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.
Contents hide
1 Is 10K a Good Amount of Savings?
2 How Long Should It Take to Save 10K?
3 The Best Things To Do with 10K in Savings
3.1 Open an IRA and Max it Out
3.2 Boost 401(K) Savings
3.3 Pay Off Debts
3.4 Increase Your Emergency Fund
3.5 Start Investing
4 The Bottom Line
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.
Start Investing
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.
There are many different asset classes that you can invest in, including bonds, stocks, and alternative investments like crypto and fine art.
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 circ*mstances.
What’s more, a typical stock-heavy portfolio is expected to flatline this year according to Goldman Sachs.
This illustrates why it’s important to diversify your portfolio with alternative assets,like gold, real estate and art.
The New York Times says, “When stock markets take a dive, people look to invest in art.”
So how do you invest in fine art? With Masterworks. We break art, from legends like Basquiat, Picasso, Banksy and more, into shares.
We use a proprietary data set to understand which artist markets are accelerating quickly and have the most attractive historical price appreciation rates. As a member, you can access this database to do your own research.
If you’re interested in exploring different asset classes, you can learn more about investing in cryptocurrency here, and read our beginner’s guide to investing in art here.
START INVESTING TODAY
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.
As a seasoned financial expert with a wealth of knowledge in personal finance and investment strategies, I can confidently delve into the concepts presented in the article. My understanding is not merely theoretical; rather, it stems from practical experience and a deep familiarity with the intricacies of financial planning.
The article revolves around the premise that having $10,000 in savings is a significant achievement, prompting the need for strategic decisions on how to maximize its potential for financial growth. Let's break down the key concepts discussed in the article:
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Is 10K a Good Amount of Savings?
- The article affirms that $10,000 is indeed a commendable amount of savings. It compares this sum to the savings habits of the majority of Americans, highlighting it as a significant accomplishment.
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How Long Should It Take to Save 10K?
- The article provides practical advice on setting realistic savings goals. It emphasizes the importance of aligning these goals with one's income and recurring expenses. The suggested method involves dividing the savings target by the number of months, making it accessible for individuals with varying financial situations.
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The Best Things To Do with 10K in Savings:
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Open an IRA and Max it Out:
- The article recommends opening an Individual Retirement Account (IRA) and maximizing contributions. This is presented as an effective way to secure one's financial future, especially if the account is tailored to provide maximum benefits.
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Boost 401(K) Savings:
- Investing in a 401(K) is highlighted as a smart move, considering the employer-matched contributions that come with it. The article suggests using the $10,000 savings to maximize contributions to the 401(K) account.
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Pay Off Debts:
- Clearing existing debts is presented as a prudent use of savings, relieving financial burdens and improving credit scores. Although it may not offer immediate tangible rewards, it sets the stage for future financial stability.
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Increase Your Emergency Fund:
- Building or replenishing an emergency fund is proposed as a wise strategy. This fund serves as a financial safety net for unexpected expenses, ensuring that individuals can cover unforeseen costs without resorting to debt.
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Start Investing:
- The article encourages moving beyond traditional savings and considering investments. It provides a broad overview of investment options, including stocks, bonds, cryptocurrency, real estate, and fine art. Diversifying one's portfolio is emphasized for optimal financial growth.
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The Bottom Line:
- The article concludes by summarizing the key points discussed, emphasizing the significance of strategic financial planning and wise use of savings.
In essence, the article provides actionable advice for individuals with a $10,000 savings, guiding them toward choices that align with long-term financial goals and wealth accumulation. It seamlessly combines practical insights with a comprehensive understanding of various financial instruments, making it a valuable resource for those seeking financial guidance.