How should I manage profits just received?

You got extra profit. Now what?
You got extra profit. Now what?

If your employer has recently deposited extra money on your account by the way of profits, the first thing is to take it slow to make the most out of it. It is important to realise that profits are not a fixed type of income, so it won’t not necessarily be repeated every year. Businesses always seek profit but there are bad years too. After that realisation, it is time start considering what you are going to with that money.

You got extra profit. Now what?

You got extra profit. Now what?

Your best options are summarized in these:

1. Debt payment

You can partially or fully cancel some outstanding debts, preferably those that are more expensive, such as credit cards. You may think it is not necessary but it is better to get out of debt as quickly as possible so that you pay less interest.

2. Save

Another option is the one that has to do with saving an amount of the money received. You should do so while having in mind your financial goals: education of children, retirement or any other project.

You also have the option to increase your emergency fund. No job is perennial. A healthy recommendation is to always have such a fund for three to six months. In addition, it can be used to take care of an extra expense, for intance your car’s maintainance, a health issue, etc…

A health check is always an option

A health check is always an option

It is important to clarify that saving does not only involve cash. You could also use an amount of money to invest in stocks, so that you can make a profit even bigger. This may be a long term plan but it is efficient.

3. Reward yourself

Money is not about saving only. You can use this chance to reward and motivate yourself to work harder from now on. Go on a journey, buy a new gadget or even the renew your closet. However, that should be limited depending on your financial situation. Some may dispose of up to 30% of the profits but others only 5% of it.

By +Nikos Kontorigas

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