By Jamie Oleka

Unexpected income—whether from a tax refund, salary increase, or side hustle—offers a great opportunity to improve financial stability. However, without a plan, this money can easily disappear into everyday spending. I had the pleasure of interviewing Kionnie Epps, a financial educator and influencer affectionately known as “The Responsible Homegirl. ” Below, she shares how to make the most of extra income based on key financial principles and strategies.

Align Your Income with Your Goals

Before deciding how to allocate extra income, consider your financial vision for the year. Are you focusing on paying off debt, building an emergency fund, investing, or treating yourself to a well-earned experience? Prioritizing goals ensures that your money is working for you in a meaningful way.

Kionnie shares, “It depends on the goals for the season. Start with a vision for the new year, whether you want to save, invest, or spend. For example, if you want to pay off credit card debt or travel out of the country this year to treat yourself, start with that.”

  • Debt Repayment: High-interest debt, like credit cards, should be tackled first since it drains future financial security. “Anytime we borrow money, we are taking away money from our future selves.”
  • Emergency Fund: Without savings, unexpected expenses can force you back into debt. Aim for at least $1,000 initially, then work towards 3-6 months’ worth of expenses. “There needs to be a balance. Have an emergency fund, and make sure to try to put some money to the side. Every dollar doesn’t need to be paid off overnight.”
  • Investing in Experiences: If treating yourself is part of your plan, find a balance—consider affordable alternatives that still bring joy without compromising financial stability.

Find a Balance Between Saving and Spending

Paying off debt quickly is tempting, but having some cash reserves is essential. Kionnie shared a valuable lesson: “In the beginning of my personal finance journey, I was in credit card debt. When I came into extra money, I paid off the debt; however, I had little saved. I can remember needing four brand-new tires and struggling to find the money for them. If I hadn’t just paid all the debt, then I would have had some in savings.”

Instead of throwing all extra income at one goal, distribute it wisely:

  • 10% for savings
  • 50% for debt repayment (if applicable)
  • 20% for investing
  • 20% for personal enjoyment or other goals

Don’t Ignore Reflection & Budgeting

A financial windfall is a great time to reassess finances. Facing your financial situation head-on prevents avoidance and helps identify opportunities for improvement. One of the best pieces of advice Kionnie received was, “Don’t run away from your finances. When we face it head-on, we see it’s not as bad as it seems. On a spiritual note, this is an opportunity to do deeper reflection on priorities and motives. God can use this moment of reflection to teach and refine you based off of your priorities.”

Ask yourself:

  • What do I need to prioritize?
  • Where do I want to be financially in the next 3-6 months?
  • Am I using my money to reflect my values and long-term goals?

Resist Lifestyle Inflation

Getting a raise or an unexpected bonus can tempt you to increase spending. Instead of upgrading your lifestyle immediately, focus on small financial wins and stick to a plan:

“Go back to your goals and vision. When you know you’re working towards something, you make decisions that align with your goals. Where do you want to be 3-6 months from now?”

  • Keep expenses steady and direct new income toward debt, savings, or investments.
  • Research major purchases beforehand (home, car, etc.) and prioritize wisely.
  • Celebrate milestones by acknowledging progress rather than overspending.

Smart Investment Strategies

For those looking to build wealth, investing extra income is a smart move:

  • Roth IRA: “A Roth IRA is great because it’s tax-free income. To prepare for the future, put away money right now that you don’t have to pay taxes on later.”
  • Brokerage Account: “A brokerage account allows flexibility, but you will have to pay capital gain taxes when withdrawing, which will need to be taken into consideration.”
  • Mutual Funds: “One great book I read—‘The Automatic Millionaire’—recommends owning what you consume and researching mutual funds for long-term growth.”

The Psychology of Money

Handling unexpected income is not just about numbers—it involves mindset. Money is simply a tool, and how you use it depends on your beliefs and behaviors. To stay disciplined:

“We often think discipline is a negative thing, but it’s really just about playing the long game. If we want lasting and sustainable change, we have to stay consistent and make financial decisions that align with our goals.”

  • Investigate your relationship with money.
  • Challenge limiting beliefs that may lead to poor financial decisions.
  • View discipline positively—it’s a tool for long-term success, not restriction.

Extra income presents an opportunity to improve financial security, but it requires intentional decision-making. By aligning money with goals, maintaining balance, and making strategic investments, you can turn short-term financial gains into long-term financial freedom. As Kionnie says, “Give your money direction. If you don’t, it’s going to get spent.”

Taking these steps can transform unexpected income from a fleeting bonus into a foundation for financial growth and stability.

You can follow Kionnie by visiting her LinkTree!

ABOUT THE AUTHOR

Jamie Oleka, Christ follower, wife, and mother, has extensive experience in K-12 and nonprofit management having most recently served as a Senior Fellow at Kentucky’s Council on Postsecondary Education. Jamie holds a Masters of Education in Instructional Accommodations from Francis Marion University, Masters of Arts in Teaching, and Ed.S. in K-12 Administration from the University of Louisville.