Smart Things You Can Do When You Have $10K Saved

Building a thriving savings fund is a goal that many Americans today share. Whether it be through investments or a dedicated savings account you set aside to manage emergencies and other surprises, building a savings reserve that cracks the $10,000 mark is a common goal. Saving $10K stands as a serious milestone on the way to increasingly potent financial security. While it takes a good deal of sweat equity and planning to execute a saving strategy that culminates in this achievement, it's also something many people can and have done over a relatively friendly timeline.

But what happens when you reach this financial mountaintop? Savings goals don't just evaporate once you hit your milestones and so anyone serious about saving for their future should continue to pursue the next goal. Be it $20,000 or even something loftier like $100,000, setting future goals — including intermediate milestones — is an all-important next step. But basic savings aren't the only thing you should be toiling against after amassing this war chest of cash reserves. Here, we take a look at five smart things you can do with your money once you reach this level of both financial stability and savings prowess.

Consider a CD ladder strategy

Many savers who have built an emergency fund or routine savings to support undefined spending plans may have simply utilized their savings account to achieve this breakthrough figure. If you're simply parking money in a savings account, the next step you might consider taking is a CD ladder. CDs, or a certificate of deposit, are common savings products offered by banks. In practice, CDs function quite a bit like bonds in that you'll deposit money with the bank for a set period of time in exchange for an agreed-upon interest rate. Both figures are fixed, meaning you're guaranteed that interest rate throughout the duration of the CD's life span, but you can't touch the money until its term expires.

The $10,000 you painstakingly saved may be enough to support a few months worth of expenses, meaning that it serves primarily as an emergency fund and must stay at least semi-liquid to cover unexpected costs. Laddering CD investments provides this happy medium. Instead of depositing all of your money in a single CD, this strategy sees savers purchase multiple CDs with differing end dates or splitting investments of the same term into multiple buys throughout the year. This way, CD maturity happens on a rolling calendar, allowing you access to portions of your money at numerous windows. CDs typically provide higher interest rates than a standard savings account. With a CD laddering strategy, you can take advantage of CD rates without relinquishing total access to your funds.

Pay off your high-interest debt

No matter how you've saved your money, there's a good chance that high-interest debt costs more than you're making every month in growth, dividend payouts, or interest. For example, the more than 20% interest rate you're paying on revolving credit card balances and perhaps even personal loans casts a long shadow over the positive infusion you receive from savings accounts, CD investments, and anywhere else. If you're still carrying a sizable amount of credit card debt, personal loans, or any type of other lending products that might be characterized by a high-interest rate, tackling at least some of this repayment obligation is a quality step at this point.

Getting serious about debt management is something that everyone should prioritize, but with a sizable savings account, this goal becomes infinitely more actionable. Every dollar you can direct toward your ultimate payoff stems the tide of poisonous interest rates that prolong your financial suffering. With a solid savings account behind you, you can start to pay off more each month in lieu of ongoing saving contributions for the time being. Alternatively, you might direct a lump sum of capital toward one of your loan accounts in order to reduce or eliminate it and the interest rate it brings to bear on your long-term finances.

Focus on your retirement savings

For those who have already tackled high-interest debt or have their payoff strategy firmly under control, new opportunities for exponential financial growth start to flourish. Some financial experts consider retirement savings to be one of the highest priorities among a person's monthly expenses, advocating for a commitment to at least some retirement investing at all times, regardless of your other obligations and goals. Others like Dave Ramsey suggest that building an emergency fund and paying off credit card and other high-interest debt should precede a serious investment in one's retirement savings.

Regardless of whether you have been saving for the future already or not, once you reach $10K in savings, a shift in focus is likely in order. Increased contributions toward your retirement account can make for a fantastic new balance in your long-term financial planning. The max you can contribute to a Roth IRA is $7,000 in 2024 (if you're under 50), the same figure stands for a traditional IRA while 401(k) contributions are capped at $23,000 for those younger than 50. Striving to max out whatever savings vehicles you employ might be a fantastic new goal for anyone who has achieved this level of personal savings. With $10,000 in the bank, you have the freedom to worry far less about routine spending emergencies or sudden changes in financial circumstance. Now's the time to get serious about your future.

Wade into the stock market

If you haven't already started investing in the stock market, once you've built a sizable savings (i.e., $10,000), there's no reason to continue waiting. The stock market is filled with a seemingly endless variety of individual company stocks and an equally impressive volume of index funds, exchange-traded funds, REITs, and other market assets.

Unlike a savings account, which yields the national average (0.57% APY as of March 2024), the stock market averages roughly 10% in growth annually. Adjusted for inflation, even a conservative investment in the market is likely to yield an annualized return of around 7%, truly dwarfing even the most favorable interest rates on standard savings accounts. The stock market is a place where you can create your own destiny. This is a space that requires research, strategy, and the ability to hold your nerve.

Yet, for those who are committed to developing a quality investment approach, the results can be transformative. Unfortunately, there's no single correct way to invest in stocks, and a multiplicity of factors contribute to the market's bull or bear trading cycles that provide their own unique challenges to investors. But at the end of the day, if you want to grow your wealth, the stock market is perhaps the best place for most investors to congregate.

Open a college savings plan for your children

Another valuable approach to money management after you've reached the $10,000 savings mark involves planning for someone else's future. A college savings plan like a 529 plan can help you set aside money for your child to attend collecge as they prepare to graduate high school and plan their own path. Investing a little bit each month when your child is young will seriously defray the cost of educating them when they grow up. A 529 plan is a tax-advantaged saving strategy that makes this process even more lucrative for parents hoping to set their children up for success.

Parents consistently look to create a better life for their kids than they enjoyed themselves. When it comes to financial struggles, a personal battle with credit card debt or the repayment of hefty student loans can act as strong motivating factors for imparting quality financial literacy and setting aside money so that education doesn't have to result in a struggle to make repayments.