Five Smart Ways to Spend Cash Gifts

Graduation, birthday, wedding, Christmas are all occasions when you’re likely to receive gifts and what better gift than cash. With cash you can buy whatever you like and possibly an even better gift than the giver would have purchased in the first place. While you may be inclined to blow the cash on electronics, clothes, or a vacation, there are some wiser ways you can use your gift.

For a big occasion, like graduation or wedding, you may have cash gifts rolling in for a few weeks. Stack the cash instead of spending it and you may be able to do something bigger than if you spent the cash as you received it.

Catch up on past due bills.

When you’re behind on payments, it can be tough catching up because you may not have any freedom in your budget to make the past due payment. A windfall is a great opportunity to get caught up. While spending your gift on bills isn’t the most exciting way to use your money, it is smart. Once you’re caught up, you can stop incurring late fees, stress less about being past due, and eliminate the risk of hurting your credit or having your services disconnected.

Put it towards debt.

If you’re working on a plan to pay off your debt, cash gifts can help you take a good chunk out of your indebtedness. You can get out of debt sooner than you originally calculated by putting any extra money towards your debt, especially when you couple the windfall with your regular debt payment.

Save it.

You can use the cash from your gift toward one of your savings goals, your emergency fund, Christmas savings, home down payment, or vacation, for example. Even a small amount of cash can put you a little closer to your goal. Don’t forgo your regular savings contribution – save what you’d regularly save plus the cash gift for more progress.

Help out a charity.

Wealthy people repeatedly encourage charitable contributions. Consider donating some or all of your money to a worthy cause. You may donate to a religious organization, local homeless shelter, or a foundation that benefits children, for example. Two of the largest service organizations include United Way and the Salvation Army. Not only does donating cash help society, you’ll also feel good about helping those in need.

Treat yourself.

It’s not a bad thing to treat yourself, after all, the gift giver probably intended for you to enjoy the money, at least a little bit. You can spend wisely and enjoy your cash gift by splitting up the money. Spend some of it on financial goals and some of it on something nice for yourself. Another good reason to treat yourself: to avoid the burnout that can come when you’re always spending responsibly and never enjoying what you receive.

However you decide to spend your cash, make sure it’s reasonable. Blowing money can feel good in the moment, but you may soon regret it when you realize you could have spent the funds on something that would have been more beneficial.