Have you ever thought about what you would do if you suddenly had a $10,000 windfall? Perhaps a relative left you a portion of their estate, or maybe you win the lottery (which I wouldn’t recommend playing by the way), or you have an anonymous check show up in your mailbox with no explanation. What would you do with the money? Put it toward a brand new car? Start hunting for a bigger house? Buy a boat? Perhaps you’ve been wanting to fund the future education of your child, so you put it into a 529 fund. Whatever your thoughts, take a second and write down what your $10,000 would do for you.
Your Financial Maturity
Did you write down what you would buy with the $10,000 yet? If not, at least get an idea of what you would do with it in your head, and be honest with yourself. If you just want to host a massive party, then write that down.
Many of us don’t ever think about the what ifs of life. We just figure that we’ll never have any extra money, so why would we waste our time dreaming about what we could have when that check is truly never coming in the mail? This lack of preparation becomes mighty dangerous if we do ever come across some extra money though – even if it’s only $100. So let’s discuss what you would do with your $10,000 if it landed in your lap.
A Trip to Vegas/Throw a Party = 0
On a scale from 0 to 10 (zero meaning financially mature and ten being very financially mature), taking an immediate trip to Vegas with the intent of blowing it all at the casino, shows, and hotel expenses is incredibly irresponsible and quite selfish. Sure, it would be pretty fun, but is a week of entertainment really worth it? If you spent your money in this manner, chances are that you will regret it years from now.
A Brand New Car (or boat) = 2
Many people would use the $10,000 to buy themselves a brand new car. Of course, $10k would buy them the whole car, but it might cover 1/3 of it, which would allow them to afford the remaining payments. So yes, you would feel important in this car and it might feed your ego for a while, but in the long run you have purchased a depreciating asset and will lose much of your “investment” in the first four years of ownership. This decision would receive a 2 on our “Financial Maturity Scale”.
A Brand New Kitchen = 4
Some of you have a kitchen from the 1980’s and would really like some updated appliances and cupboards. $10,000 won’t get you everything you want, but it’s a start. I consider this usage of the money to be in the lower-mid range of our scale because the renovation will allow you to fetch a higher dollar amount when you sell your house, but until you put your house on the market it will not produce any money for you and that money is gone forever. You can’t exactly return your cupboards once they’re installed.
Earn 1% In Your Savings Account = 6
Others may be completely uncertain of what to do with the cash. Afraid of making a financial mistake, they just stick the $10,000 in the bank account to earn 1% interest. This move certainly isn’t going to make you rich (in fact, you’d be falling behind when considering inflation), but at least your money is liquid in the event you need it and it is earning a little bit besides. Financial wisdom rank? 6.
Putting It Into a 401k/529 fund = 8
Investing your money for the future is a fantastic idea and receives an 8 on the wisdom scale. Instead of earning a measly 1% in your savings account, you will likely receive 8% or more each year until you pull the money out for retirement. The only downside is that you can’t change you mind after doing this since you will be penalized for any withdrawal you make before the age of 59 1/2.
Investing in Property, Real Estate, or Your Own Business = 10
The wealthy love to talk about their business ventures, house rentals, and land leases. They can freely move their money around without penalty and the potential earnings amount is limitless. If you intend to use your $10,000 in this way, then you are well on your way to becoming a very wealthy individual.
Earn the Money and Spend It Wisely
Many of you might still be arguing with me in your mind because you will never inherit that $10,000. However, I would challenge you to think in reverse. If your mindset is a zero or a two on our scale, then it is quite obvious that you will never earn your way to that $10,000, no matter how much money you bring home from your job. However, if you have the mentality of the wealthy and continually invest your additional money (in small increments at a time), then your wealth will eventually grow that $10,000 mark and will continually skyrocket as you keep investing! Learn to think like the rich and you will grow rich yourself.
What would you do with your $10,000?
9 thoughts on “What Would You Do If You Had $10,000?”
We had a windfall on the order of $10,000 just a few months ago. I guess we would be a 6 on your scale but not a 10 – we have earmarked the money for a down payment on our first home, but for now it’s sitting in a savings account. We are moving in a few months, and if we move to the city we want to live in long-term we’ll keep the money in savings and add to it until we have our down payment, but if we move to another city we’ll likely invest it for the short-term until we move to our desired city. Blowing the money never entered our brains because we want to honor the relative who gave it to us by using it for something he would approve of. We have other money saved that we intend to blow. 🙂
Thanks for the comment Emily! First of all, congrats on the windfall. Secondly, a home purchase is definitely not a bad idea for a place to put the money. Just be sure not to overspend on the house. Ideally, you want your monthly payment to be low and last for only 15 years or less. Cash flow is important to invest in your future. Best of luck!
Where would you rank using that $10k to immediately pay off debt, especially if it is high-interest? I would expect that many individuals would like to make a dent in their student loan payments. Sure, the money will be effectively gone and won’t be available to invest and accumulate interest from savings, but it would save you a significant amount over the long term if that $10k was used to pay off part of a principal balance.
I would give you a 7 on that one Chase. I am a big fan of getting rid of your debts, just as long as you vow to never take on that debt ever again. Instead, use your future windfalls for passive investments!
A Trip to Vegas/Throw a Party = 0 (zero meaning financially mature)….?!
I assume you mean “zero meaning financially IMmature” right?
Updated to clarify (zero meaning financially mature and ten being very financially mature)
Hi – I would agree with you, Typopolice. A zero is very IMmature. Thanks!
So, I’m about to get around $10,000 from an inheritance, I live a paycheck to paycheck life currently, so I want to be smart and get myself out of this rut. Thus why I landed on your article in my search for advice and ideas of how to essentially, not blow it. So far my boss and friends who have at least slightly more money than I, have recommended savings accounts or 401k. My boyfriend wants me to get a car, as we don’t have one and have to rely on walking or riding the bus everywhere. The bus is time consuming as it takes me around 45-1hr to get to and from work, but cars are expensive and the money would be gone.
If I’m understanding right, it sounds like you would suggest an investment in realty. Mostly I’ve been seeing that a lot in my research so far. The problem is, how would I even go about that. I currently rent a crappy apartment, one of my brother’s is using his to make a down payment on a house and one is using his to start up a moving business. The third brother will probably blow it. So, how do I become the piggy with the brick house I guess is what I’m asking…
Great question CandC! The very fact that you’re thinking this hard about what to do with the money shows that you are more financially mature than most. So congrats! The first question I would ask yourself is, “Why do I live paycheck to paycheck?” Is it because you have excessive debt and are making payments each month? Or is it because you have a low-level education and cannot land a job with a higher income (no offense here – I’m just trying to get to the root cause of your paycheck to paycheck lifestyle).
If you have debt payments that are weighing you down, then perhaps it would be wise to pay down some of that, which would therefore reduce your monthly payments, and then allow you to save a bit of your money each month.
If you simply aren’t making enough money, then perhaps it would be wise to advance your education. Put the money into a high-yielding credit union checking account (I currently earn 3% on my checking account each year), and then remove the amount you need for each semester at your local community college. There are many two-year degrees that can land you a nice paying job.
If you are concerned about retirement, then yes, perhaps a 401(k) is the way to go. After 14 years or so, your $10,000 will likely turn into $40,000 (and then even more if you leave it in longer).
There are many options here (obviously). I would love to hear your returning thoughts!
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