Did you come across an extra $1,000 from your tax returns or a gift from a family member? You might be ecstatic. After all, $1000 is a lot of money. But what to do with this money? There are many possibilities. In this article, we will try to help you narrow out the best option for you.

Most likely you don’t have a burning cash need right now, or else you will not be here. So, this thousand dollars is extra. There are two main ways you can handle this joyous moment. You can either spend it all or you can put it aside to grow your money.

The choice is yours, but we will give you some tips on both routes for you. So, let’s get right to it.

What should I do with 1,000 dollars?

Okay, the first route we are going to explore is how to spend $1,000 and live it up!

Fun ways to spend $1,000

(1) Book a vacation

You earned this extra $1,000, and you can take a very decent extended vacation for this money. Is there a hotel you wanted to chill in for so long? This is your time.

You can enjoy a very nice 2-3 day vacation at a nice hotel for about $200 per day on a full-board basis. Enjoy some nice amenities like a heated swimming pool, a spa, maybe some golf, delicious food, and of course a great view. You can book hotel stays directly on hotel websites or through third parties such as Booking.com for some discounts.

(2) Buy that electronic you always wanted

Have you been putting off purchasing the brand new PlayStation 5? This might be your chance. Need a new laptop for work? Here’s your chance.

This might be a good time to buy that DSLR camera you always wanted to buy to pursue your photography hobby.

How about that new Apple iPhone or Mac laptop? A $1,000 might not cut it in these instances if you’re looking for the latest and greatest.

How about that expensive grill for your dad?

(3) Home improvements

Home renovations and improvements are frequent headaches that we try to forget since even the smallest thing costs you thousands of dollars. So, this might be the perfect opportunity to venture down this dark avenue without taking on the financial burden too much. Or at least, total financial burden minus $1,000.

Getting that patio reworked, roof fixed, painting re-done, gardening, and driveway re-done can be some helpful ideas to focus on.

(4) Change your wardrobe

Have you been wearing the same black pants and the same shade of lipstick to work? Well, maybe, this can be a good opportunity to give your entire wardrobe a change. Shop at your favorite clothing store (no, not the usual one. the high-end one). Buy those red-sole shoes you always wanted and get yourself a nice spa day booked.

(5) Hire a yacht for a day!

This is the ultimate getaway. But it’s not cheap at all. According to natural.com, a yacht can be rented for around $1,500 to $1,800 per day. Also, you are definitely not taking a yacht into the beautiful ocean waters by yourself. Get some friends to tag along, and split the cost.

(6) Donate it

A $1,000 can go a long way for someone in dire need. There are millions of orphaned children all across the world. There are millions of people who starve daily. Give out the money to a selected animal shelter. Donate it to a mental health awareness project. Donate it to an environmental cleanup project. The happiness you will gain out of donating just $1,000 will be immeasurable!

So, these are some fun ways you can spend $1,000 that you have extra. Now, let’s get a little more serious and see how we can set aside the money for future use.

What to do with $1,000 dollars to make more money

Personal finance is all about taking control of your financial journey. And $1,000 extra can take you a long way. Here are some ways you can make use of the $1,000 for better financial health.

(1) Set aside for your emergency fund

If you don’t have an emergency fund for yourself, setting up one should be your top priority. We have talked about the purpose of an emergency fund and how much to save in an emergency fund in a previous article. Trust us, this will come in handy.

(2) Invest in the stock market

Do some research on the publicly traded companies in your country and invest the $1,000 in the stock market. Investing in the stock market is no longer a painstaking task thanks to companies such as Wealthsimple Trade (Canada) and Robinhood (USA).

You have two options when it comes to picking stocks; 1- invest in growth stocks that will grow in value over several years, 2- invest in dividend stocks where you can earn a hassle-free dividend income every month or quarter or per annum. Here is my dividend portfolio for example.

How do I start investing with $1,000?

You might scream that $1,000 is too little to start an investing journey. Partially you are correct. But, a $1,000 is much better than having invested nothing at all. On stock trading apps such as Wealthsimple Trade or Robinhood or Weebull, you can start investing as low as $100. And $1,000 is enough to cover the share price of even pretty big companies such as Apple ($124/share), The Coca-Cola Company ($55/share), The Toronto-Dominion Bank ($60/share), and so on.

(3) Save towards retirement

Why save now when you are retiring at 60? Well, why not try to retire early?! If you are not already doing so, you can contribute towards your 401(k) (USA) or Registered retirement savings plan (RRSP-Canada). Over the next 10 or 20 or 30 years, this humble $1,000 could potentially multiply to be several thousands of dollars.

(4) Pay down an outstanding debt/loan

Loans usually have enormous interest rates. So, it helps to pay off these loans or even settle your credit card outstanding balance before you consider investing money anywhere. Usually, a loan has anywhere around 15%-30% interest rate per annum. Credit cards usually have 20%+ interest rates on average. None of the investment returns in the world can outpace those rates. So, it makes sense to pay off outstanding debt balances and reduce your monthly interest costs.

Even paying down your student loan or auto loan makes much more sense than investing.

(5) Invest in your education

Spending money on your education never fails. Take up a course that you like. It will not only enrich your knowledge but may open up future opportunities to monetize it. You could teach others what you learned in an online course or an eBook. You can use your newly acquired knowledge to get a salary raise or a promotion at work. If all monetization methods fail, still you learned something you liked.

(6) Start a blog

We wrote an extensive article about how to start a blog. This does not cost a fraction of a thousand dollars. So, what are we going to do with the remaining money? You can use the remaining money to buy a premium WordPress theme from Themeforest or Elementor to make it look as good as it possibly could. Use the remaining money to buy some content off of freelancers and boost your online presence. Once you get some decent traffic (around 300+ per day), you can apply for a premium advertising network such as Ezoic to monetize your content and make a decent passive income.

Alternatively, you can also buy an established blog. Buying a decent blog for $1,000 will be very very tough, though.

Conclusion

A thousand dollars may not seem like much today. But there is still a lot of utility that can be drawn from this money. Do what you like and the yield on the investment will be higher than anything you can imagine. But most importantly, be smart about your financial situation. Your financial security comes before anything else. So, choose wisely.

Comment below what you would do with an extra $1,000 in your hands!