Extra Cash? 11 Smart Purchases You Can Make With $400 or Less
Here at The Cheat Sheet, we talk a lot about how to be financially responsible and how to increase wealth with very little money. Many Americans live paycheck to paycheck. That we know. But let’s quantify that generic statement by putting some real numbers behind it. The Bureau of Labor Statistics Consumer Expenditure Survey 2015 reports an average household income per consumer unit (think entire household of family members or single, financially-independent people living alone or with other people) is $69,629. And the consumer’s unit average yearly expenses is $55,978.
Let’s say you dedicate those yearly expenses to standard things, such as food, housing, transportation, and insurance. While the actual percentage breakdown per expense will differ from household to household, depending on your family picture, you’ll still be dedicating a good chunk of your income to various necessary evils each month.
If we continue with this logic, the actual money you have left over — you know, that unreasonably small portion of your salary that remains after paying bills — is what many would dub as “play money.” The average consumer unit will have about $13,000 a year to play.
With all that extra cash, what can we do? Of course, we could blow it on a steak dinner or splurge for the newest tech gadget. But what are a few smart items we should buy when we have the opportunity? We’ve compiled a list of smart purchases you should never feel bad about buying. And the best part? They’re all under $400.
1. Student loans
The average recent graduate has about $37,172 in student loan debt and pays about $351 per month toward the loan, according to Student Loan Hero. For those who are super strapped for cash, they might choose to defer their loans to a later date or skate by paying just the minimum. But it’s the interest that will kill you. One of the smartest things you can do with extra cash is to pay more into your loans when you can afford to do so. It’s a solid bet to say added expenses will pop up eventually, and staying ahead of the curve will be one fewer financial burden down the road.
2. An interview suit
Even if you’re not currently in the job market, investing in an interview suit is always a wise decision. You never know when you’ll need a go-to outfit for networking events, conferences, or a random “I’ve got someone I want you to connect with” meeting. Shopping for the perfect outfit is a lot more bearable when you’re not under duress or in a time crunch. Instead, you can browse for sales. You’ll find cheaper options in many locations, but a nice suit should put you right around that $400 mark.
3. A durable mattress
What does anything matter if you don’t get a good night’s sleep at the end of the day? When you have extra cash at the end of the month, put it toward a high-quality mattress that will ensure you wake up ready to tackle each morning with spunk. High-quality mattresses will come at a price, there’s no doubt. But they also last for years and years. You could spend thousands on a name-brand mattress, but a foam mattress from IKEA could work just as well.
4. Digital file protection
External hard drives and online storage are perfect for backing up all those vacation shots, your wedding album, and imperative side-business files. Hard drives are easy to find online, and they’ll run you about $82 for one with worthwhile storage capacity. Online storage pricing varies when it comes to options and personal preferences, but you can choose between services, such as Mozy, Dropbox, or SugarSync. These cloud storage providers charge a monthly fee but give discounts for yearly subscriptions. Expect to pay between $28.98 and $99.99 per year.
5. Online classes
The most successful people will tell you learning never stops. As the workforce trends continue to change, the need for specialized expertise grows. A practical expense would be to devote a few extra bucks to improving your knowledge. Maybe you want to become a better public speaker. Or you want to pick up a new hobby to clear your head at night. And maybe you’ve heard tech gurus ramble about an increasing demand for coding professionals. Buy books, go online, and enroll in a course. Do whatever you can to set yourself up for future success.
6. A commuter bike
According to Bankrate.com, the average monthly payment for a new car will cost you $479. Why spend what you could save? One of the smartest purchases you can make with $400 or less is a commuter bike. When considering what you’d also pay in gas, maintenance, and car insurance, a commuter bike will pay for itself almost instantly. There are definitely good, better, and best when it comes to bikes, but you could find a quality road bike for around $300.
7. An emergency fund
It’s never a bad idea to start establishing an emergency fund. Experts say saving three months’ worth of expenses would be a reasonable amount of cash to stash away just in case. A good trick is to make your savings automatic. Once you’re unable to see your money coming in, it’s easier to get by without it and find ways to work with what you have. Then, when you break your arm doing back flips off a boat or blow a radiator in your car, it’s covered.
8. Retirement savings
Expanding on the previous point, try to accumulate as much wealth as you can for early retirement. Consider creating a moderately aggressive investment plan by opening IRAs, 401(k) accounts, brokerage accounts, etc. Take advantage of your employer opportunities, and set up automatic contributions for your company’s 401(k) plan. Start at a respectable 3% contribution, and gradually increase it until you get to at least 10%. When in doubt, seek a fiduciary financial planner.
As Kiplinger explains, “If a 25-year-old saves just $100 a month, assuming an 8% return and quarterly compounding, she’ll have $346,039 by the time she turns 65.” That’s an automatic win for someone with, I don’t know, say $400 to spare.
9. Solid clothing
Some of us find it absolutely insane to buy a pair of jeans that cost more than $39.99. However, quality clothing items, such as boots and winter coats, really hold up over time. And the money you shell out is worth it later. Reddit’s Buy It For Life adheres to this philosophy. This subreddit aims to “emphasize products that are durable, practical, proven, and made to last.” It might seem insane to pay $219 for insulated L.L. Bean Duck Boots, but you’ll be grateful when they’re still keeping your toes warm and dry 10 years later.
10. A coffee maker
Does life really exist without coffee? Another smart purchase is to invest in a solid coffee maker. If you fancy those specialty drinks, you could buy a combination machine from DeLonghi for $162 on Amazon. Considering the price of specialty drinks from coffee shops — and our dependency on caffeine — this is a purchase that will pay for itself in a matter of weeks.
11. Various fitness programs
There’s no safer bet than to invest in your health. Health equals wealth, right? Whether you buy a treadmill for $399.99 or invest in various meal prep services popular for those always on the go, they’re all worthwhile expenses.
Depending on your employer, you might also be eligible to receive reimbursements for health-related expenses, such as gym memberships, fitness classes, or sports-league teams. While you’re at it, look into other reimbursement programs you might be eligible for, such as cellphone plans, moving costs, or professional-development classes.
Follow Lauren on Twitter @la_hamer.