Bonus, tax refund, inheritance, or other unexpected windfall? Here are 5 ways you could splurge on your financial self.
It can be exhilarating to receive a windfall of cash, whether it’s through a bonus, a pay raise, a tax refund, or an inheritance. With an extra chunk of money, your imagination may run wild with things you can spend it on—perhaps a new car, a dream vacation, or a big-screen TV.
As you determine what to do with extra money, make sure to consider using the money to invest in your financial well-being. After all, it’s is an opportunity to rev up your savings and plan for the future, which is one of the best rewards you can have.
Here are five simple ways you might use extra money to splurge on your financial well-being.
If you are participating in your employer’s retirement plan, perhaps a 401(k), consider using your bonus or pay raise to increase your contributions. Most firms would automatically deduct the money from your paycheck and invested it in your account, so you may not miss it. Plus, you’ll take a step forward on the path to building your nest egg for a more secure future and perhaps an early retirement.
If your employer doesn’t offer a retirement plan or if you want to maximize your retirement savings, consider contributing to an Individual Retirement Account (IRA). As long as you have earned income for the year, you can use your unexpected cash to make a contribution. For 2019, individuals under age 50 can contribute $6,000, while those over 50 can save $7,000. Contributions to IRAs can have various tax advantages. Traditional IRAs provide a tax deduction for the tax year that you make the contribution. In the case of Roth IRAs, you can receive tax-free withdrawals during retirement.
It’s natural to want to pamper yourself with a luxurious splurge when you have a windfall of cash. However, it’s important to keep your spending in check when you figure out what to do with extra money, especially if you carry debt or have other goals that your new money could help you meet. So before you buy on impulse, ask yourself if you really need the item, or whether it will help you get to where you want to be.
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
TD Ameritrade does not provide tax advice. We suggest you consult with a tax-planning professional with regard to your personal circumstances.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2022 Charles Schwab & Co. Inc. All rights reserved.