What Would You Do With $500?

using an extra $500

I love to find articles about the best ways to use an amount of cash. No matter what your financial beliefs, there are basically four ways to use money: spend it, save it, invest it, give it away.

The good folks at Mt Edgecumbe Hospital in Sitka, AK are giving me $600 for meals next week while I’m working at their clinic. Unless I make lots of friends and go out every night, I’ll probably get most of my food from the grocery or as take out since I hate eating in restaurants by myself. I’m guessing that will probably take about $100. That leaves me five Benjamins to use however I want. What would you do with $500?

Spend It

If I had consumer debt, I’d probably use my extra $500 toward paying it off. $500 is not chump change, and gaining a windfall to put toward debt can be a great shot in the arm to sustain motivation toward debt payoff goals.

Since I don’t have that type debt anymore, I could use this money to spend on holiday gifts or for our trip to Mexico that’s coming up next month. We also need a new couch in the worst way, but that somehow keeps getting pushed to the back burner.

If you’re going to spend your extra $500, make sure it’s for something you will use and value. Don’t blow it on an unplanned shopping spree.

Save It

Since 60 percent of Americans can’t cover unexpected expenses, saving $500 in an emergency fund is a grand idea for those who don’t have anything set aside for a rainy day. I’ve also read that having at least $500 in an account removes a mental barrier to continued savings. If you can save that much, what’s to stop you from reaching higher goals?

Invest It

$500 is a great amount for beginning investors or those looking to expand. Many low cost brokerages allow IRA opening balances of less than $500 or you could use it to invest in stocks.

For less than $500 you could buy a Motif of up to 30 stocks at Motif Investing. My daughter bought a Motif earlier in the year with her birthday and chore money. Being able to choose stocks and see how investments work is a great way to get kids started as investors.

Give it Away

As we approach the end of the year, it’s time to think about charity. Many non-profits generate most of their operating budget from year end donations. Not that you can’t donate any time, but I guess even philanthropists like to wait until the last minute. Remember that all donations to a 501(c)3 entity are tax deductible.

I’m not 100% sure how I’ll spend my $500, but I’m leaning toward putting it in my Roth IRA or funding a new Motif. What would you do with $500 this month?

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  1. I’d take some food with you, given the cost up there. At least healthy protein or granola bars…

    I’d put $500 towards the remodel I’m doing.

  2. Food prices are much higher in Alaska. In fact, in some more remote places, if you can get a gallon of milk, it costs $8-10. Most people get shelf stable milk. But to your question, $500 is an amount that is tough to decide what to do with. If I had debt, I’d definitely put it toward paying that off. But happily, we have no debt at all so I’d probably just tuck it away and add it to other savings for something for the house we are building. Hubby needs a new office chair. Or up the amount we will give to one of our favorite charities.

  3. I’d love a windfall of $500 right now! I’d use it to buy a plane ticket ($175), pay off my smallest balance CC ($156), replenish some of the savings I had to spend this month ($100), then the last $69 I would probably put it into my food budget for the month. I’d have to decide! Have fun in Alaska!

  4. That is a very generous amount for food, although I think food prices are probably a bit higher in Alaska because of transportation costs. If I had an extra $500 is would probably be invested in our home remodel that is almost complete (it feels like it has been going on for years) or maybe something fun because I need to relax after dealing with the remodel! Have a wonderful adventure in Alaska and I can’t wait to hear all about when you get back.

  5. That’s a great problem to have. 🙂 I’d likely choose between either spending it on something fun – like for your vacation or put it towards what we’re saving for a house down payment, which it would probably go towards the latter. If we didn’t have that we’d likely just invest it.

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