7 Smart Things To Do With $10,000

By Zach Buchenau

Last Updated: October 11, 2021

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Wondering what to do with $10,000?

If you’re not used to having a large pile of extra cash lying around, it can be challenging to know how to use it wisely.

I mean, should you save it, spend it, or invest it?

This article offers 7 smart ideas to help you make an informed decision about what to do with $10,000. While everyone’s financial situation is different, being intentional with your money will keep you on track toward your financial goals.

No matter how you’ve earned or received your money, hopefully, these ideas will help you avoid any financial regrets.

1. Put It Into An Emergency Fund

It may not sound very exciting, but one of the best things you can do with a large sum of money is to put it into an emergency savings account.

If you haven’t yet started an emergency fund, now is the time to do it!

Unexpected expenses happen, and when they do, you’ll want to be fully prepared.

According to a study by Bankrate, only 39% of Americans could afford a $1,000 emergency.

This is a problem, because when it comes to accidents and emergencies, the question isn’t if they’ll happen, it’s when.

So, the best way to deal with these emergencies is to financially prepare for them ahead of time.

How much money should you have in your emergency fund? We recommend setting aside enough money to cover a minimum of three to six months of your expenses. That way, if you were to lose your primary source of income or experience an emergency, you’d be able to support yourself for a while.

To determine how much money you should have in your emergency fund, review your monthly expenses and multiply it by either 3 (for a bare-minimum emergency fund) or 6 (for a more substantial emergency fund).

Consider how much it costs to pay your rent and all necessary bills each month. If you’re still having trouble coming up with a target amount, use an online emergency fund calculator to get an estimate.

Unless your emergency savings account is fully funded, it’s the first place you should consider putting your $10,000 (or at least a portion of it).

7 smart things to do with $10,000 | Be The Budget

2. Use It To Pay Off Debt

Another responsible thing to do with your money is to use it to pay off any debts you’re carrying.

Debt is like cancer to your financial health – the longer you go without addressing it, the more havoc it will wreak.

If you have any debt from student loans, credit cards, or car loans, you shouldn’t even be asking yourself what to do with $10,000. The smartest thing you can do to improve your financial situation is to pay off all your debt as quickly as possible.

Loans typically come with astronomical interest rates, making them extraordinarily difficult to pay off. Over time, you’ll probably end up owing much more money than you initially borrowed.

The best way to deal with debt is to put all of your resources toward getting rid of it.

So, if you’ve saved up, gotten a work bonus, or received a financial gift, use it to get yourself out of this tough financial spot.

While it may be tempting to use the money for something more glamorous and fun, paying off your debt will get you one step closer to financial freedom.

We live in a culture of instant gratification, so it can be difficult to deny yourself when you finally have the cash to pay for something you want. But the truth is, the more discipline you exercise in the here and now, the brighter (and easier) your financial future will be.

Want to maximize your income and improve your financial situation? If so, check out a few of our other posts:

3. Invest It For Retirement

Continuing on with the theme of investing in your future, another great thing to do with $10,000 is to put your money toward retirement savings!

Many people don’t think about retirement until it’s too late.

But if you don’t want to be working for the rest of your life, now is the best time to start planning for your retirement.

The earlier you start, the sooner you’ll be able to retire and the more spending power you’ll have in your golden years.

Make sure you’re taking full advantage of your company’s 401k match if they offer one. Then, after maxing out your employer match, consider investing some of your ten grand in a Roth IRA.

If you haven’t yet started saving for retirement, this initial contribution could be just what you need to get started. It may even motivate you to continue prioritizing retirement savings from now on.

Or, if you’re already in the habit of saving money for the future, sizeable contributions such as this could help get you on a path toward early retirement.

It takes a lot of discipline to put off spending your money until later in life, but unless you do, there’s no guarantee you’ll be able to support yourself as you get older.

It’s important to have a plan for your future and to set yourself up for success. If you don’t have your own financial back, who will?

4. Put It Toward A Down Payment On A House

Perhaps you’re at a stage in life when you’d like to be able to buy a house, but up until now, you haven’t been able to save enough. Well, if you’re wondering what to do with $10,000, it’s a great idea to put it toward a future down payment on a house.

Saving for a down payment takes most people quite a long time. But, if you have an extra ten grand, you can get one big step closer to making that dream a reality.

Of course, setting aside money one time probably isn’t going to cover an entire down payment.

But if you allow these initial savings to be a springboard for continual saving over time, you’ll create momentum toward your goal.

To increase your likelihood of continuing to save for a house, do some research on the area you’d like to live.

Find out how much houses are selling for, so you can get a better idea of how much money you’ll need to save for a down payment. This will make your financial goal more concrete, and you’ll be more likely to stick with it long-term.

5. Use It To Start A Business

Starting a business is one of the best ways to earn more money from the money you already have.

And in case you think you need a degree in business to start your own entrepreneurial venture, think again.

These days, it’s easier than ever for just about anyone to start a business.

With access to so much free information on the internet, there are so many ways to create a profitable business from scratch.

Depending on what kind of business you want to start, you may run into some start-up costs.

After all, most businesses require at least some initial investment.

You may need to pay for things like legal fees to establish your business, software, equipment, materials, or contract work.

With the help of your $10,000, you can bring your business idea to life!

Even if you’re working a full-time job, a side gig can provide a new source of income and fulfillment.

There are so many types of businesses you can start. If you’re not sure what to sell, take stock of your existing skills, talents, and interests. Or, think about a current struggle or frustration in your own life that you’d like to solve.

For example, Sara Blakely founded her company, Spanx, after being unsatisfied with traditional pantihose. She used $5,000 to fund the initial research and development of her product, and her business is now worth one billion dollars!

You don’t have to be the next Spanx founder, but Blakely’s story goes to show that you don’t need to have much to start an enormously successful business.

6. Add It To A College Fund

Do you have children you’d like to put through college one day? Or do you have dreams of getting a college education for yourself?

It’s no secret that college tuition is expensive.

Plus, when you factor in the cost of student housing, textbooks, and other living expenses, the total cost ends up being enormous.

Many people opt to take out huge student loans to be able to afford their schools of choice, tying them to a post-college future plagued by debt.

For this reason, putting your money into a college fund for yourself or for your children is one of the most responsible things you can do.

You may want to talk to a financial advisor about setting up an education-specific savings account.

Certain education savings accounts have restrictions that only allow funds to be used for higher education. So, be sure you have a good understanding of your education fund of choice before you start contributing to it.

Paying for college is one of the best gifts you can give to yourself or to a loved one.

7. Put It Into Other Sinking Funds

If, after reading through this list, you’re still not sure what to do with $10,000, you might consider putting the money into funds for long-term purchases.

Sinking funds are essentially savings funds meant for a specific purpose that allow you to put aside a little money each month so you can use it at a later date.

By saving ahead of time for anticipated expenses or purchases, you won’t put as big of a dent in your wallet when it comes time to pay for them.

Instead of adding a line in your budget for those expenses when they roll around, you’ll be able to consistently save for them ahead of time.

Here are a few examples of sinking funds that you could start contributing toward:

  • Future vacations and travel
  • Car maintenance
  • Christmas gifts
  • Dining out
  • Any subscriptions you renew annually
  • New appliances, furniture, and home improvement projects
  • Cost of kids’ activities and programs
  • Phones, computers, and technology

Sinking funds create more financial freedom and peace because they help eliminate spending surprises in your life.

They help you gain even more control over your finances, so you always have enough money for what’s coming around the corner.

For instance, instead of stressing out about whether or not you can afford to go on vacation, you’ll already know exactly how much you have to spend on your getaway.

Sinking funds are a great way to develop a sense of peace and stability in your relationship with money.

Final Thoughts

As you may be able to tell, the smartest ways to use $10,000 all involve setting you up for a stress-free financial future.

With some strategic thinking and discipline, you can be sure to make a wise decision about what to do with your extra cash.

Even though it may be tempting to blow your $10,000 on a vacation, a luxury item, or something that will give you a hit of instant gratification, do your best to prioritize your financial future over your urge to spend.

Remember, it’s not every day that you have an extra $10K lying around.

So, use it wisely.

You’ll be really glad you did!

Zach Buchenau

About The Author:

Zach Buchenau is a self-proclaimed personal finance nerd. When he isn't writing about budgeting, getting out of debt, making extra money, and living a frugal life, you can find him building furniture, fly fishing, or developing websites. He is the co-founder of BeTheBudget, and Chipotle's most loyal customer.

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