During the pandemic, the average American’s savings rate increased from 12.7% to 32.2%, so you may have a small nest egg that you’re wondering what to do with. It’s important to wisely spend saved money instead of blowing it so you get the most benefit from it. Here are some responsible things you can do with your money to improve your financial position.
Start a Business
Although there are businesses you can start with very little or no money, having a cash infusion will open up a lot more options.
It’s a great time to launch an online store because everyone is shopping from home due to the pandemic. You can use your savings to buy inventory or craft supplies to make your own handmade products. Any extra money you have can be spent on marketing to spread the word about your new shop.
Commercial cleaning businesses will also be in high demand as restaurants, gyms, and salons begin to reopen. Employees may not have time for the strict cleaning protocols that are required, so companies may bring in outside help to ensure the health and safety of their customers.
Starting a commercial cleaning business usually costs a couple thousand dollars, but could earn you $100,000 per year or more. So this is definitely a way to wisely spend saved money.
Buy a House
Buying a house is a great way to make your money work for you. You’ll be building wealth with every housing payment instead of lining your landlord’s pockets.
Although many people believe you need a 20% down payment saved to buy a house, there are cheaper options. FHA loans, for example, only require a down payment of 3.5%. Some conventional loan programs even allow you to put down 3%.
If you don’t have enough money saved for closing costs, there are grants that can help you cover them. So you may be able to get into a home for much less money than you thought and start building equity.
Make Upgrades to Your Current Home
If you already own a home, making repairs and upgrades is a way to wisely spend saved money. Improvements can increase the value of your home and reduce the amount of capital gains tax you have to pay when you sell it.
Kitchen and bath remodels are some of the most profitable renovations. They can net you up to 182% more than what you paid for them in resale value. Replacing your home’s roof, upgrading the siding, and landscaping are also good investments.
Invest in Your Career
Another way to wisely spend saved money is investing in your career. Going back to school and getting a master’s degree could increase your lifetime earnings by as much as $620,000. Taking a course that teaches an in-demand skill like data analysis, user interface design, or cloud computing can also help you get a better job and earn more.
Although it’s tempting to spend your savings on tech gadgets or a vacation, wisely investing it in your career or home will pay off more in the long run.
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