Now is the perfect time to be thinking about what to do with extra cash that comes your way. The easy thing to do is just spend it on a big screen television or some other extravagant waste. The better thing to do can be to choose a path that will get you going in the right direction for your future. Here's how: The first step is paying off as much as possible of all current debts. This will be a huge help financially, since each dollar you don't have to pay someone else is a dollar you can use for yourself. It is often best to pay off high interest debts first, although eliminating small debts quickly is better in some situations. As you get rid of debts, you will feel motivated to continue bettering yourself financially. Make bigger, better goals. If you really want that big screen TV, then make it a goal and then reach it by setting up an account that you regularly make deposits to. Save until you can make your goal purchase. Set up an emergency fund. You should have three to six months' worth of expenses in an account somewhere (preferably with high interest rates). Start a CD with unexpected money that can be used if an emergency arises and that can be added to until you reach your emergency fund needs. Set up a Health Savings Account. If you choose to set up this account in accord with the government's criteria, the account will be tax exempt. You might also decide to open your own savings account and use the money therein for healthcare. Having such an account will help ease your concerns when it comes time to visit the doctor or hospital. Travel somewhere you have always dreamed of going to. Use your newfound money to travel. If you are able to go on your trip with savings instead of going into debt to pay for it, there will be no guilt attached to your dream vacation. Put your extra money in a retirement account. When it reaches the predetermined point you can walk away from your nine to five job for good. Live off the retirement fund or keep it safely tucked away as you find new and more interesting ways to earn income. Learning to live frugally will help you have more money available to use and will put in a better position to save money with your financial future in mind. Building up your savings now will make your future much more secure.
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