What Should I Do With 10K in Savings?
If you are good at saving money, then you will probably reach a point where you need to do something with the money that you have saved. Having $10,000 in savings is great, but might not be the best use of this money. Instead, there are ways that you can use this money to leverage financial growth. This is often the best way to use your savings.
But, when you actually have that money sitting in your bank account, waiting to be used, it can be difficult to know what to do with it. After all, this is a lot of money, and that alone can make investing it quite intimidating. So what should you do with 10K in savings? In this guide, we’ll be telling you some of the best things that you can do with this money. Keep on reading to find out.
Is 10K a Good Amount of Savings?
Yes, 10K is a good amount of savings to have. The majority of Americans have significantly less than this in savings, so if you have managed to achieve this, it is a big accomplishment. If you are someone who enjoys saving money, you should aim to achieve a 10K save as quickly as possible, even if this means saving aggressively.
How Long Should It Take to Save 10K?
When it comes to setting savings goals, it is important that you set them within your means. You shouldn’t be scraping by in life, just so you can save 10K quickly. That being said, if you are earning a steady, decent income you should be able to save $10,000 within a year or so. Take a look at recurring expenses that you have going out of your account, and see what income you have leftover from that.
If you want to save $10,000 within a year, you should simply divide this figure by 12. This means that if you can save $833 a month, you will be able to hit that savings goal in a year. But, if this is a bit of a stretch, then you should take a look at the disposable income that you have which you can save, and divide this into $10,000. The result from this calculation will be the number of months it will take you to reach 10K in savings.
The Best Things To Do with 10K in Savings
Now, if you have $10,000 in savings, you are likely wondering what you should do with it. With that in mind, let’s take a look at the best things that you can do with this money to ensure you get the most out of your hard-saved cash.
Open an IRA and Max it Out
One of the best things to do with your savings is to max out your IRA account. If you do not already have one of these accounts, then you can easily open one before maxing it out. Depending on the style of IRA that you opt for, you might even be able to open one online. Once it is opened, you should max out the account to ensure you have given the maximum contribution possible. However, even if you max out your IRA account, you will still have money from your 10K save left. So, let’s take a look at some of the other things that you can do with this money.
Boost 401(K) Savings
Alternatively, you can choose to invest your 10K save in your 401(K). The 401(K) is by far one of the best forms of investment because it is an employer-matched way of planning for your retirement. Every time that you invest in your 401(K), you get free money added on top because most employers match at least a small portion of the money invested. If you have $10,000 sitting in your savings account, this will be more than enough to max out your 401(K). So, this could be a great way to invest more of your savings to ensure you feel the full benefit in the future.
Pay Off Debts
This might seem like an obvious one, but if you have any debts that have been left unpaid, it would be a good idea to pay them off with the money that you have saved. While paying off debts can be a massive relief, it can also feel a bit like a kick in the teeth because you do not get to see the results of your hard-earned cash. But, having those debts taken off of your shoulders will be a massive relief, and it means that going forward, any money that you save will be yours. Paying off your debts will improve your credit score, so while this can seem like a bit of a let-down, using your 10K save to do this will help a lot in the long run.
Increase Your Emergency Fund
Another great way to use this money is to increase your emergency fund. If you haven’t already got an emergency fund, then you can use your 10K save to start one. An emergency fund is a pot of savings which you can dip into as and when needed. So, if your car needs some emergency repairs, or if you have to pay to replace your cell phone, you can use your emergency fund to do this. Your emergency fund essentially covers any outgoing payments that you might not have been prepared for. So, you can pay for these without going into any debt. Your emergency fund doesn’t have to have $10,000 in it, so if you have cash leftover after investing in one of the ways above, this could be a great way to use it.
Finally, you can invest the money that you have saved. This is the best option after you’re comfortable with the size of your emergency fund.
Bonds were once one of the most popular investments, but in recent years they have fallen in popularity. Instead, investing in alternatives and stocks and shares have become more popular.
Stocks held in a tax-advantaged account like your Roth IRA or 401k are a great way to earn interest without being taxed, but they aren’t very liquid, as there’s a penalty for withdrawing money before retirement in most circumstances.
The Bottom Line
In short, in this guide we have taken a look at what a 10K save is, how long it should take you to save this money, and, most importantly, what you should do with this money once you have saved. Hopefully, this gets you started on your journey towards saving and using your money wisely.