I love to find articles about the best ways to use an amount of cash. No matter what your financial beliefs, there are basically four ways to use money: spend it, save it, invest it, give it away.
The good folks at Mt Edgecumbe Hospital in Sitka, AK are giving me $600 for meals next week while I’m working at their clinic. Unless I make lots of friends and go out every night, I’ll probably get most of my food from the grocery or as take out since I hate eating in restaurants by myself. I’m guessing that will probably take about $100. That leaves me five Benjamins to use however I want. What would you do with $500?
If I had consumer debt, I’d probably use my extra $500 toward paying it off. $500 is not chump change, and gaining a windfall to put toward debt can be a great shot in the arm to sustain motivation toward debt payoff goals.
Since I don’t have that type debt anymore, I could use this money to spend on holiday gifts or for our trip to Mexico that’s coming up next month. We also need a new couch in the worst way, but that somehow keeps getting pushed to the back burner.
If you’re going to spend your extra $500, make sure it’s for something you will use and value. Don’t blow it on an unplanned shopping spree.
Since 60 percent of Americans can’t cover unexpected expenses, saving $500 in an emergency fund is a grand idea for those who don’t have anything set aside for a rainy day. I’ve also read that having at least $500 in an account removes a mental barrier to continued savings. If you can save that much, what’s to stop you from reaching higher goals?
$500 is a great amount for beginning investors or those looking to expand. Many low cost brokerages allow IRA opening balances of less than $500 or you could use it to invest in stocks.
For less than $500 you could buy a Motif of up to 30 stocks at Motif Investing. My daughter bought a Motif earlier in the year with her birthday and chore money. Being able to choose stocks and see how investments work is a great way to get kids started as investors.
Give it Away
As we approach the end of the year, it’s time to think about charity. Many non-profits generate most of their operating budget from year end donations. Not that you can’t donate any time, but I guess even philanthropists like to wait until the last minute. Remember that all donations to a 501(c)3 entity are tax deductible.
I’m not 100% sure how I’ll spend my $500, but I’m leaning toward putting it in my Roth IRA or funding a new Motif. What would you do with $500 this month?