Cash may be considered one of the most appreciated Christmas gifts available. It gives the recipient flexibility, allowing them to choose something for themselves. But just because you got cash as a Christmas, that doesn’t mean you should blow it on something frivolous. Before you spend, look at your current situation and see if it can’t do some good outside of a retail environment.
Pay Down Debt
While using Christmas cash to pay down debt isn’t glamourous, there are benefits. First, you can pay off debt faster. Second, you aren’t using any money from your pay check to get ahead. Third, you will pay less in interest.
Yes, paying a debt is about the least exciting thing you can do. But, the potential benefits to your long-term financial health are worth looking in to.
Save the Cash
If you don’t have a sufficient emergency fund, put the cash in savings. Everyone should have at least a few hundred pounds available to manage unexpected costs. Otherwise, you might resort to taking on debt to manage an emergency. Consider saving the cash instead of spending it, because you never know when it might bail you out of a dire situation.
The only thing better than cash is more of it. If your savings and debt are under control, then consider investing. When done properly, your money has a chance to grow. And, if you have time on your side, the effects of compound interest are almost a wonder to behold.
Focus on Necessities
A surprise Christmas windfall can help you handle necessities that otherwise have you stretched. This includes replacing appliances that are on their last leg, replacing older household goods and even buying food. If you have an immediate household need, and not using the cash to cover it means a downgrade in your quality of life, then spend it accordingly.
Have (Useful) Fun
If your financial house is in order, then have some fun with the money. However, you don’t have to spend the money randomly to have a good time. Think about putting it toward an item that will get a lot of use instead of spending it on a passing fad or an item that will quickly lose its charm.
For example, if you jog for exercise and enjoy music while you are out on a run, then investing in high-quality headphones is a good choice. It supports a healthy activity, is an item you will use repeatedly, and can provide an element of fun.
Even traditionally “for entertainment only” purchases can be smart if you will get significant use out of them. For example, buying your first gaming console can provide a lot of entertainment as long as you actually enjoy gaming. But purchasing a console just because your friends all have one might be a waste.
It’s okay to have fun with the money as we all need fun in our lives. Just make sure you are truly getting your money’s worth before you spend it. Don’t make uneducated decisions and consider how the cash can be used for the most benefit. While some options aren’t exciting at first, they can lead to good times. For example, being one step closer to debt free might be a wonderful thing, so don’t count it out as an option.