Managing a $10,000 windfall involves several options. Prioritize creating an emergency fund, paying off debt, and investing in education or a side hustle. Consider starting long-term investments, like KiwiSaver, and save for specific goals. Lastly, allocate some for personal enjoyment while maintaining financial stability and planning for the future.
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“Basically, what the title says, I have no idea what to do with my money but would like an idea on ways to make more money from this or maybe if it’s smart to just use on life necessities.Context: Student Halfway through Degree, Living from Student Allowance – only have my laptop to pay off which is 1700 left but I’m quite comfortable to leave that until I decide what to do with the money”
(Original question on Reddit)
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Deciding what to do with a windfall of $10,000 is an important financial decision. To help you decide what to do, here are some smart options to consider:
Emergency Fund
It’s important to keep money aside in times when you need it. So, ensure you create an emergency fund with at least three to six months’ worth of living expenses. This fund acts as a financial safety net and can cover unexpected costs. Especially as a student as you may have unexpected expenses such as legal fees, theft, car repairs, medical expenses, etc.
Pay off debt
As you mentioned, you have a $1700 laptop debt to pay off; it’s important to pay that off as soon as possible, especially if you bought it on finance. You don’t want to end up paying extra interest, so paying this off first should be something to consider. Additionally, if you have any other debts, prioritise paying those off first to save your money on interest payments in the long term.
Invest in your education
As you said, you are halfway through your degree, so keep some money to invest towards your course fees. However, if you have an interest-free student loan, then you can save that money and instead put it more towards other things, such as the next option.
Invest in a side hustle
Consider starting a side hustle or business. Invest in learning new skills which can help you earn more money on the side during your studies. This will help you live more comfortably and secure your financial future.
Start Investing for your future
Once your immediate needs are met and you have money left over, look to invest in different financial vehicles. Such as stocks, mutual funds and KiwiSaver. Look to diversify your investments to spread your risk and regularly contribute to them. KiwiSaver is important to start if you haven’t already, as this will help set you up for retirement or when you decide to buy your first home. Look into which fund is suitable for you and start contributing towards it, as there are many benefits to investing in your future.
One of the benefits of KiwiSaver is the government contribution of up to $521.43 each year. Regardless of your work situation, if you qualify, the government may contribute 50c for every $1 you deposit into your KiwiSaver account (up to $1,042.86).
Enjoy some of it
Enjoy some of that money responsibly once you have prioritised your financial goals and future. It’s essential to strike a balance between financial responsibility and enjoying life. Allocate a portion of the money to treat yourself or spend on experiences that bring you joy.
By considering these options, you can make a well-informed decision about what to do with your $10,000. It’s essential to prioritise your financial stability while also planning for your future and enjoying some of the rewards of your hard work. Remember that each person’s financial situation is unique, so tailor your choices to your needs and goals. If you’re uncertain where to start, consider speaking with a financial advisor or conducting further research to create a financial plan that aligns with your aspirations and financial well-being. This thoughtful approach will help you make the most of your $10,000 and set you on a path to financial success.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The information in this post is only general in nature and is not personalised financial advice. Please contact us if you want financial advice.
