Image source: Getty Images.

Every now and then, you may find yourself with a little extra cash -- perhaps from a tax rebate, an insurance payment, or the sale of some asset. Many people would just deposit that sum in their bank accounts, and it would gradually be spent on this or that. Other folks might use it for a treat -- a fancy bicycle, a new camera, or maybe a vacation. Here are five smart things you can do right now with $1,000.

Image source: Pixabay.

No. 1: Fund an emergency fund

If you're going through life without an emergency fund -- or some kind of emergency plan -- then you're on shakier ground than you might realize. It's hard to imagine that you could suddenly lose your job, or suffer a costly health issue, or face some other kind of expensive emergency, but it happens all the time.

If you have lots of money in the bank, or know that you could turn to flush friends or family, great. But many people will need to rely on themselves -- which is why emergency funds are so necessary.

In an accessible account, such as a savings account, money market account, or short-term CD, aim to keep about six-to-nine months' worth of living expenses -- including mortgage or rent payments -- and enough to cover food, utilities, transportation, insurance, taxes, and other necessities. If it's relatively easy for you to find a new job, then a few months' worth of expenses can suffice; but if it's hard for you to secure a new gig, save more. Failing to be prepared for an emergency might leave you racking up high-interest rate debt on a credit card -- which can turn into another kind of emergency.

It's hard to get ahead if you're deep in debt. Image source: Getty Images.

No. 2: Pay off debt

Speaking of high-interest-rate debt such as credit cards, it's critical to get that paid off as soon as you can, lest it keep costing you a lot, or worse, lest it snowball into an even bigger balance owed. Owing $20,000, as plenty of people do, and facing interest rates of 25%, can cost you $5,000 each year in interest alone! It's very smart to apply any extra cash to paying off debt -- and to generate more extra cash, too, such as working a temporary part-time job, or cutting costs for a while.

No. 3: Invest in the stock market

It might not seem worth it to invest just $1,000 in the stock market, but small sums can still grow rather powerfully. If you park it in a broad market index fund that averages 10% annually for 15 years, it will end up topping $4,000. Over 25 years, it will grow to nearly $11,000.

If you're willing to take on more risk than that, you might, instead, put the money in a company that you believe will grow at an above-average rate over the coming decades -- or perhaps split the money between two such companies. It won't always work out as hoped, but if you research your candidates well, and then follow the progress of whatever companies you invest in, you stand a chance of outperformance.

Here, for example, are some 15-year growth rates of a few familiar companies -- plus what they would have turned $1,000 into over that period:


15-Year Average Annual Growth Rate

$1,000 Would Become

CVS Health Corp



Clorox Co



McCormick & Company



Nucor Corporation



UnitedHealth Group Inc



Starbucks Corporation



Nike Inc



Boston Beer Co Inc



Sherwin-Williams Co


$17,449, Inc.



Note how they don't have to be young or high-tech in nature in order to perform well. Sure, it's no surprise to see performing so well; but McCormick has been selling spices since the 1800s, and Sherwin-Williams is in the exciting business of selling paint.

Image source: Getty Images.

No. 4: Invest in yourself

Another good way to invest is to invest in yourself. Here are some ways:

  • You might invest in getting fitter -- perhaps via a gym membership, hours with a personal trainer, good running shoes, and/or a wearable fitness tracker.

  • You could invest in furthering your career by pursuing a professional certification, learning another language, or taking a class in public speaking.

  • You might invest in your relationship with your life partner via a romantic weekend away, or a gift you make for him or her, or a purchase that both of you would enjoy, such as a kayak.

  • If you find yourself frustrated or unhappy with your life these days, consider spending the money on some counseling sessions. Getting to a better place mentally can vastly improve your life in many ways.

You money could help others -- a lot. Image source: Getty Images

No. 5: Give it away

Finally, if your life is pretty good, remember that billions of people around the world, including millions in the U.S., are trying to live on just a few dollars per day. A $1,000 gift could go a long way to help those who are less fortunate than yourself.

It could, via, give 50 needy families a gift of a flock of ducks or chicks or geese, which could help sustain them for a long period. It could, via, provide needed resources for 20 or more public school classrooms.

Through, $1,000 could provide 11,000 meals to people facing hunger. Through, it could help support a social entrepreneur working to tackle a big issue (such as human rights, the environment, hunger, poverty, education, crime, or health) in an innovative way.

Before you spend your extra $1,000, or whatever sum you have, on something you'll soon forget, think about what your needs are, and how you might deploy the cash most effectively.