Recently I interviewed personal finance blogger Jordanne Wells and something she said really struck me:

“If you know having money in your pocket will make you feel like you want to spend, then don’t have money in your pocket.” 

Wells didn’t mean using cash vs. credit/debit, or walking around without any money/plastic. She was referring to having “extra” money, as in spending less than you thought you would.

For example, maybe you budgeted $100 for groceries but the total was only $80 thanks to wise coupon use and some really good sales.

What to do with that $20?

“Put it toward something right now,” Wells says.

As in, right now. Don’t wait for the monthly credit card statement, or hesitate to move those bucks into your emergency fund. Do it nownownow.

“All of those payments just help to get you in that habit of ‘When I have money, I do something (positive) with it’,” the writer says.

She’s no ivory-tower theorist. Her lessons came the hard way. When Wells came to the U.S. from Jamaica to attend college she had zero information on how to handle money. Credit cards were a revelation: “I can charge $50 and I only have to pay $10? Awesome!” What with school expenses and then “work-appropriate” clothing, Wells amassed debt that she couldn’t pay in full – and that grew to $30,000 by her early 30s.

Needing to buy a vehicle after a car wreck, she learned that she had “awful” credit; the best car loan she could get was at 11 percent interest. So she set out to improve her financial life via what she calls the “Debt S.L.A.Y.E.R” method. Wells also wrote an e-book called “How to Build Credit and Raise Your Credit: Everything You Need to Know to Understand, Build and Maintain Excellent Credit.”

 

 

Right now a lot of folks would love to be in the position of having “extra” money. Plenty of people would have liked that opportunity pre-pandemic, too. If you’re living from paycheck to paycheck, or even just on very thin margins, the notion of surplus money cluttering up the checking account is something of a pipe dream.

Or maybe it isn’t.

 

Go over your budget with an eye toward Wells’ policy: Once the bills are paid, is there even $10 left over? If so, on the day you get paid you should shoot that sawbuck somewhere else. Another example: If driving just to and from work and the supermarket is now the norm, figure out how much you haven’t spent on gasoline and put that money to some kind of good use. Otherwise it’ll end up spent some other way.

Here are a few ways to deal with the burden of “extra” money. (I’m being facetious there, in case you weren’t sure.) They’re listed in order of what I consider to be their importance.

 

1. Pay off debt faster

 

Especially credit card debt, which likely has double-digit interest. Paying it off can save you a ton of money. (There’s a good example of this down near the end of the post.)

 

 

2. Beef up the emergency fund

 

Some people say you need three to six months’ worth of living expenses salted away. That’s nice. But it’s also unrealistic for some folks.

However, all EFs are wanted and loved. As little as a couple of hundred dollars can cover many emergencies, or at least reduce the amount you wind up having to finance.

Still sounds like a lot? Yes. Yes, it does. But get going anyway. The best time to have started an emergency fund was five years ago. The second-best time is today.

A chapter from my first book is called “Challenge Yourself to Save.” It contains 33 examples of what I call “stealth savings” – simple and/or innovative ways to carve a few dollars here and there out of even the tightest of budgets.

Because I believe so strongly in EFs, I’ve made that chapter available for free as a Google doc. All of those tactics may not work for you, but at least some of them should work for everybody. (Feel free to share the link.)

 

3. Contribute to retirement

 

Not everyone is lucky enough to have an employer match. If you’re one of those who does, add the extra money until you’re at least maxing out the match.

No employer match, or no employer fund at all? Put these bonus bucks into a Roth IRA or some other retirement vehicle. The NerdWallet site is a great source of information on all things personal finance; here’s their rundown of Roth vs. traditional IRAs. It contains other links to teach you more.

Incidentally, if you don’t work outside the home but have a spouse who does, look into something called a “spousal IRA.” If you qualify, it lets you save for retirement even if you don’t earn an income.

 

4. Prepay your holiday spending

 

Did you know that Christmas is in December this year?

Seriously: A lot of people are shocked – shocked! – to find themselves in holiday debt each January. Somehow they forgot that they like to buy presents and make butter spritz cookies every year.

In the immortal words of Yogi Yorgesson, from his best-selling record album:

Oh I yust go nuts at Christmas

On that yolly holiday

When I go in the red like a knucklehead

’Cause I sqvander all my pay

 

 

Don’t be a knucklehead. Make yourself a plan. Determine how much it’ll cost to do presents, special foods and maybe travel (or maybe not, given the current unpleasantness) for whatever holiday(s) you celebrate. Divide that number by 12 and set that amount aside each month.

If you can, that is. Just a few bucks here and there will at least be a head start on the celebrating – especially if you get creative about gifts and watch for specials on butter, flour and other items you need for holiday cheer.

Right now you have just three months to get going – but better late than really late.

 

5. Stock your pantry

 

My former MSN Money colleague Liz Weston calls a well-stocked larder “the emergency fund you can eat.” Recent pandemic-related shortages of everything from yeast to TP certainly reinforce the notion that having some of everything you need is a good plan.

Make a list of everything you eat/use regularly, including cleaning supplies, paper products and OTC medications. Those with warehouse club memberships can really score, both in terms of large quantities and (generally) lower prices.

If that’s not you, maybe you know someone who has a Costco (or whatever) card and will take you shopping? Splitting an order (possibly several ways) can help you answer the question of where you’d stash 36 rolls of paper towels.

(Note: Hiding things in under-bed boxes is an option. If you put the bed up on risers, you’ll have that much extra storage space.)

But even just an extra can or two of tuna, box of pasta or bag of lentils will get your stockpile going. Use your extra dollars wisely by buying things on sale. Bonus frugal points if you use coupons for any of this stuff.

And yeah, when you see toilet paper you’d better get a little extra of that as well.

 

6. Stock other stuff, too

 

Time to make another list: of non-food items you use regularly and will eventually need to replace. For example:

• Pet items (take advantage of that sale on kibble or cat litter)
• Car stuff, such as windshield washer fluid, antifreeze and oil
• Garden supplies – if you know you’re planting vegetables again next year, hit the end-of-season sales this year
• Canning supplies – watch for good deals on lids, jars, bags and containers

Rate them in order of importance, and set out to find the best deals you can. (Pro tip: You might find some or all of these things inexpensively through yard sales or thrift shops, or for free from a Buy Nothing Facebook group,)

 

7. Start a pet emergency fund

 

At some point Fido or Fluffy is going to need to see the doctor. Set aside a few dollars a month (more if possible) so that the vet bill won’t be hit quite so hard. Even if you can’t pay it all upfront, the pet EF means you won’t have to put the entire bill on a credit card. And if the fund is enough to cover the entire cost, you might be able to ask for a discount for paying cash.

 

8. Spend it on yourself, Part 1

 

When times are tight – and especially if they’re always tight – it’s easy to put off things like dental exams, new glasses and replacement winter boots. Start an account called “Taking Care of Me” and fund it as much as you can; even if that’s just $5 a month, you’ll be $60 closer to those new specs by the end of the year.

Remember, those stealth savings tips mentioned earlier can be used to fund self-care, too.

 

9. Spend it on yourself, Part 2

 

It really is okay to indulge in streaming services or the occasional craft beer. In fact, it’s probably a good idea, provided that you’ve taken care of business first.

A life without any fun or luxury items at all can be very glum indeed. These days people are feeling additional stress because they can’t go anywhere and/or are worried about losing their jobs. Add in maybe having to teach your kids at home, trying to keep them amused away from their friends (and much of the rest of the world), and maybe battling them about other aspects of the new austerity (cheaper meals, lower data plans, et al.) and you’ve got yourself a recipe for stress.

And it doesn’t have to break the bank. A new book by your favorite author, once-a-week takeout from your favorite place, or even just a sweet-smelling bath bomb or a really good cupcake can feel incredibly luxurious.

Self-care isn’t always free, but a lack of self-care can wind up being incredibly costly.

 

10. Give it away

 

Remember, these are extra dollars. Once you’ve taken care of life’s essentials, you can use those bonus bucks any way you like.

That might be a massage or a double feature (once the movie theaters open back up). But it could also be charitable giving – to a church, cause or charity, or just via a random act of kindness.

It feels good to give. It just does. Try it and see.

 

Changing the things you can

 

Some things you can’t control – for example, the pandemic taking your job or cutting your hours way back. Or maybe the fact that your adult offspring had to move back home because their jobs vanished/shrank. But while you can’t change certain things, you can change the way you react to them.

Taking any “extra” money and putting it toward a goal is one of the things you can change. While I would never begrudge someone a treat during tough times, some weeks you can – and should – say to yourself, “Yeah, it’s only $10 for this [whatever], but how much good could those dollars do somewhere else?”

Never underestimate the power of an extra $10 here and $10 there. Eventually it starts to look like real money. Here’s an example from Category 1 (debt payoff), courtesy of an article I did for Self.inc, “Should I pay off my credit card or save money?”:

• Suppose you have a $2,000 credit card balance on a 15% APR card and usually pay $40 a month.
• By the time you zero out the debt you will have paid $1,026 worth of interest.
• But if you raise the monthly $40 payment by $35, you’ll pay just $412 total interest.
• That’s a savings of $614. Think of what you could do with those extra dollars.

So use your “extra” money wisely. If you plump up your EF (or your pet EF), then the money is there when you need it. When you have a dedicated amount of cash for a special occasion, you’ll enjoy it so much more because you won’t have to worry how you’ll pay for it. And when you feel secure enough to drop a fiver into the food-bank drive, you’ll realize just how lucky you are.

Readers: Had any extra money lately? If so, how did you spend it?

Related reading:

• Financial planning: Too many women don’t care
• Can’t get ahead? Try a ‘savings challenge’
• 7 free financial resources