YNAB tree logoAustralian flag
It looks like you're located in Australia.
We have an Australian version of our website.

Please confirm your location and we’ll send you to the appropriate site!

What Should I Do With Extra Money?

One simple question to help prioritize your budget.

Have you found yourself in the fortunate position of trying to decide what should I do with extra money? Let's go through your best options. First, a brief aside to talk about sleep (and I promise, it's all related).

When I was younger, and in what I shall only refer to as a wide-eyed and adventurous stage of my life—I worked hard on sleeping less. I prided myself on it. Surely if I sleep less, I can do more with today’s 24 hours, right? And way back then that was mostly true to a point.

Six hours a night? No problem. Just give me one day a week where I can have eight.

As I get older, I’ve fought a losing battle with six hours. I’ve realized that I was less productive in the 18 hours I was forcing myself to stay awake. I mean, let’s face it—sitting exhausted on the couch waiting to go to bed isn’t really being that productive.

(At this point I would love to be able to say that this age-related requirement for more unconsciousness has been compensated for by an increase in age-related wisdom. Alas, it has not been a fair trade-off in that sense.)  

I’ve stopped fighting how many hours I need—it is what it is. Instead, I’ve started working on something that I can influence: the quality of those sleeping hours. Is it better to change to a harder mattress, or memory foam, or is it the pillow? Am I too hot? Too cold?  

I’m asking  myself constantly, "What’s going to help me sleep better tonight?"*

What Should I Do With Extra Money?

In our YNAB workshops, we’re often asked where it’s best to budget money.

“This month I have a little extra money that needs a job.  Should I pay down debt with it? Should I boost my emergency fund category this month? What about car repairs? Should I use it to budget future month’s expenses?"

Maybe you’ve already faced one or more decisions like this. And just like there is no one-size-fits-all answer to the question "How much sleep do I need?" there is no single right answer to the question of where to budget.  

Simply ask yourself: 

"What’s going to help me sleep better tonight?"

  • Will you sleep better tonight with the cool pillow of knowing you’re living debt free?
  • Will you sleep better tonight with a comfy blanket provided by an extra large cushion for unforeseen events?
  • Will you sleep better tonight with your fleecy-lined pajamas, wrapped up in the knowledge that no matter what, next month’s bills are funded?
  • Will you drift off right away with the knowledge that you're on the path to an early retirement, a dream house, or a yearlong adventure around the world?

We’ve all got different pay cycles, job security, and we all find comfort in different things. So ask yourself that question, and let your gut reaction guide you. Don’t overthink it or rationalize it, or agonize over it. Budget the money and let it sit there overnight. See how you feel.

Tomorrow is a new day and, we can always change our mind.

Especially after a good night’s sleep.

Related Articles
What Should I Do With Extra Money?