Some people accumulate extra cash in their bank accounts. They don’t really need it there and are frustrated that it’s earning nothing. What should they do with it? Well, first of all, wondering what to do with your extra money is a great problem to have! If you have extra cash available in your budget, here are suggestions to consider.

Note: I’m not necessarily putting these in order of importance. It will be different for everyone.

1. Fill your emergency fund

Let’s back up here. First, make sure you HAVE an emergency fund. Keep your emergency savings separate from your checking account. Essentially, having a separate emergency fund makes your money 1) out of sight, out of mind 2) less susceptible to fraud 3) allows for potentially higher earnings.

Your emergency fund should be enough to cover 3 – 6 months of your living expenses. If you are the only earner in your household, it should probably be closer to 6 months. If you are in a dual-income household, you could consider an amount closer to 3 months.

2. Save up for your next big purchase

I want people to avoid debt wherever possible. Obviously, most people are going to have a mortgage. That’s fine – even good. However, if you can avoid acquiring more debt for your next car purchase, roof replacement, or vacation, that would be nice! Similar to the emergency fund, consider opening a separate account earmarked just for that one big savings goal. Example: The New Car Account

3. Boost retirement savings

Do you have a 401(k) or another employer-sponsored retirement plan? I REALLY want you to at least contribute enough to your retirement account to earn the full 401(k) match.

Consider starting at the minimum match and work your way up 1-2% each year. Better yet, each time you get a raise, boost your contribution rate. For example, if you get a 4% raise and you were contributing 8% of your salary to your 401(k), consider taking half of that raise and boosting your 401(k) contribution to 10%.

4. Pay off existing debt

If you have extra cash in your checking account but you still have a lot of credit card debt, PAY IT OFF. Accumulating interest on a credit card is especially unnecessary if you have cash in the bank to pay it off.

Do you have a few credit cards or loans? I tell you HERE how to pay those debts off.

5. Give

If you have extra cash, consider looking outside yourself. Give!

There are numerous studies that show giving to those in need can promote mental, emotional, and even physical health!

Cleveland Clinic claims that some of these benefits include lower blood pressure, increased self-esteem, less depression, lower stress levels, longer life, and greater happiness. Sign me up for that!

These benefits come from giving of your time and energy – not just your money! You don’t have to be wealthy to glean the benefits of a generous lifestyle.


You don’t have to pick just one of these things to do with your extra money. You can work on a few of them at a time. They are all important, worth your attention, and will take you far on your journey of financial freedom and holistic happiness!