If extra money comes your way, what can you do with it?

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There might be times in life when you find yourself with a little more money. Perhaps you’ve had a pay rise at work, got a tax refund, been gifted some money, or received an inheritance. But what can you do with that money to potentially make it work harder for you? We explore some of your options. 

1. Think about paying into your pension plan

Have you been underestimating how much money you might need in retirement? According to the Retirement Living Standards, from the Pensions and Lifetime Savings Association, a single person could need £31,700 per year for a ‘moderate’ standard of living. So if extra money has come your way, you could consider putting it into your pension plan. Just remember, a pension is an investment. Its value can go down as well as up and you could get back less than was paid in. 

If you’re paying into a pension plan that your employer set up, they’ll usually pay in too. They might even match what you’re putting in up to a certain amount. So it’s worth checking with them to see what’s possible. 

If you’re a Standard Life customer and you want to pay in a lump sum or change your monthly payments, you can usually do this online or on our app. If your employer set up your Standard Life plan, check with them to see how it works.

2. Set up or add to an existing emergency fund

Sometimes tough situations or unexpected costs (think: things like vet bills or car repairs) crop up. An emergency fund can help you prepare for some of life’s curveballs.

Not saving into an emergency fund yet? To start one, it’s might be a good idea to put money in a place you can access quickly, like an instant or easy-access savings account. You can earn interest on these accounts, too. 

It's often recommended that people have between three to six months’ essential outgoings in their emergency fund. So if your essentials cost you £800, you might want to work your way up to saving at least £2,400 into your emergency fund. But that’s just a suggestion. Even saving a little bit of money regularly could help give you some peace of mind.

3. Consider opening an ISA

You could think about opening an Individual Savings Account (ISA) for some of your financial goals.

There are different types of ISA. With Cash ISAs, you could earn some interest on the money you save. 

With some types of ISA, like Stocks & Shares ISAs, your money is invested, so you could achieve investment growth over time. But remember, the value of investments can go down as well as up. 

There are also Lifetime ISAs, designed to help you save either for your first home or retirement. Your money can be held in cash, investments, or a mixture, and the government adds a bonus. 

The government’s website has information about ISAs and LISAs, and the rules around them. Or you can check out the table in our article.

4. Explore other ways of saving or investing

There are other ways of saving besides what we’ve already talked about – you can check MoneyHelper for information on different types of savings accounts. And if you’re saving for children or grandchildren, you could look into some savings options for kids.

Are you particularly interested in investing? You can read our article Thinking about investing? Here are a few things to consider. This explains more about picking your investment platform and how to choose investments.

One more thing...

These were just some suggestions; there may be other things you’re keen to do with your money, like treat yourself to something or tackle some debt. 

Remember, you can get free impartial money guidance from MoneyHelper. If you’re not sure what to do with extra money – particularly if it’s a lot – it could be worth getting financial advice from a financial adviser. MoneyHelper has information about finding an adviser.

Don’t forget, if money’s come your way, there could be tax implications. If it counts as ‘income’, you might find yourself pushed into a higher income tax band. Or if you’re gifting money to other people, it’s worth checking whether or not Inheritance Tax could be involved in future.

 

The information here is based on our understanding in June 2025 and shouldn’t be taken as financial advice.

A pension and some types of ISAs are investments. Their value can go down as well as up and could be worth less than was paid in.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.

Standard Life accepts no responsibility for information in external websites. These are provided for general information.