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Paying off debt is a long and difficult road and sometimes, it seems like you’ll never reach the end. But now, you have! All of your debts are cleared and you’ve got loads of extra money each month that you can spend on other things. This is where you need to be careful because if you don’t make good financial decisions, you could end up right back where you started again. It’s tempting to splurge and spend a load of that extra money on luxury items which is fine, to some extent, but you also need to do something sensible with it. This is what you need to do with your money after you’ve paid off all of your debts.
Decide On Your Financial Goals
Financial goals are always important because they can help you to make the right decisions with your money. If you don’t really know what you’re trying to achieve, you’ll just be putting money into a savings account and sitting on it. People have a lot of different financial goals; perhaps you want to travel more or you might want to move into a larger house. Knowing what your goals are will help you to work out where best to put the extra money that you have now that your debts are cleared.
Increase Pension Contributions
It’s always important that you’re looking to the future and making sure that you’re saving enough for retirement. You should already have been doing this at the same time as paying off debts so you can build up a bit of money, but now that you’ve got that extra cash there, you should increase your contributions. You shouldn’t put everything that you’ve got into retirement because there are other things that you need to do with that extra money but you can definitely increase the amount you pay in by quite a lot.
Investing your money is the best way to secure your finances for the future and make sure that you’ve got money set aside in case of an emergency. Having those returns on an investment can help you to avoid getting into debt again so you should start right away once you’ve paid back everything you owe. The world of investment can be tricky and you don’t want to lose everything so it’s always best to seek the advice of investment planning companies before you do anything. They’ll be able to tell you which investments are best suited to your financial goals and help you to make better decisions so you don’t risk losing everything.
Now that you’ve done all of the sensible stuff that you need to do with the money, you can start to enjoy yourself a bit more. Revisit your budget and allocate a bit more money to leisure activities like eating out or taking the family for days out. If you make sure to do the rest of the things on this list first, you can enjoy what’s left guilt free without having to worry about over spending again.
It’s important that you make good decisions with your money once you’ve paid off your debts, otherwise, you’ll end up borrowing and getting stuck in that cycle again.