What Should I Do With Extra Money?

The order behind the allocation

This planner assigns only the extra cash you enter. First it covers unfunded essential bills and debt minimums. Then it builds a one-month starter reserve and addresses the selected high-cost debt. A known near-term expense comes next, followed by emergency reserves up to three months. Any remainder stays available for a considered long-term plan.

Required minimums come before starter savings because a payment due now is already a commitment. The debt balance field should be the balance remaining after those minimums. Enter only the unfunded portion of upcoming costs, so money already reserved elsewhere is not assigned a second time.

A fictional ₱20,000 bonus

Suppose essential outgoings are ₱5,000 a month, there is no emergency fund, ₱1,000 of unfunded bills, ₱1,000 of minimums, ₱6,000 of debt remaining at 36% APR and a ₱2,000 annual expense. The plan assigns ₱2,000 to required payments, ₱5,000 to starter protection, ₱6,000 to debt, ₱2,000 to the annual expense and ₱5,000 more to the reserve.

The total stays ₱20,000. Starter savings are included in the later reserve balance, not counted again as an additional gap. If the extra amount were only ₱1,500, required payments would remain short and no money would be assigned to goals or long-term planning.

Assumptions that affect the recommendation

The high-cost threshold is 12% APR, a Kasyafi planning convention. A lower-rate debt is not automatically prioritized by this short planner. It does not model promotional expiry, early-repayment penalties or multiple balances; use Invest or Pay Debt and the Debt Payoff Calculator to explore those tradeoffs.

The reserve baseline is one month initially and three months in total. Your income reliability, dependents and access needs can justify more. Known near-term goals are assumed to be genuine commitments. Optional shopping should not displace required bills.

When keeping cash is a useful decision

A long-term planning reserve is an uncommitted remainder, not an investment instruction. You can keep it accessible while comparing options and confirming the next few months of bills. Do not treat an assumed investment return as guaranteed. Historical returns do not predict future returns, and repayment savings depend on the lender’s terms.