What to do with all your Lunar New Year money
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The annual celebration of Lunar New Year includes sumptuous feasts, festive dragon and lion dances and the all-important gifting of red envelopes filled with money. Symbols of good wishes and luck for the year ahead, the envelopes can be given to friends, family, colleagues and acquaintances. Depending on the nature of the relationship, they can contain anywhere from a few singles to a few hundred dollars.
Here are some of the best ways to use your Lunar New Year money wisely.
Set aside at least some of the money to reduce your debt, suggests personal finance blogger Marc Andre. (Minimum payments on your debt can cost you a lot of money. Learn what to do about it.)
“It could be a credit card, student loan, car loan or any other type of debt. It's probably not the most fun or exciting way to use your money, but it may be the most practical,” said Andre. “There’s no better option than using it toward any debt you’re trying to pay off.”
If you feel anxious about your financial situation, use the money to start an emergency fund.
“This cushion will keep you going if you were to face a financial setback,” said Lynch. “Most of us rely on someone else financially - employer, clients, spouse, family - so having an emergency fund will help reduce some anxiety that goes along with that.”
If the money you receive isn’t enough to cover a few months of expenses, continue making small contributions that will add up over time.
A windfall can be an opportunity to sign up for a class that helps you grow professionally or personally, suggests Misty Lynch, behavioral financial adviser and certified financial planner at Twine.
“Often we easily find reasons to spend money on others but spending on yourself feels selfish or unnecessary,” said Lynch. “Spending money to improve your professional skills can set you apart at work and open you up to new opportunities.” Also consider investing in your physical or mental health, which can help reduce stress and make you feel happier, said Lynch.
Maybe you have a big purchase coming up, or one you've been putting off because you didn’t have the money. Your Lunar New Year money can help cover this type of expense as well.
“There are a lot of things that could fall into this category like getting new tires for your car, buying a crib for a baby that’s on the way, or some needed dental work that you've been avoiding,” said Andre.
It’s never too early to start squirreling away money for your retirement. Opening or adding to an individual retirement account can have multiple benefits. (Learn how to open an IRA.)
“If you go with a traditional IRA, you may also reduce your taxable income,” said Andre.
What’s your least favorite chore? Identify something you really don’t like to do and use your Lunar New Year money to have someone else do it.
“For me, it’s cleaning,” said Lynch. “Using this money to buy back some of your time by outsourcing one of your least favorite tasks feels really good. A deep spring cleaning by a professional would provide business to someone locally and also give me time to spend on things I enjoy.”
Still more options include a meal delivery service, a virtual assistant or hiring a babysitter so you can enjoy a night out.
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