There's nothing like having a little extra money on you to make you feel good -- and powerful. After all, you can do a lot of things with that money.
If you have an extra $1,000 right now, you might be wondering what some of your best moves are. There are more than 1,000 things you can do with $1,000, but here are 18 smart things you can do right now.
- Establish or bulk up an emergency fund. Most of us need to have about three to nine months' worth of living expenses tucked away and available in case some unthinkable event, such as a job loss, happens.
- Pay off debt. If you pay off credit-card debt that's charging you 25% in annual interest, it's like getting a guaranteed 25% gain on your money! Pay down your high-interest-rate debt as soon as you can. If you don't have any debt, consider making an extra payment or two on your mortgage or on your student loan.
- Buy insurance. If anyone is depending on you financially, you need life insurance. Term policies are generally better deals than whole life policies. You may need other insurance, too, such as renter's insurance, or an umbrella policy to cover big claims against you.
- Beef up your bank account. If your bank account is usually close to empty, put the $1,000 in it so that you don't end up facing occasional overdraft fees. Those are costly, and can add up. Meeting certain minimum thresholds can get you other perks, or avoid other charges, too.
- Sock it in a retirement account. Put the money in an IRA. A traditional IRA contribution will shrink your taxable income, while a Roth IRA offers tax-free withdrawals in retirement.
- Save for college. Open or fund a 529 Plan account for Junior. You can sock away a lot of money in them, and the funds will grow on a tax-deferred basis. Distributions for qualifying college-related expenses are tax free.
- Get your kids investing. Spark your children's interest in investing. Perhaps open a custodial account for them at a local brokerage, and then study and invest in some companies together.
- Have critical documents drawn up. Most of us need to have several critical documents prepared and ready. These include a will, a power of attorney, a living will, and a healthcare proxy. Hire a lawyer to help you with these and any other estate-planning matters, such as setting up a trust.
- Get a financial checkup. Another smart thing you can do with $1,000 is to get a financial checkup. Find a good financial planner (perhaps a Certified Financial Planner, or CFP) to evaluate your financial condition and make recommendations. Favor fee-only advisors.
- Get out more. Spend the money on season tickets to a local theater or sports team. Season tickets will ensure that you get out and enjoy yourself regularly.
- Take a trip. Traveling is a smart thing you can do with $1,000, as we often value and cherish experiences more than things we buy. You might fly to Europe, enjoy a cruise, or take a scenic train ride.
- Get some new work skills or certifications. You can make yourself more valuable and marketable in your career by adding some new skills, or professional certifications, to your resume -- or even a new language you've mastered.
- Remodel a room inexpensively. You don't need to spend $50,000 on remodeling your home in order to enjoy it more. You may be surprised at how much you can accomplish with just $1,000. Perhaps add some backsplash tiles and new cabinet handles in your kitchen. Replace an aging appliance or two. Give one or more rooms a coat of fresh paint. Or get a bunch of new replacement windows.
- Become a biker. Another smart thing you can do with $1,000 is to buy a bicycle (and helmet, of course!). If you can bike to and from work, you can save money while also getting in shape. If not, just bike recreationally.
- Get in better shape. Tired of not getting to the gym even though you really mean to? Hire a personal trainer for a bunch of sessions. That can get you into the working-out habit with some guidance and encouragement.
- Eat better. Join a community-supported agriculture (CSA) program for fresh locally grown produce. You'll be supporting local farmers, and perhaps also eating more nutritiously.
- Strengthen your network. Don't wait until you need a favor to tap your social or professional network. Cultivate relationships with people you admire and would like to know better by taking them to lunch or dinner.
- Be generous. Finally, a smart thing to do with $1,000 is to give it away. No matter how much you think you need it, there are millions of people who desperately need it more. You can look up charities and see how they're rated at sites such as CharityNavigator.org, Guidestar.org, and GiveWell.org.
Think before you spend significant sums -- and make good use of your valuable dollars. If you happen to have $18,000 extra dollars, you can spend $1,000 on each of the ideas above!