How to Make Your Surplus Money Work for You


Usually, our interaction with income begins after we take up a job or start a business. And more or less, the flow of money is systematic. But there are times when someone can get lucky and win the lottery or outperform in a contest and win a prize. The best is when you inherit wealth from someone.

So if you are on the receiving end and wondering what to do with the surplus money, this article will try to paint a picture of how you may invest a lump sum and make better use of it.

But before all that, you should be clear about a couple of things:

  • What is your long-term goal, and how much are you saving for it?
  • Do you have any big expenses coming up, and how are you planning to tackle them?

A house, children’s education, or a business idea could be categorized as long-term goals. We all have our own long-term goals, and they may differ from those mentioned above. However, the underlying truth for all financial goals is the same. How much and how often do you save for them?

If you have a couple of lakhs right now, the best investment would be to make it work for your long-term goal. Not only will it reduce the distance between you and your goal, but it will also make it easy for you to channel your regular income towards other day-to-day requirements and not cut corners for big savings.


If you have surplus cash and want to buy a house, use the money. You could take a home loan to manage the remaining payment for the flat. Not only will your debt be less, but the tenure for which you have to take a loan will be slashed. Similarly, if you want to start your own business, use the surplus money to start it now.

If you are saving enough money for your long-term goals and don’t need to spare some of your surplus cash, investing could be the best way to double your money. Depending on the type of growth you are looking for and the risk you can handle, there are many options in which you could invest.

  • Open a Fixed Deposit account, where you will get assured returns after maturity. FDs are risk-free investment vehicles that are ideal for putting aside extra cash.
  • If you are okay with taking a calculated risk, you could invest in Mutual Funds. Do your research and invest wisely.
  • An alternate savings account is also something you should think about. Opening a zero balance account is an ideal option to park some of your surplus money. You don’t have to maintain a monthly average balance, and the bank will give you interest on the amount deposited in the account. The account opening process is digital and can be completed from the comfort of your home. A digital savings account offers other benefits, such as a free virtual debit card and the option to get an instant credit card with minimal paperwork. The Kotak811 digital savings account also allows you to invest money in various instruments and take advantage of free digital payments.
  • Investing the money in a debt fund is a good option; a debt fund or bond fund yields stable returns and is considered safe. A debt fund is less volatile than equity funds.
  • Some extra cash might come in handy to start a retirement investment, so you can plan for a comfortable retirement life. Learn more about ways you can save money for retirement and other things here.

Ways To Make The Best Of Surplus Cash

1. Pay Your Due Bills


The first step to make the best of your surplus cash is to pay your due bills. Paying off any outstanding debts you may have will ensure that other expenses are taken care of, and by doing so you can guarantee that more money will be available for future use. Additionally, paying overdue bills on time allows you to improve your credit score and avoid penalties.

There are two main ways to pay your debts, one is the Avalanche Method and the Snowball Method. Avalanche Method involves tackling the debt with highest interest rate first, while Snowball Method involves paying off the smallest balance debts first.

2. Start An Emergency Fund

You never know when an emergency might arise, so having a financial cushion in place is essential. Starting an emergency fund with your surplus cash can help you prepare for future situations that require additional funds. You can start off small by setting aside $25 each month, or increase the amount as your income increases.

3. Invest It

Your surplus cash can be used to invest in stocks, bonds, mutual funds and other investments that provide greater returns than saving money in a bank account. Investing money wisely has the potential to generate more wealth over time, so it’s important to understand the risks involved before investing any of your savings. Researching different investment opportunities can help you make the most of your surplus cash.

4. Save For Retirement


Retirement should be a top priority, as having enough money saved up when you reach retirement age is essential. Taking advantage of tax-advantaged retirement accounts such as an IRA or 401(k) plan allows you to save on taxes while also making sure that your future is secure. You can use your surplus cash to contribute to these accounts and build up retirement savings over time.

Making the best of any extra funds is important in order to ensure financial stability and security. Whether it’s paying off debts, starting an emergency fund, investing in stocks or saving for retirement, there are many ways to make the best of surplus cash. Taking the time to research and understand your options will help you make the smartest decisions for your financial future.


Having extra cash is always helpful. However, how you spend that money is entirely up to you. Think carefully and act wisely.