What would you do with an extra $1,000? Not life-changing money, but enough to matter.<\/p>\n
The obvious advice: don’t blow it. And yes, paying down high-interest debt is smart. But there are other savvy moves that financial experts swear by \u2014 and they might surprise you. Here are eight options to consider with your extra grand to make every dollar count.<\/p>\n
Check Out: Warren Buffett Says ‘Make Money While You Sleep’ — 5 ‘Forever Assets’ That Do<\/a><\/p>\n Read Next: 5 Signs You\u2019re Losing Money Every Month \u2014 and How To Find the Leaks<\/a><\/p>\n 1. Start an Emergency Fund<\/p>\n If you don’t want to pay down debt but still want to do something useful, an emergency fund<\/a> could be the right way to go.<\/p>\n \u201cKeeping money set aside in a bank account may not be the most exciting thing you can do, but it is one of the most important,\u201d said Matt Hylland, financial planner at Arnold and Mote Wealth Management<\/a>. \u201cIf [the pandemic] taught us anything, it is to expect the unexpected. Starting an emergency fund can help you be prepared for unplanned expenses or loss of income that would otherwise have thrown a wrench in your financial plan. Use a separate savings account at your bank or look into a money market account, but don\u2019t worry too much about funding the highest yield right now. The primary value of the emergency fund is not earning interest, it is helping you sleep better knowing you have a safety net.”<\/p>\n Keep Financial Literacy Month going \u2014 learn how the MoneyLion app helps you track, manage and move your money in one place<\/a><\/p>\n 2. Open a High-Yield Savings Account<\/p>\n If you\u2019re starting an emergency fund, consider placing your money in a high-yield savings account<\/a>.<\/p>\n \u201cHigh-yield savings accounts are a great, low-risk option to receive interest on your money while still having access to it in case of emergency,\u201d said Chris Holder, financial advisor, CEO and founder of $100 Million Run. \u201cI recommend shopping around to see which banks are offering the highest interest rates … There is normally no minimum balance and no fees. Rather than earning a minimum interest from sitting in a regular savings account, a high-yield account can accrue interest rates up to 5%.\u201d<\/p>\n 3. Make Necessary Repairs<\/p>\n If you don\u2019t have any debts to pay off and you have an emergency fund in place, take a look around your home (or car) and consider what you\u2019ve been putting off upgrading or replacing.<\/p>\n \u201cIf you\u2019ve been putting off necessary repairs, now could be a great time to make them,\u201d said Daniel Hampel, director of operations at PARCO. \u201cFor some, this might mean fixing leaky insulation. For others this could mean getting a much-needed set of new tires on your car. Whatever it is, these preventative maintenance activities can save you a lot of money down the road. In reference to the old adage, \u2018a stitch in time saves nine,\u2019 making necessary repairs, such as replacing old tires, could prevent an accident in wintertime and will improve your fuel economy.\u201d<\/p>\n 4. Open a Roth IRA<\/p>\n Another smart move to make with $1,000 is to open a Roth IRA. Sammy Azzouz, CFP, president of Heritage Financial<\/a> and author of The Boston Advisor blog explained that this can simultaneously serve as a retirement savings kick-starter and emergency fund.<\/p>\n \u201cThe Roth IRA is a great retirement vehicle because its earnings grow tax free and you are never forced to make withdrawals from it,\u201d Azzouz said. \u201cHowever, if you run into an emergency and need cash before retirement, your contributions into the Roth IRA can be withdrawn tax and penalty free. The contribution limit is $7,500, or $8,600 if you\u2019re 50 or over.\u201d<\/p>\n 5. Double Your Money With 401(k) Employer Matching<\/p>\n \u201cIf you haven\u2019t maxed out your yearly employer benefit, put your $1,000 contribution into your 401(k)<\/a>,\u201d Holder said. \u201cMost employers match between .50 cents to a full dollar, therefore, you could easily turn your $1,000 to $1,500 to $2,000.\u201d<\/p>\n 6. Start an Online Business<\/p>\n \u201cAny financial advisor will tell you, second streams of income are the best way to work toward six- and seven-figure goals,\u201d Holder said. \u201cStart by using your money to set up an online side hustle or LLC. A few examples: Affiliate marketing programs are a great option, as well as offering content creation and social media management. Put down a small deposit for your business bank account, website and even get some professional photos to get you going.\u201d<\/p>\n 7. Get in on the Stock Market<\/p>\n Financial advisors generally do not advise playing the stock market with $1,000 if you\u2019re low on savings or don\u2019t have a cushy retirement plan in action. But if you\u2019re really looking to get in on the Wall Street action, consider an exchange-traded fund (ETF).<\/p>\n \u201cPutting your money into an ETF (basically a basket of securities in one fund versus one stock by itself) that follows the S&P 500 as the long-term historic percentages show may only have a small short-term ROI, but is a great long-term investment,\u201d Holder said.<\/p>\n 8. Hire a Financial Coach<\/p>\n \u201cEven the best of the best know that they need someone to give them wisdom, observe and change their behaviors and hold them accountable,\u201d said Jeremy Keil, CFP, CFA, a retirement-focused financial planner with Keil Financial Partners<\/a> and host of the Retirement Revealed blog and podcast.<\/p>\n \u201cYou don\u2019t necessarily have the time to learn all there is to know about finances; it\u2019s hard to critique or even see your own financial mistakes and it helps to have someone keep you on track toward the goals you create for yourself. Investing in a financial coach can pay off in less stress, and hopefully even more money.\u201d<\/p>\n