Congrats, a financial windfall has come your way! Whether it’s a hefty bonus, an inheritance, or proceeds from a sale, it feels good to have some extra cash padding your financial accounts.

When we have some extra cash lying around, it’s tempting to immediately splurge and treat ourselves to something extravagant. Of course, there’s nothing wrong with doing so. Life is not all about responsibilities, and we should reward ourselves from time to time.

But if you’d like to be smarter about your money, this is the time to think about giving this extra cash a purpose. Consider your current financial circumstances, figure out your needs, and put that extra money to good use.

Here are seven ways you can use your extra cash wisely.

Pay off debt

One smart way to use your extra cash is to use it get yourself out of the red. If you have an outstanding loan or consumer debt, funnel the extra money to paying it off more quickly. This is especially beneficial if it’s high interest debt, such as an outstanding credit card balance.

Don’t forget: credit cards have a high interest rate of up to 24% per annum. Having a $5,000 balance on your card for a year could see you paying up to $1,200 in interest alone! And while you may be comfortable with meeting the minimum monthly payments, the interest rate is applied against the outstanding amount, and that can add up to quite a sum.

So, if you’re servicing consumer debt, your priority is to eliminate that debt as soon as possible so you can move on to growing your savings and investments.

If you have a large amount of debt, consider seeking advice on how to better manage it. Learn more about any assistance schemes or repayment plans that are available and look into consolidating your debt into Debt Repayment Plan. Such a plan can make it simpler to manage and clear your debts.

Add it to your emergency fund

If you’re in the black, you can give yourself even more financial security by adding your financial windfall to your emergency fund.

It’s recommended that you have anywhere between three to six months of your monthly income set aside as an emergency fund. This fund is meant to be a financial cushion in the event anything unexpected happens such as a sudden illness, losing your job, or an incident that requires major expenses.

Having an emergency fund means not having to go into debt when faced with unplanned expenses and it can help reduce financial anxiety.

If you have dependents such as elderly parents or children, it’s more important to have sufficient money to care for them in case anything disastrous happens.

But really, everyone can do with a little more financial padding for emergencies and it’s a wise move to add any extra money to your emergency stash.

Top up your life insurance coverage

Have you recently reviewed your insurance coverage? A little extra cash could be well-utilised by increasing your insurance coverage.

A common question is how much life insurance is enough? A simple way to figure this out is to calculate your assets and liabilities and discover what the shortfall is between the two. This amount should be the minimum amount of life insurance coverage you should have.

The truth is that most of us are under-insured as we underestimate the amount needed to support our loved ones after our death. As such, having a little extra cash could mean it’s a good time to reassess your coverage.

Think that your extra money isn’t enough to buy sufficient coverage? Take a look at term life insurance, which offers a high sum assured at an affordable price. This is because term life provides pure protection, with no added frills.

Putting your extra cash towards topping up your insurance coverage could go a long way in giving your family increased financial security.

Get a head start on achieving your savings goals

Instead of spending that extra cash, how about making the smart move of saving it? This may seem like something obvious, but it can be difficult to resist that temptation to enjoy the money right now instead of putting it towards some future happiness.

Having a savings goal can be great motivation to put the money away instead of using it now. Do you have a life milestone coming up? Planning a wedding, buying a home, or intending to buy a car? Or maybe you’d like to take your family on a holiday?

Whatever your financial goal is, this extra cash can help take you one step closer to making it come true.

If you’re already steeped in your saving habits, then make an even smarter move by making your money work harder for you.

Instead of leaving your money in a savings account or a fixed deposit account, consider other low-risk savings instruments such as an endowment plan.

A single premium endowment plan could be a good option to grow your extra cash in a low-risk environment. An endowment plan will protect your capital while also offering a higher rate of return compared to a normal bank account.

Such a plan can help you build your savings nest and achieve your short and long-term financial goals. Learn more about endowment plans here.

Start investing

If you have a high-risk appetite and a longer time frame to reach your financial goals, consider making your cash work even harder for you by investing it instead of just saving it.

There are various investment instruments available in the market, ranging from bonds to stocks to exchange-traded funds. Such financial instruments yield a higher return but also carry more risk.

As such, it’s important to educate yourself on how to invest before you begin. Read up on the various types of investments, learn sound investment strategies, and understand how the investment market works. The worst thing you could do is put your money into something you don’t understand, so it’s important to do your homework.

Alternatively, you can also seek professional investment advice by speaking to a financial advisor. An investment professional can make the process easier by assessing your current financial situation, finding out your financial goals, and offering advice on the investment vehicles and strategies best suited for you.

Investments are an important component of growing your wealth, so putting your bonus, sales proceeds from property, or inheritance into an investment vehicle is a great way to improve your financial standing.

Upgrade yourself

Forget about those new clothes, new bag or fancy gadget that you’ve been eyeing– instead of buying new things, put your extra cash into improving yourself. Afterall, investing in yourself is one of the best things you can do for yourself and your loved ones.

In a professional sense, you could invest your extra money into advancing your education or taking up a course that will upgrade your skills. Becoming more knowledgeable and skilled can lead to opportunities for a promotion, bigger career prospects, and better earning power. It ensures that you remain employable even as the workforce and economy changes.

You could also invest in yourself in a more personal way. That could mean committing to a gym membership or hiring a personal trainer to improve your health and fitness. Or you could learn a hobby that you’ve always wanted to — be it diving, a new language, or art lessons.

Nurturing your body and mind will lead to a happier you, which is why upgrading yourself is a wise way to spend your extra cash.

Top up your CPF accounts

For many Singaporeans, we don’t really think much about our CPF until we need to use it. But if you’re thinking ahead to your golden years, using your financial windfall to top up your CPF accounts is a good idea.

This trend is catching on. According to a report by the Sunday Times, 2017 saw approximately 61,000 CPF members contributing about $1 billion in cash top-ups to their Special Accounts (SA) or Retirement Accounts (RA).

So what are the benefits of topping up your CPF accounts?

Firstly, the top-up amount can go towards planning for your retirement and the money can earn CPF’s higher interest rates compared to sitting in an ordinary bank account. This is an easy way to be more prepared for your retirement.

Secondly, you can also enjoy tax reliefs. When you make a cash top-up to your own CPF, you can enjoy a tax relief of up to $14,000 for the calendar year.

While it can be tempting to use extra cash on a quick and immediate reward, by choosing one of the options above, you guarantee a greater reward for yourself and your loved ones in the long run.