Perhaps you received a modest tax refund or an unexpected gift. Or maybe you just happened to be walking down the street and saw a $100 bill flapping against the pavement, waiting to be claimed. (Hey, stranger things have happened.) Your first inclination might be to spend your newfound mini-fortune, rather than doing something responsible with that money -- especially since $100 is hardly a life-changing amount.
But while $100 may not seem like a monumental sum, it can have a pretty significant long-term impact if you put it to good use. Here are five moves to consider.
1. Contribute to your emergency fund
A shocking number of Americans claim they don't have enough money on hand to cover a $1,000 emergency. No matter how much money you make, you should always have three to six months' worth of living expenses socked away in an accessible emergency fund. This is the best way to protect yourself if you lose your job or fall ill and find yourself without an income. If your emergency account isn't fully funded, then you should put any extra money you get your hands on into savings.
2. Start or add to a retirement account
It's almost frightening to think about, but a whopping one-third of Americans don't have any retirement savings whatsoever. If you find yourself with an extra $100 on hand, then another good bet is to stick it in a retirement account and invest it to help it grow. And if you think $100 won't do much for you in the grand scheme of things, think again. If you were to put that $100 in a 401(k) or IRA and choose investments that generate an average annual 8% return, then after 40 years, it would grow to almost $2,200 -- an amount that could come in quite handy when you're living on a fixed income.
3. Pay down a credit card balance
Credit card companies like it when cardholders carry balances, because that's how they make their money. Carrying a balance, no matter how small, means automatically losing money to interest charges. If you owe money on your credit card, then using that $100 to reduce or eliminate your debt would be a very smart move. Granted, that $100 on its own probably won't save you a whole lot in interest, but it will get you one step closer to becoming debt-free. Plus, paying off bad debt can help boost your credit score, and the better your score, the less it will cost you to borrow money in the future.
4. Invest in yourself
Is a missing skill or certification standing in the way of a higher salary? If so, you might use that money to pay for a course or license that helps you not only excel at your career, but command more money as well. Imagine that a $100 online Web design course results in a $1,000 bump in salary. That's a 900% return on investment. Talk about money well spent.
5. Buy some stocks
A single Benjamin probably won't make you a fortune in the stock market, but if you don't need the money for something immediate, then you can use it to open up a low-cost, no- or low-minimum brokerage account and start investing for your future financial goals. Buying stocks for the first time can be intimidating, but getting over that hurdle can pave the way for a lifetime of rewarding investments.
Though $100 may not seem like much, it can actually go a long way toward helping you reach certain financial milestones. So before you go and blow that money in one fell swoop, take a minute to think about how it might better serve your needs in the long run.