Sometimes, it might feel like you're just scraping by financially. But every once in a while, you may receive a windfall of cash. Whether from your tax refund, a work bonus, an inheritance, or just accrued over time, smart financial consideration and a little planning can help you figure out how to put that cash to work.

Unsurprisingly, there are a lot of different things you can do with your extra cash. Initially, you may be tempted to spend it all on impulse purchases—but if you're reading this, you're on track to making a smart move.

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With that, here are a few things you should do if you’re sitting on extra cash:

1. Wait

Take a breath, step back, and evaluate your current financial situation. This extra cash can potentially transform (or at least benefit) your financial life. Save time and wind up back where you started.

Use this time to consider your greater financial goals. Have you wanted to buy a home, vehicle, or other asset? Have you been considering investing for your retirement or maybe purchasing an investment property to generate extra income? If you've been saving up, these things might already be on your mind, and putting the money towards them could be the right move for you. Even so, you should still take the chance to reconsider what you've been saving towards: are these goals still relevant?

Now that you've got your goals in order let's cover what you need to consider when determining what to do with your extra cash.

2. Identify the Type of Debt You’re Carrying

Not all debt is created equal. If you evaluate your financial situation and find that you're carrying a lot of debt, then identifying which type of debt you have will be your next step:

• Bruce Helmer knows inefficient debt as "the violent thief of wealth." This debt has high-interest rates, such as those on credit cards, and is used to buy stuff you don't need.
• Lower interest rates characterize efficient debt, and it's used for assets that might appreciate in value, like property. In fact, interest payments on efficient debt may even be tax deductible.

When you've got a wad of cash and a considerable amount of inefficient debt, it may be the smartest move to start paying that debt down. The interest rates of inefficient debt are often higher than the rates of return of most potential investment opportunities, so you'll be doing yourself a favor by clearing this debt before investing.

If all you see is efficient debt, or your inefficient debt situation is under control, your cash may be better used elsewhere.

3. Determine Your Risk Tolerance

Many people come to financial advisors wondering if they should save their cash or invest with it. The question of saving versus investing is all about your risk tolerance. Investing means your principal will be at risk, Whether in stocks, bonds, real estate, or something else. Of course, with this risk comes traditionally higher returns—but if you're not sure how you'll make ends meet in a couple of months, you may find that saving is better suited to you.

Understanding your risk tolerance can provide you insights into what to do with your cash. Some people are comfortable taking on the higher levels of risk that come with investing. In contrast, others prefer (or require) the stability of saving, such as through a bank or credit union savings account. Before making any investment decisions, it's important to do your research and speak with a financial advisor.

4. Save for the Unknown

Even if you have a higher tolerance for risk, unforeseen expenses can arise quickly—and when they do, you won't want to be caught unprepared. While it might not be the most exciting thing to do with your extra cash, establishing or adding to an emergency fund can provide peace of mind that money can't buy.

To set up an emergency fund, you can use the following steps as a general guideline:

• Set up a basic savings or money market account at your financial institution
• Make sure the account is not exposed to market risk and that you'll be able to access the funds if you need them
• Save three- to six months' worth of living expenses in the account
• Unless you're in an emergency, don't touch it
• If you need to use the money, aim to refill the account shortly afterward

You don't have to sink all your extra cash into the emergency fund immediately. Building the fund over time can provide you with an additional savings goal that helps you keep your spending in check. What's important is that you keep at it—and always remember to put back in what you take out!

5. Invest for the Long Term

If your debts are in order and your emergency fund is filled to the brim, it may be time to look for longer-term places to put your extra cash. Adding to your investment funds is a great way to build up your financial fortress if you're in a comfortable situation. Here’s how you can get started:

• Invest in your retirement accounts: Have you been maxing out your "employer match" contributions to your retirement funds? If not, this extra cash could go twice as far. Also, consider contributing to a health savings account, Roth IRA, or another tax-advantaged retirement account to achieve a tax-diversified portfolio, setting yourself up for retirement success.
• Invest in individual stocks, bonds, or indices: With the explosion of democratized investment platforms, you can pick and invest in your own assets with the click of a button. Remember that investing with these platforms does not guarantee any level of investment performance—and that using them can foster emotionally fueled investing decisions.
•  Invest with a wealth management firm: Financial advisors at Wealth Enhancement Group leverage market intelligence from a deep investment management team to augment your financial plan. We spend every day thinking about your financials so you don't have to worry, including investment allocations, tax implications and more. If you want to see how a relationship with a top-notch wealth management firm could benefit you, schedule a free meeting with a financial advisor today.

6. Invest in Yourself

If you don't want to increase your exposure to the market through investments, you can consider using this extra cash to invest in yourself.

• Engage in entrepreneurship: Starting a business can be seen as a monumental task, but in the internet age, it could be easier than you think. Monetizing one of your hobbies through an e-commerce platform is usually relatively straightforward with the help of YouTube and blog posts. Your extra cash could be used to make some capital investments to help kickstart your business.
•  Take an online course: Cohort-based courses, or courses that give you access to a dedicated community, can help put your cash to work. You'll learn new relevant skills that you can use to get ahead in your career and have the chance to network with like-minded people.
• Travel: While it may not seem like an investment at first glance, using your extra cash to travel can be a great way to broaden your horizons and learn about the world—and yourself. Consider destinations that have interested you for some time, or search on the internet for the gathering places of people you want to meet.
• Upgrade your physical health: You could use your extra cash to splurge on a new gym membership or even some exercise equipment for your home. Your health is one of the only things money can't buy, so keeping up with your physical fitness (or motivating yourself to start a workout routine) is of prime importance.

Your Financial Future Is Closer Than You Think

In today's world, things can change faster than you expect. Extra cash on hand represents an opportunity to improve your financial situation and invest in your future, no matter your circumstances. With the help of a Wealth Enhancement Group financial advisor, you can take control of your financial plan and steer yourself toward the financial reality you've been dreaming of.

Every dollar counts, and taking proactive steps with your extra cash today can significantly impact your financial future. If you're ready to take the next step, set up a free introductory meeting with a financial advisor today to see how much we offer.