clear strategy, your blog or YouTube channel can become profitable.

Sell Unwanted Items

Selling unwanted items is an effective way to make extra money while decluttering your home. Platforms like Craigslist and Facebook Marketplace let you sell directly to buyers without significant fees. Local consignment shops offer a quick and convenient option for selling gently used clothes, providing immediate cash in physical stores.

Swappa lets you set your own prices for electronics, giving you more control over sales. Poshmark is ideal for selling clothing and accessories, charging a flat fee on lower sales and a percentage on higher ones.

To successfully sell items in an online store, present them clearly and accurately, provide good customer service, and price competitively in jewelry making.

Rent Out Your Space

Renting out your space can generate lucrative income. Platforms like Airbnb allow you to list your property for short-term rentals, providing passive income with minimal active management. Investing in quality furnishings and amenities enhances property appeal and attracts more guests, so here are a few ideas for a profitable venture to consider for a few nights.

Understanding local business regulations and obtaining necessary permits is vital for legal operation. Effective guest screening and using automation tools for tasks like communication can optimize rental income and ensure a positive experience.

Offer Pet Sitting Services

If you love animals, pet sitting can be a delightful way to earn extra income. With potential earnings up to $1,500 per month, it’s a lucrative option with minimal startup costs, requiring only basic supplies like pet treats and crates.

Start by signing up on platforms like Rover and Wag, which connect pet sitters with pet owners in need. These platforms make it easy to find clients and manage bookings.

Pet sitting involves more than feeding and walking pets; it requires genuine care and attention. Ensure your living space can accommodate pets safely and comfortably, and always check for landlord permission if you pet sit.

Become a Financial Coach

Becoming a financial coach allows you to use your expertise to help others manage their finances. Offering personalized advice and strategies helps clients achieve financial goals while earning a steady income.

Creating digital products like online courses or eBooks generates passive income by leveraging your knowledge. Setting up a membership site provides a reliable source of recurring income while building a community among clients.

Hosting webinars and offering group coaching sessions are effective ways to reach a larger audience and maximize earnings without significantly increasing your workload.

Join Focus Groups

Joining focus groups is an excellent way to earn good money by sharing your opinions on products and services. Payments can range from $50 to $200 per session, making it a lucrative side hustle.

Before joining a focus group, you’ll typically need to go through a screening process to determine your eligibility. This ensures that participants meet the specific criteria needed for the study.

Compensation is often provided in cash or gift cards, and some groups even offer free samples of the products being tested. Focus groups are a great way to earn extra money while having your voice heard.

Take Online Surveys

Taking online surveys is a simple way to earn extra money in your spare time. By signing up for survey sites, you can get paid to share your opinions on various topics.

While the earnings from online surveys are modest, they can add up over time, providing you with a steady stream of extra income. It’s important to manage your expectations, as taking surveys is not a get-rich-quick scheme.

To maximize your earnings and make more money, consider signing up for multiple survey sites to access more opportunities and increase your chances of qualifying for surveys.

Drive for Ride-Sharing Services

Driving for ride-sharing services like Uber or Lyft offers flexible hours and the ability to set your own schedule. On average, rideshare drivers earn around $20 per hour, with some making up to $50,000 a year. Driving during peak times, such as weekends and evenings, can yield higher profits due to increased demand. Additionally, rideshare companies often run promotions like ‘Quests’ and ‘Boosts’ to incentivize drivers and enhance earnings.

It’s essential to verify the insurance coverage provided by the companies during specific periods and consider investing in a dual dash cam for safety and documentation purposes.

Deliver Food Or Groceries

Delivering food or groceries is another flexible way to earn extra income through food delivery, making it a great option for a second job. Platforms like Uber Eats, Instacart, and Shipt allow you to choose your delivery method, whether it’s by car, scooter, bike, or on foot.

Shipt shoppers can earn between $16 and $27 per hour, depending on various factors. Grubhub drivers can expect to earn a base rate plus bonuses, with a national average of about $14.06 per hour.

To get started, you’ll need a smartphone and must meet the minimum age requirement, which typically takes about a week to set up.

Advertise on Your Car

Advertising on your car is a passive income stream that allows you to earn money by simply driving your vehicle as usual. Companies like Carvertise will pay you between $100 and $400 monthly to wrap your car with ads.

Most personal vehicles from 2010 or newer are eligible for advertising wraps, making it accessible to many drivers. You can even choose which brand’s advertisement goes on your vehicle, ensuring you’re comfortable with the partnership.

Ensure you partner with a legitimate advertising agency and understand the terms of the agreement. Drivers are typically paid through direct deposit for their advertising campaigns.

Conclusion

There are many effective ways to make the most of your extra money, from building an emergency fund and reducing debt to investing and creating passive income streams. Each approach offers distinct benefits for achieving financial growth and stability.

It’s important to assess your goals and select strategies that align with your needs. Options like high-yield savings accounts, money market accounts, and traditional bank accounts can provide safe and accessible ways to manage short-term savings while your other investments grow.

By making informed decisions today, you can secure a prosperous financial future. Take action now to turn your extra money into a valuable asset for reaching your financial dreams.

Frequently Asked Questions

What Is the Best Way to Start Building an Emergency Fund?

The best way to start building your emergency fund is by opening a high-yield savings account and setting up automatic transfers from your checking account. This consistent approach will help you grow your fund effortlessly and secure your financial future!

How Can I Quickly Pay Down High-interest Debt?

To quickly pay down high-interest debt, focus on paying more than the minimum monthly amount on your credit cards; this will reduce your balance faster and save you money on interest in the long run. Take action now, and watch your debt dwindle!

What Are the Benefits of Investing in a High-yield Savings Account?

Investing in a high-yield savings account allows your money to grow faster due to higher interest rates while still giving you the flexibility to access your funds easily. It's a smart move to make your savings work harder for you!

How Can I Start Investing in the Stock Market?

Starting to invest in the stock market is easy; simply open a brokerage account to get access to various investment options. Remember to diversify your investments to effectively manage risk and enhance your returns—take that first step today!

What Are Some Ways to Create Passive Income Streams?

You can create passive income streams by investing in rental properties, peer-to-peer lending, or dividend-paying stocks. These methods provide regular income with little ongoing effort, helping you build financial security.

Purchasing closed-end municipal bond funds at a significant discount to their net asset value can help reduce risk and enhance returns, especially when leveraging the fund to manage the volatility associated with rising interest rates.

Additionally, selling unused gift cards on various platforms can be a practical way to make extra money. You can sell or trade unwanted gift cards online or at kiosks for quick cash, making the process easy and efficient.