Recently, my wife received a $500 dollar Christmas bonus from work. What do you think we did with it? Well, if you guessed invested it, you would be correct. The natural instinct for most of us would be buying Christmas gifts, but my brain does not work like that. Normally, I like to save and invest any extra money that comes my way. However, that does not mean my way is the correct way.
First, I think a person should evaluate what is the best solution for where that extra money should go. If you have bills that need to get paid, having an extra $500 dollars can certainly help alleviate that problem. I think it is smart to tackle some debt when you can. If you can put some of that money back into a savings account or an emergency fund that would be great as well. You really never know when your car will break down or your water heater might go out. Also, If your income fluctuates month to month, having that extra $500 dollars can help you offset any financial disturbance.
I personally focused on buying more stock. I saw a good buying opportunity with General Electric and I like the idea of continuously making money off that Christmas bonus through capital appreciation and dividends. I just love that. I remember a few years ago I received a Superior Service Award at work and got $750 dollars. I used that money to buy more American Electric Power stock,which has increased over 30% since then. If you can afford to use that extra money to save or invest you can really get ahead. I am grateful that I have the opportunity to do this. I understand that not everyone can. Perhaps down the road those individuals will be able to save and invest more. It just takes time and determination.
I guess the key is just do not blow the money. Buying gifts is nice, but saving, reducing debt or boosting your emergency fund is a more practical approach. What would you do with an extra $500 dollars?