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Is $10,000 a lot of money? Well, it depends on who you ask!

To some people, $10,000 might seem like a lot of money, while others might see it as chump change. It really depends on your perspective. $10,000 is a lot of money for someone living paycheck to paycheck, while $10,000 isn’t a lot of money for a multi-millionaire.

What is important to remember is that $10,000 can go a long way for some people and not very far for others, depending on their current financial position and mindset.

So read on to learn how much $10,000 is relative to your own personal needs and expenses, as well as ways to make the most out of this lump sum.

Is $10,000 a Lot of Money? (+ 11 Tips on What to Do With It)

Is $10,000 a lot of money?

Given inflation, rising rent, and other costs, $10,000 won’t go as far as you think. While $10,000 is certainly a significant sum of money, for many people it doesn’t stretch very far. It generally covers 2 to 5 months of living expenses for a person with a lean budget, but it won’t last an entire year.

However, this doesn’t mean that $10,000 is worthless. If you are strategic about how you use it, $10,000 can give you a nice cushion in case of an emergency, help you pay off debt, or be invested in a way that earns interest over time.

Is 10k a lot to have saved?

Yes, it’s considered a real milestone to have $10,000 in savings. If you don’t need this money for immediate life expenses such as rent, groceries, bills, or debt, then you can feel confident that you are on the right track to financial security.

In 2019, the median bank account balance was $5,300, and in 2022, 61% of Americans were living paycheck to paycheck with no savings at all. So, if you have $10,000 in savings, you are doing better than most people.

This amount of money will get you about a quarter or a third of the way towards covering a year’s worth of living expenses if you’re smart about it. But if you have a higher cost of living, this may only be enough to cover a month or two.

It’s important to note that money depreciates over time, so if you save your money in an account that doesn’t bear interest, you’re actually losing money. In order to make the most of your $10,000, you should invest it in a way that will grow over time.

a woman writing on her notebook if $10000 a lot of money

Is winning $10,000 a lot of money?

If you suddenly have an extra $10,000, this is certainly a large increase to your bank balance. Since this wasn’t money you already accounted for in your earnings, it could be a windfall that opens up all sorts of possibilities.

You might be wondering if you should immediately spend this money or save it. The answer, as with most things in life, is somewhere in the middle. You don’t want to fritter away your good fortune, but you also don’t want to hoard it and miss out on opportunities.

You’ll need to assess your current life situation to know what’s best to use this unexpected amount for. If you financially have your head above water, you might want to consider using this money to invest in your future. But if you’re behind with bills or debt, it may be best to use this money to catch up and get yourself back on track.

Keep in mind: No matter what your situation is, $10,000 can have a big impact. It’s important to think carefully about how you want to use it before making any decisions. And if you’re not sure what to do, there are always financial advisors who can help you figure out the best way to make use of this money.

What should I do with $10,000?

It can be helpful to brainstorm all the possible ways to use $10,000 to make sure you make the best decision for your needs. So here are some good options that can help you make the most of this lump sum:

1. Use it to pay off high-interest debt

If you have debt with a high-interest rate, such as credit card debt, paying this off should be your top priority. Not only will this free up more of your monthly income to save or spend on other things, but it will also save you money in the long run by reducing the amount of interest you’re paying.

Lower-interest debt such as student loans or a mortgage can also be paid off with this money, but you may want to consider other options first if you think you can grow the $10,000 even more by investing it.

Related: 15 Incredible Debt Snowball Worksheets to Get Out of Debt

2. Invest in a solid emergency fund

If you’re debt-free but don’t have any money in savings, an emergency fund is a good place to start. It’s important to have an emergency fund to cover unexpected expenses so you don’t have to put them on a credit card and rack up debt.

A good rule of thumb is to have enough saved to cover three to six months of living expenses. So, if your monthly expenses are $2000, you would want to have $6000-$12000 set aside in an emergency fund.

Put your emergency fund in a high-yield savings account so you can earn interest on your money while it’s waiting to be used. These types of accounts are easy to pull your money out from when an unexpected expense comes up.

My top pick for this is easily CIT Bank, especially as it’s got high interest rates and no fees!

cit logo

CIT Bank – Money Market Account

Our pick: Best high interest savings account

Why? Well, because it’s got:

  • 1.00% interest (over 11 times higher than the national average)
  • No fees and only a $100 minimum deposit
  • FDIC insured, meaning your money’s safe

3. Invest in yourself with education or training

If you want to take your expertise to the next level so that you can make more money, learning a new skill can be a great investment. Whether it’s taking an online course, getting a certificate, or going back to school for a higher degree, using this money to invest in yourself can pay off in the long run.

Not only will you be able to command a higher salary with new skills or credentials, but you’ll also have a better chance of getting promoted or landing a new job.

Just make sure that you’re strategic about the education or training you’re getting. Choose a skill set that’s proven to be valuable in your career or the field you’re trying to get into. And make sure it’s something you’re interested in so that you’ll stick with it and see it through to the end.

a woman making her budget plan to know if $10000 a lot of money

4. Use it for a big purchase

If you want to buy a house or a new car, this could be the perfect opportunity to save up for a down payment. It could be used for a chunk of the cost of a home, or even cover the entire cost of a used car.

You can use it for other major expenses such as medical bills not covered by insurance, wedding costs, or a once-in-a-lifetime trip.

You may also be interested in: 15 Best Things to Do With $50k in Cash (to Grow Your Wealth)

5. Invest in a side hustle or business venture

If you want to multiply your $10,000, investing it in a business venture can be a great way to do that. Whether you’re starting your own business or investing in someone else’s, this money can give you a head start.

You can get an extremely high return on your money through this method, but there’s also a high risk involved. So make sure you do your research and understand the risks before investing any money in a business venture.

That doesn’t mean you shouldn’t do it though as it can be the perfect solution if you don’t want to work anymore!

6. Invest the money in a retirement account

When we invest in retirement accounts, we let our money work for us and accumulate over time. This is one of the smartest things we can do with our money since it’s something we’ll all need eventually.

The sooner you start investing, the more time your money has to grow. And if you’re already contributing to a retirement account, this $10,000 can help you reach your goals even faster. If not, this is the perfect time to start an account such as a ROTH IRA or 401k.

A safe bet is to invest the money in low-risk mutual funds that don’t need to be actively managed. Mutual funds such as the S&P 500 return an average of seven to eight percent per year, which is a great return on investment and purely passive income.

a virtual assistant making a computation if $10000 a lot of money

7. Invest the money in an HSA account

Another great option for those with high-deductible health plans is to invest in a Health Savings Account, or HSA. An HSA is a tax-advantaged account that can be used to cover medical expenses not reimbursed by your insurance.

Not only will you get a tax deduction when you contribute to the account, but the money in the account can grow tax-free. And when you use the money to pay for healthcare expenses, you don’t have to pay taxes on it either.

If you’re healthy and don’t anticipate having many medical bills, you can let the money in the account grow and use it as a retirement fund.

Related: Can I Retire at 60 With $500k?

8. Start a CD Ladder

A CD ladder is a way to invest your money in multiple certificates of deposit. You break your money up into different CD investments, with each one having a different maturity date. This way, you have a CD that’s maturing every few months, which helps you keep your money invested and earning interest without being locked up too long.

You can also take your money out of the CDs whenever you want without penalty, although you will lose the accrued interest if you do so. This can be a great option for those who don’t want to be tied down to a long-term investment but want to earn interest.

Find out more about: 30 Day Challenge Ideas to Improve Your Life in One Month

9. Repair or improve your home

If you want to increase the value of your real estate while making it more enjoyable to live in, using the money to repair or improve your home is a great option. You can do anything from fixing up the landscaping to adding a new bathroom or kitchen.

You can also use the money to make energy-efficient improvements that will save you money on your utility bills each month. And if you ever decide to sell your home, these improvements can help you get a higher price.

10. Take a sabbatical

If you’re overworked and stressed out, taking a sabbatical can be a great way to use your $10,000. This is an extended break from work, usually lasting several months.

During your sabbatical, you can travel, volunteer, or just take some time to relax and rejuvenate. It’s important to unplug from work during this time and really focus on taking care of yourself.

FYI: A sabbatical can be a great way to recharge your batteries and come back to work refreshed and with a new perspective. It’s also an opportunity to explore other interests and passions you may have.

11. Donate to a worthy cause

Sometimes sharing our good fortune with others can be its own reward. If you have a cause that’s close to your heart, donating a part of your $10,000 can make a big difference.

And if you itemize deductions on your taxes, you can deduct the donation from your taxable income. So, not only will you be helping out a worthy cause, but you’ll also get a tax break.


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About the author

Anna is the founder of LogicalDollar and a personal finance expert, having been seen in Forbes, HuffPost, Reader’s Digest, MSN Money, Yahoo! Finance, CreditCards.com and many more. She’s committed to helping others get on the path to financial freedom using the experience gained from turning $60,000 in debt into a thriving investment portfolio. Find out more.