How to use your extra cash responsibly

Receiving extra cash as bonus, gift or winnings, is an exciting event and a time for celebration to recognise the hard work you put in throughout the year.
It can provide us with an opportunity to achieve our financial goals. When we think about spending money, we need to do so responsibly.
The 80/20 principle is a good one to adopt.

Also read: Spring clean your finances

Here are some practical tips on how to spend your cash responsibly:
• Reduce debt – make additional payments towards debt and try to reduce higher interest-bearing debt first. Reducing debt helps you to save in the long run, by freeing up cash that you normally use towards debt repayments.
• Saving for emergencies – put some of this money towards emergency savings or add to your emergency savings. You should aim to save the equivalent of 3 months of your expenses in emergency savings.
• Invest for the future – speak to a financial advisor about investing for the future. Higher interest rates mean the cost of borrowing is higher. However, it also means you will earn more interest on savings and investments.

Interest earned on positive balances means you have the opportunity to earn additional income in the form of regular interest income.
If you haven’t already started on the investment journey, it’s a good time to start. Speak to an advisor or your bank, do your research and empower yourself with information and knowledge about investing.
Learn about the different types of investment vehicles and look to match your investment goal with an appropriate product.