If you are like me, a sudden $2,000 extra money is bound to make you feel overwhelmed. It is a lot of money and all the possibilities of spending $2,000 start circling your head. However, as economic theory states, our ‘wants’ are unlimited and resources are limited. So, we have to make do!

Fortunately for you, this extra $2,000 can take you a long way in terms of fulfilling some of your wishes. This is definitely more impactful than what you can do with $1,000.

Maybe you got a nice little bonus from your 9-5 job, or you got a birthday present from your parents or even worked an odd job to make some extra cash. Either way, what to do with your $2,000 depends on what your immediate goals are. So, this article is only to help you with some ideas on what you can do. Obviously if you have some other pending emergency, that take precedent over all of this.

What to do with 2,000 dollars?

We are going to segregate this article into two sections; 1) spending your $2,000 immediately and living it up, 2) smart and productive ways to utilize your $2,000. What you want to select is up to you!

Fun things to do with 2,000 dollars

(1) Vacation and a shopping spree

What screams louder than ‘fun’ if not for a pampered time at a hotel complete with actually buying some things you want. Granted you can’t spend a week at Four Seasons hotels and shop at Beverly Hills streets. But you can definitely have a similar luxurious experience in a lesser star grade hotel and shop at some of your favorite stores. At the end of the day, you don’t want to go into debt attempting to spend some extra money.

If you can cover up everything else, you can get some exquisite accommodation in Asia (in countries such as Thailand, India, Bangladesh, and Nepal) for 2-4 weeks for $2,000! Yes, it is that affordable.

(2) How about a day out on a yacht?

According to natural.com, the rent for a yacht costs around $1,500 for a day. So why not you and your friends or you and your significant other take a trip into the clear blue ocean? Fresh air, blue ocean as far as the eye can see, away from your daily routine, and good company. What more can you ask for $2,000?!

(3) Buy the latest iPhone or Samsung smartphone

Smartphones are so sophisticated these days that they pack so many features and so much hardware. So, it is natural that the latest Apple iPhone 12 Pro Max comes with a price tag of $1,399. Don’t worry, the rest of the peripherals needed for the phone such as the charging block, AirPods, a nice casing will cost you the balance. Its Android competitor, Samsung Galaxy S21 Ultra 5G costs $1,649.

(4) Show off with a Gucci leather bag

A handbag by the luxury fashion brand Gucci is all you can afford for a $2,000 price tag but it is bound to turn some heads when you walk into a room with it in your hands!

If Gucci isn’t your preference, there are plenty of other brands to match the price tag, too. Have fun!

(5) Time to upgrade your hobbies?

This is such a broad topic, we cannot simply talk about all the ways you can spend money on your hobbies. But we will cover some popular hobbies and how $2,000 can help to elevate your game.

If you are an amateur photographer, you could try to upgrade your camera. For $2,000, you can probably buy some of the best-in-class gear such as a Canon EOS 6D Mark II DSLR camera bundle for $1,500. If you have the camera body covered, you could try for a new lens to capture the best micro photos or maybe some astrophotography–these usually range anywhere from $300 to over $5,000!

If you are a mountain biker, you know where we are going with this. Yes, a new mountain bike perhaps?

If you like painting, $2,000 can go a long way to buy some amazing supplies that will last you for a while.

Have you dreamt about buying that guitar you’d love to play? You could probably buy two for the cash you have in hand right now.

Enjoy stargazing? Take it to the next level with a brand new Celestron telescope!

So, you get the point. Think about the favorite things you do in your spare time, and see how you can upgrade them within the budget.

(6) Book a 4-Night cruise with Royal Caribbean

If you prefer to enjoy an all-out party in the sea with amazing food and music and fun, the Royal Caribbean International cruise service has you covered. And prices range anywhere from $250 to $500 per person for 2-4 nights at some of the most beautiful oceans around Florida, Galveston, and even in Singapore, Australia, England, China, and more.

A 12-night cruise in Barcelona, Spain costs only $579 per person!

(7) Take up a course

If you thirst for knowledge and skills, $2,000 can take you a long way to learn something new. Maybe you want to enhance your software development skills, maybe you want to learn knitting, maybe you want to finish up a professional qualification, or maybe you want to learn kayaking. Possibilities are just endless.

(8) Donate

There is much happiness and content to be gained by donating money or goods to someone in need just as much as we use them on ourselves. Maybe even more happiness and content than using them on ourselves. $2,000 is a lot of money for us. But this is an absolutely massive amount for someone in need.

For example, the ShareTheMeal program by the United Nations World Food Programme says that they only need US$0.8 to feed a starving child for a day. What can your $2,000 do in this case? It can buy 2,500 days of food for a child who would have otherwise missed a day of food! For clarity, that is 6.8 years’ worth of food for one child.

Similarly, you can donate to any worthy cause you know.

How to invest $2,000 to make more money?

Now that the fun stuff is out of the way, let’s take a look at what we can do to utilize this extra 2,000 dollars in a little financially responsible manner.

(1) Start an emergency fund

Our first and foremost advice to anyone with some extra cash is to set up an emergency fund if you don’t already have one. An emergency fund acts as your safety net in terms of sudden/unplanned financial crises. Massive job losses surrounding the COVID-19 pandemic is a good example of an unplanned financial crisis. $2,000 is a great amount to start an emergency fund. But is that enough for you? Check out our comprehensive guide on emergency funds to find out all about them.

(2) Set aside for retirement

Retiring as early as possible (FIRE) is a topic we frequent in this blog on personal finance. So, we simply cannot opt out of the impact of 2,000 dollars on fast-tracking your retirement age.

Let’s assume you have $40,000 sitting in your retirement fund today with it earning 5% interest every year and this interest is re-invested in the retirement fund (compounded). It takes roughly 20 years for you to reach $101,078 in the retirement fund. However, if you add that extra $2,000 to the fund today, you can retire an entire year earlier at the 19th year from today. Just a mere $2,000 which you could have burned in a day, earned you 365 days of freedom from your 9 to 5.

(3) Start investing

If you have not yet, $2,000 can be a great stepping stone into the world of investments. You can buy shares of companies, bonds, mutual funds, ETFs, gold, or even cryptocurrency. However, to grow your money, you need to invest in a source that earns you something over your country’s inflation rate.

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How to invest $2,000 dollars?

In the world of investments, $2,000 is not a massive sum. But do not be discouraged. My personal investment journey only began with $100 and has grown to only $1,000 in 6 months. Any amount is better than having no amount invested.

There are a few ways you can invest $2,000 and multiply the money;

1. Pick a fundamentally strong company (blue-chip companies, companies with long history, quality products, and strong market positioning) and invest in its shares.
2. Invest in companies that pay dividends.
3. Invest in Exchange-traded Funds (ETFs) which is a collection of shares, bonds, and commodities, and managed by experienced fund managers.
4. Buy Certificates of Deposits (CDs), usually very safe and fixed returns (but lower than above options).
5. Lend money in a peer-to-peer lending program.
6. Buy rare-earth metals such as gold, silver, or even oil and energy resources.

Do keep in mind that a $2,000 investment will not make you rich overnight. However, if you do let the power of compounding take over some years, you can turn your humble $2,000 into $20,000 in 50 years invested at a safe 5% return per annum. If you let it marinate for just a decade more, you can double your $20,000 to almost $40,000 by the 62nd year. This is the power of compounding.

(4) Start a side hustle & boost it

You might not be able to open a full-fledged brick-and-mortar store (who wants that anyway!), but you certainly can bump up a side hustle into operations with $2,000 in your pocket.

If you want to buy and sell t-shirts in your neighborhood, $2,000 will be more than enough for some substantial inventory. Even if you take on the designing part and outsource t-shirt printing to a company, you are likely to get a decent quantity of custom printed t-shirts that you can start selling.

If you want to start a blog with your favorite topics, 2,000 dollars can buy you the website, domain, hosting, a premium theme, and even quality pieces of content written to kick start the journey.

You can even start your own baking gig with this kind of money. Create a Facebook page with an attractive name and pictures for your new brand, promote it among your friends and family. You can use a small portion of the $2,000 to promote the page to millions of Facebook users thus giving your business a boost.

Check out our article on some passive income ideas for more inspiration.

(5) Pay down debts

It is normal and often necessary to take out loans in anyone’s life. A very high percentage of people rely on a mortgage to buy a house, an auto loan to buy a car and use credit cards to make day-to-day purchases such as grocery. Paying down any of these outstanding debts can help a lot in terms of reducing amounts paid as interest.

(6) Pay bills in advance

Sometimes, service providers give big benefits if we pay up for services in advance. If you do have the opportunity to enjoy some discount on the total bill if paid in advance, you might want to consider doing so.

What do you think of the different ways you can spend or invest that extra 2,000 bucks you got? What would you do with 2,000 dollars extra? Leave a comment below.