What to Do When You Have Too Much Money

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What to Do When You Have Too Much Money

Is there such a thing as too much money? Okay, okay, we’re being a bit facetious here because, no matter what, rarely will you ever find any amount of money you have as being “too much.” But if you have all your debts paid off, have secured an emergency fund, and perhaps are even giving a little charitably with money left over in your budget, you might be wondering what to do with it.

The answer is simple: plenty. There’s plenty of things you can and should do with leftover cash. We are by no means financial gurus, but if your current cash flow is solid, here are some next steps to take.

Meet your employer’s match. Many companies offer 401k matching wherein when an employee invests a certain percentage of their paycheck in a 401k account, their employer will contribute up to that same amount. Essentially, this is free money. If you have not been able to maximize this match, say you’ve only been contributing 5% when your company will match up to 10%, be sure to take full advantage of this opportunity first.

Bump up your IRA. After you’ve met your employer match, and you still want to put more into savings for retirement, consider a traditional or Roth IRA. With a traditional IRA, you make contributions on a pre-taxed basis and fork over the taxes when you withdraw the money later (you must be minimally 59 ½ years old). A Roth IRA is just the opposite. You put your already-taxed money into the account now and don’t pay taxes again upon withdrawal in the future. Just remember to look up maximum contributions each year as they can change!

Invest extra cash. Still have money left over at this point? Perfect! Now you’re on to investing. While some people are intimated at the thought of investments, it can really be quite simple. If you don’t feel confident with basic investing, consider talking to a personal finance specialist who can help you out. Since 1925, stocks have averaged a 10.2% return annually.[1] One of the simplest ways to break into the investing world is by purchasing stock in America’s largest 500 companies, like Apple, Google, or Yahoo. This is a great starting point for novice investors.

Don’t let it get you in trouble. When we have too much money and feel like we can burn through it, we do just that. Before you know it, you’ve increased your lifestyle inflation and have stopped focusing on saving and generating further wealth for you and your family. In essence, extra cash can make you poor if you aren’t careful with it. Be sure to make your hard-earned dollars start working for you and be wary of overspending during times of abundance.

If you find yourself having too much money, high fives all around. We applaud you. Having this cushion means you’re doing something right. With these simple tips, you’ll establish even stronger financial security for yourself and your family for the future.


[1] Long, H (2016). New Year’s resolution: start investing. Accessed January 4, 2016. Retrieved from http://money.cnn.com/2016/01/01/investing/new-years-resolution-investing/.

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