As I look back over my financial journey, one of the early, and most memorable goals I can remember achieving, was the day I reached $10,000 in savings. And while it was a fairly rewarding milestone to conquer, to be honest, after all the hard work it took to achieve the goal, I found it to be a little anticlimactic. Honestly, it caused me to ask the same question that likely led you to this article in the first place: is $10,000 a lot of money?
Put simply, $10K is not typically considered a lot of money. In fact, for many Americans, that isn’t even enough to cover their living expenses for 3 months. Rather, according to our research, the value at which most people consider to be “a lot of money” sits between $500K and $2.5 Million.
Now, I realize that’s a wide range, but let’s be honest, the answer is pretty subjective. I mean, if your monthly expenses are only $2,000, then your definition of wealth is probably a lot different than somebody with $10,000 of monthly expenses.
It really just depends on your lifestyle, and your ability to stretch a dollar.
Is $10K A Lot To Have Saved?
Ok, so we’ve established that $10K might not be considered “a lot” of money, but that doesn’t make the money any less valuable. I mean, if you want to build wealth in your lifetime, you have to start somewhere — and with $10,000, you’re well on your way.
So, before we go any further, I just want to make sure you don’t discount all your effort to save that first five figures. Seriously, keep up the good work! You’re kickin’ butt!
In fact, I’d like to address the original question from a slightly different point of view. Rather than wondering if $10K is a lot of money, let’s ask the question, is $10K a lot to have saved?
For some people, $10,000 could be considered a lot to have saved. Since most experts recommend maintaining 3 to 6 months of emergency savings, if your monthly living expenses sit somewhere between $1,667 and $3,334, then $10,000 should be enough (or more than enough) to cover you.
Truthfully, I think that is a much better way to look at it.
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5 Best Things To Do With $10,000
Ok, now that we’ve addressed the previous questions, let’s get to the more important stuff. And that’s, what to do with the $10,000 you have saved.
I mean, what’s the point of working really hard to save all that money if you don’t have any idea what to do with it?
With that in mind, for the rest of this article, I’m going to cover 5 of the best, most important, things you can do with that $10,000 you have sitting in your savings account.
1. Use It As An Emergency Fund
Chances are, if you’ve made saving money a priority in your life, you’ve probably heard the phrase “emergency fund”, or “rainy day fund”, thrown around a time or two. And if you have $10,000 sitting in your savings account, then one of the best things you can do is use it to protect yourself from financial emergencies.
I always say that the only thing predictable about life, is that it is going to be unpredictable. And that phrase applies particularly well to personal finance.
In other words, at some point, you are going to get hit with an unexpected emergency expense, and if you haven’t properly prepared for it, you could end up in a really tough financial situation.
Here’s the thing, while you might not be able to predict emergency expenses, you can prepare for them. So, if you have yet to set up an emergency fund, then I highly recommend you open a new savings account, move your $10,000 into it, and let it sit there until that inevitable “emergency expense” comes along. Because, trust me, it will come.
Whether it comes in the form of your furnace dying in the middle of winter, your car suddenly breaking down, or an unexpected medical bill, the more prepared you are for the unexpected, the better off you’ll be in the future.
By the way, if you decide to use your $10,000 to set up an emergency fund, be sure to check out our resources page for our top savings account recommendations. We have a lot of experience in saving, and we’ve compiled a list of our absolute favorites!
2. Use It To Pay Off Debt
If this is your first time visiting Be The Budget, then you should know that we are strong advocates for living a debt-free life.
You see, whenever you owe people money — whether it’s a car payment, a credit card balance, or student loans — you restrict your financial margin, and thus, your financial freedom.
So, if you have some debt that’s restricting your financial life, then using your $10,000 to pay a portion, or all of it, off is another great option.
While it might not be the most fun way to use the money, it can’t tell you how wonderful it is to live a life without debt. In my personal experience, it’s stress-relieving, financially-freeing, and one of the best ways to improve your financial future.
3. Invest It
If you’ve already set up an emergency fund, and you don’t have any debt to worry about, then the next best thing you can do with your $10,000 is to invest it. And, honestly, the easiest way to do that is to put it into a retirement account.
If you have a retirement account set up through your employer, you could put the money in there. If not, we recommend setting up a ROTH IRA, maxing it out, and then investing the leftover money into mutual funds with a long, proven track record, and/or index funds.
To put this into perspective, if you invest $10,000 and let it sit in a mutual fund that earns an average of 10% each year for the next 40 years, it will grow to over $450,000. Compound interest is a powerful thing, which is why investing your $10K is such a great idea.
4. Use It To Start A Business
I’ll admit, one of my all-time favorite subjects to discuss is entrepreneurship. I mean, of all the things that fire me up, and get me out of bed in the morning, starting a business sits at the top of that list.
In fact, that’s one of the main reasons I started this blog.
So, if you have $10,000 and a desire to start your own business, then I say go for it! I mean, we only get one life, and we can either spend it dreaming about the things we want to achieve, or actually taking action, and chasing after them.
All that said, if you want to start a successful business, be sure to use your money very carefully. After all, if your goal is to make money, then the last thing you should do is spend every dime you have saved.
Here at Be The Budget, we believe that giving is one of the most important aspects of personal finance.
You see, when you make an effort to give, whether that’s tithing to your local church, or just giving to someone in your community that could use a little help, it keeps your financial life in perspective. In other words, instead of money becoming your idol, giving helps you view money as a tool that can be used for all sorts of good in your own life, as well as the lives of people around you.
While $10,000 might not be considered a lot of money, it can still have a significant impact on your financial life.
From protecting you from emergency expenses to beginning to building wealth, and even starting your own business, there are all sorts of things you can do with that amount of money.
So, what would you consider to be a lot of money? Also, given the choices in this article, what would you do with $10,000? Be sure to comment below!
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