What You Can Do With Extra Money You Make

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Indecisions strike in situations with options but where it is difficult to make a choice.

Situations that need clear choices when the outcomes of either decision are unclear hit us every so often and when this happens, we say we are in a dilemma.

Dilemmas are situations that make it hard for people to make easy decisive choices. When a dilemma involves money, the caution and trepidation in which we approach the situation is even higher. 

Experiencing a money dilemma is when you have doubt, uncertainty, fear or all of these when it comes to your finances. Some financial decisions that may cause dilemmas include managing debt, finding a balance between your spending and saving, spending on credit, investing for optimal returns, protecting capital or insuring yourself and property  adequately among others.

Previously, we looked at the common money fears and how to overcome them and in the same spirit, this week we look at the common money dilemmas people face in the hope that you will be able to identify any that you struggle with so you can be able to improve your financial decision making.

1.   What do I do with the extra money?

If you struggle with this question, then you could be one of the few who do not know what being broke is. If not and you have just had a windfall, then the reality is that if you are spontaneous, you would not make good decisions with it.

For some, a salary increase could mean that they have more money to spend on material things while others will use the extra pay to clear debt or add it to savings.

Tip: To avoid falling for regrettable choices, always ensure that your primary financial goals are taken care of first. These could be your retirement savings, buying a house or any other appreciating asset. Whatever the case, let the windfall take you a step closer to realising your dreams than blowing it off and then going back to regrets.

2.  What comes first?

We all should have financial goals we aim for and the reality is that it can be difficult to prioritise them.

In our article on budgeting like a pro, prioritise and work on your goals in a way that helps accelerate your speeds towards achieving it. If in debt, prioritise clearing it and then work on building an emergency fund or saving for retirement. With these covered, it becomes easier to focus on your other goals. Wondering where to begin?

Tip: Do the math. Take the path that will save you the most by having a budget handy at all times to ensure that you are on track. When you budget, you will realise that some things are more of a priority than others based on the numbers.Loading…

3.  To buy or to rent?

Depending on the times and seasons of an economy, it is sometimes better to rent than to buy. For instance, if your pocket does not allow it, you cannot buy a house when the sale prices are going up and in such a time, it would be advisable to rent. 

The best time to buy would be when the prices have come down to a level you can comfortably manage. Likewise, with renting, consider the neighbourhood and the costs that come with it. If the pros are fewer than the cons of renting, then enjoy living within your means. Again do the math.

Tip: Weigh the pros and cons based on the numbers. Every situation will offer a different solution and so go for the best that favours your pocket.

4.  Do I invest or pay off debt?

The rule of thumb has always been to invest young, invest as much as you can and invest often. But, while this sounds good, there are some things that hinder the investing plan like having a student loan or other kinds of debt that may make it difficult to invest.

Tip: Depending on where you are, again look at what would favour you to attain your goals faster. If paying off the loans is better off than investing or vice versa, go for it!

5.  Do I need insurance?

With so many insurance policy options, it could be difficult making a decision on which would be best for you. Different needs also mean that you could be torn between getting an insurance cover or staying without one.

As always, the numbers are king in personal finance decisions. Ensure that the premiums fit comfortably within your budget but that the cover should be enough to cover what you are contributing for.

Tip: Always look at the outcome you expect and always ensure that you can comfortably cater to that outcome by ensuring that whatever is needed is within your budget.


Money dilemmas are real and they can easily affect our financial wellbeing if not handled well.

To make life easier on matters that you struggle making financial decisions on, consider:

  • Using tech nudge-functions which will remind you to save, contribute or invest. There are several tools that you can use and they are available online.
  • If money is tight which is what affects your decision making, consider creating an extra revenue stream. This could be something you love doing but which you can monetise.
  • If your struggle is between spending and saving, have a direct debit system where your current account can transfer money to your savings account as soon as you get paid.