So, you've gotten a $1,000 bonus or tax refund, or you managed to save up $1,000 through hard work. Great news -- but now you need to decide what to do with all that cash.
Fortunately, there are a lot of ways you can use the money wisely to improve your financial circumstances over the long haul. Here are a few great options.
Image source: Getty Images.
1. Tackle the basics
If you don't yet have your basic financial foundation in place, you may want to use your $1,000 to shore up your finances. What does this mean, exactly? It depends upon your situation.
- If you have credit card debt, pay it off -- or pay it down as much as possible. An extra $1,000 applied to a $5,000 credit card bill with $350 monthly payments and a 15% interest rate would take 11 months off your repayment time, and save you just over $610 in interest.
- If you aren't investing enough for retirement, use your $1,000 to start. If you don't currently have a retirement account, use your $1,000 for an initial investment in a 401(k) or an IRA. If you're already investing but not maxing out your accounts, an extra $1,000 could make a huge difference in your account balance by retirement -- particularly if you repeat the extra investment every year.
- If you don't yet have an emergency fund, start one. Put your $1,000 into a savings account you won't touch unless you have a true emergency. While you should work up to saving three to six months of living expenses, a $1,000 starter emergency fund will help keep you from going into debt for car repairs, an unexpected medical issue, or other routine catastrophes that arise far too frequently.
2. Take a course
One of the best ways to spend $1,000 is to invest in yourself. By learning new skills, you can make yourself more employable and maybe even increase your income.
You can talk with your employer about the types of training that could help you advance, or just decide on new skills you want to learn. There are a huge number of options for continuing your education, many of which cost $1,000 or less.
You could take a few classes at your local community college to develop more advanced computer skills, learn basic accounting, or develop a whole range of other skills to help in your personal or professional life. Online classes, like a social media bootcamp, could help you build your brand or increase your networking abilities. You could even obtain a certification -- like becoming a certified tax preparer -- that would open up new career opportunities.
3. Try out a new business venture
Starting your own business doesn't have to mean investing tens of thousands of dollars, and it doesn't mean quitting your day job. For an investment of less than $1,000, you could create a website, market your products or services, and start connecting with customers.
One 27-year-old recently made an $800 investment in a business selling dog waste bags that made a political statement -- and his investment earned him more than $150,000. If you can come up with your own creative idea or find a way to fill an unfilled market niche, you could take a very small initial investment and turn it into a major revenue producer.
4. Get some professional advice
Is there something in your personal or professional life you struggle with? Why not spend your $1,000 to ask an expert to help? Investing in improving your circumstances could provide long-term relief and could even make a lasting impact on your finances.
Many fee-only financial planners or advisors will work with you at an hourly rate or charge a flat fee to help you make a comprehensive financial plan. An estate-planning lawyer could allow you to put plans in place in case something happens to you, while a career counselor could help you chart a new course or polish up a resume. If a few hours of expert advice can help you solve a problem, the investment will be well worth it.
5. Tackle deferred maintenance
Have you been putting off home repairs or not maintaining your car the way you should? Your $1,000 could go a long way toward tackling lingering problems that could lead to long-term issues if you don't get them fixed.
Get your tires rotated, your filters replaced, your oil changed, and the car checked out thoroughly by a trusted mechanic. This way you can avoid costly repairs, keep your car in good condition, and hopefully ensure you'll be able to drive it for a long time -- rather than constantly making car payments on new vehicles.
Adding extra insulation, replacing drafty old windows, upgrading that old energy-hog appliance, or making other simple improvements or repairs to your home could also help you to lower your utility bills, maintain your curb appeal, and avoid costly problems down the line.
6. Make a microloan
Nonprofits like Kiva allow you to make small loans to entrepreneurs across the world who don't have access to traditional financing. You can pick a category or region you'd prefer to target, and choose which projects and people to provide funding to. Repayment rates are high, and you can make a difference in the lives of others while getting back the money you invested over time.
7. Invest in long-term cost reduction
While blowing your $1,000 on shopping isn't a good idea, there are things that you can purchase with your cash that should help you save money over the long term by reducing your ongoing expenditures.
If you find yourself spending a fortune on fancy coffees, a high-quality espresso machine and bean grinder for your home could be a money-saver. So could a treadmill that allows you to drop your gym membership, or a home dry-cleaning machine that lets you skip your weekly trip to the cleaners.
Investing in items that save you time and money can be a great way to spend your cash, so long as you're confident you'll use the purchases and won't end up letting the items you bought grow dusty on the shelves while you continue to spend.
8. Consider a cryptocurrency
Cryptocurrencies are a risky investment with the potential for a big payoff. If you already have money in safe, reliable investments for your retirement, and cash invested to fulfill your other financial goals, why not research some of the new cryptocurrencies and see if you can pick the next big digital currency to take off? Just don't pick this option if you can't afford to lose the money.
Spend your $1,000 wisely
Ultimately, your financial situation should dictate exactly what you do with your $1,000. The key is to do something with the money that helps you to advance your goals or improve your long-term financial security. If you make wise choices, your $1,000 investment can help you build a stronger future.
