6 Things Gen Zers Should Do When Their Savings Hits $10,000
Let’s say you’ve been diligently focused on your finances and are finally seeing progress. You’ve been able to save $10,000 over the years, and now you’re wondering what you should do next.
Here we will look at what someone in the Gen Z demographic (those born between 1997 and 2012) can do with their finances once they see their savings grow to this substantial amount.
Invest in Your Retirement
The time is always now to start thinking about your retirement. This is one investment that your future self will thank you for. While you shouldn’t allocate your entire savings to your future, it’s essential that you put some funds aside so that you have compound interest working on your side.
A recent TransAmerica Center for Retirement report disclosed that members of Gen Z in the workforce are stashing away about 20% of their annual salary into a 401(k) or similar retirement account. If you feel you’re behind on your retirement savings, you could begin catching up right now.
Many financial experts suggest that you can boost your retirement savings by at least setting aside what your employer is willing to match. You can take advantage of your employer’s match or open a separate IRA if you’re already taking advantage of your employer’s account. You can put funds into your 401(k) or start thinking about investing in assets that will pay you an income in retirement. The good news is that you have multiple options when planning for retirement.
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Make a Dent on Your Debt
You could use your $10,000 in savings to become debt-free if you have any debt. While saving up, you may still have debt from college, a vehicle you purchased, or other possible reasons. Here are two ways to approach your debt:
- You can use the snowball method popularized by Dave Ramsey, where you pay down the lowest balance first to gain momentum.
- You can tackle the debt with the highest interest rate first to ensure you spend less on interest over the term.
The goal is to figure out how to tackle any debt you have so you can reduce this from your life and focus on building wealth for the future.
Consider a Home Down Payment
You’re now seeing some significant progress, and it might be time to start considering making a down payment on a home. While the $10,000 figure may not be enough to qualify for a mortgage in many locations, it’s enough to start thinking about your options in this space. It’s never too early to begin thinking about homeownership since home prices are going up, and it’s advantageous to get aggressive about your savings.
You could leave your funds in a high-interest savings account while you take the time to learn about your real estate options. This $10,000 amount is a fantastic starting point, and you can now start looking at real estate deals in various locations to see your possible options.
Invest in Your Skills
With 10 grand in your account, you have enough money to invest in your skills now. It’s important to remember that what got you to your current level may not help you get to the next level. This is why it’s critical that you always upgrade your skills so that you can increase your future earning potential. Here are some ideas on how you can invest in your skills:
- Consider upgrading your current education level. If you feel like your income has peaked, it might mean it’s time to spend some money on furthering your knowledge.
- Take a certificate course. There are numerous certificate programs out there that could help you become more valuable. Courses like a personal training program, basic safety training, or something specific to your field could help increase your future income.
- Learn a new skill that could lead to a side hustle. You could invest your funds into learning something new like coding, graphic design, or video editing to create a profitable side hustle for yourself.
Investing in your skills is essential because you tend to earn more as you learn more. Since you have the money saved, you can look into different options for increasing your income to save even more in the future.
Work On Growing Your Network
If you’re still early in your career, you have plenty of room for professional growth. You can invest some of your savings into growing your network to increase your future career prospects. The popular expression suggests that who you know is more important than what you know. This is why you should be spending the money on growing your network. Here are some options:
- Join a professional association. Are there any organizations with like-minded people that you can join?
- Attend conferences in your field. Are there any conferences in your field that could benefit you?
- Invest in a mentorship. Is there anyone you admire who offers coaching or some sort of consulting?
While these expenses may seem like an inconvenience at the moment, you have to remind yourself that the money will come back in the future with interest.
Beef Up Your Emergency Fund
When you see that you can save money, it’s crucial to put some money aside for a rainy day. Many financial experts advocate having three to six months’ worth of living expenses saved up just in case.
The goal is to have money ready just in case of an emergency situation, from an unexpected job loss to getting hit with a car repair. You don’t want to take too many risks with this money because you want the funds to be reasonably liquid.
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