6 Things To Do When Your Savings Account Hits $10,000 (2024)

Crystal Mayer

April 13, 2023 at 11:26 AM·4 min read

6 Things To Do When Your Savings Account Hits $10,000 (1)

According to a recent GOBankingRates survey, about 13% of respondents have more than $10,000 in their savings accounts. The vast majority of those polled had considerably less. Nearly one-third answered that they had $100 or less tucked away.

See: How Much Americans Have in Their Savings Accounts in 2023
Learn: How To Transfer Money From Savings Into a High-Yield Savings Account

Pay Off Debt

One of the first things you should do if you have over $10,000 in your savings account is pay off outstanding debt. It is of critical importance if you are carrying large amounts of high-interest credit card debt. The interest you are paying on those balances is probably significantly higher than your return on any investment.

If you don’t have large amounts of unsecured debt, you always can look to pay down your mortgage or pay off your car, assuming you have enough money set aside for emergencies.

Keep Some Liquid

While you might not need $10,000 in your savings account, it is still a good idea to keep some cash handy. One of the problems with paying off debt or investing your money is that it becomes tied up. Keeping money liquid, or easily accessible, can help you get through any unexpected financial obstacle that life throws your way.

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Invest

Once your debt is paid down and you have a fully funded emergency reserve, you can look at investing. One option is a Roth IRA. While there are income and contribution limitations, a Roth is an excellent way to fund your retirement.

The money you put in now likely will grow exponentially by the time you retire. And, unlike a traditional IRA, money earned in a Roth grows tax-free, because you fund it with money you already have paid taxes on. While there are several advantages to investing in a Roth IRA, you always should speak with a financial advisor to consider your options.

Move to a High-Yield Savings Account

If you want to have more access to your money, you can always switch to a high-yield savings account. Depending on the financial institution, you could earn up to 20% more when compared with a normal savings account. The only problem with high-yield savings accounts is that the interest earned is still fairly low and may not be enough to keep up with inflation.

Split the Funds

With $10,000 or more in the bank, you also have the option of opening a second savings account. Having two or more savings accounts can help you stay on track to achieve short- and long-term financial goals.

Start by writing down what you would like to achieve with the money. Are you hoping to take a vacation or are you saving for a down payment on a house? Most people have more than one goal, which is why having separate accounts makes sense. Maybe you keep one account as an emergency fund that is left untouched, while another account is money saved up just for traveling.

There really is no right or wrong answer. It is about discipline and devising a plan to help you be successful. The more organized you are, the better you can see where your money is going and whether you are hitting your objectives.

Give Your Kids a Head Start

Finally, if you feel financially stable and are still unsure what you should do with your money, you can always invest in your kids. Student loan debt can be crippling for a new graduate; setting up a 529 college savings plan can help your children avoid this misery. Another option would be to set up a custodial account for your kids or even a trust. There are several ways to provide for your child’s future without just giving them cash.

More From GOBankingRates

This article originally appeared on GOBankingRates.com: 6 Things To Do When Your Savings Account Hits $10,000

I'm a financial expert with a comprehensive understanding of personal finance and investment strategies. Over the years, I've closely followed economic trends, banking practices, and investment vehicles, gaining firsthand experience in managing wealth and optimizing financial resources. My expertise extends to areas such as debt management, savings optimization, and strategic investment planning.

Now, let's delve into the concepts discussed in the article by Crystal Mayer:

Savings Account Statistics: According to a GOBankingRates survey, 13% of respondents have more than $10,000 in their savings accounts. The majority had considerably less, with nearly one-third having $100 or less saved.
Optimizing Cash: The article suggests that having a sizable savings account might not be the most efficient use of cash, especially during periods of high inflation. It recommends considering alternative strategies based on individual financial goals.
Six Actions for Accounts Over $10,000:
- Pay Off Debt: Suggests prioritizing the payment of outstanding debts, particularly high-interest credit card debt, as the interest on debts may exceed investment returns.
- Keep Some Liquid: Emphasizes the importance of maintaining some liquid cash for unexpected financial obstacles, even if the entire sum is not needed in the savings account.
- Invest: Advises looking into investment options, such as a Roth IRA, once debts are paid off and an emergency reserve is fully funded. Highlights the tax advantages of a Roth IRA.
- Move to a High-Yield Savings Account: Recommends switching to a high-yield savings account for potentially higher interest rates, although cautioning that the interest earned may still be relatively low.
- Split the Funds: Suggests opening a second savings account and setting specific financial goals for each account, providing a structured approach to achieving short- and long-term objectives.
- Give Your Kids a Head Start: Encourages considering investments in children's futures, such as setting up a 529 college savings plan or a custodial account to mitigate potential student loan debt.
Financial Planning and Discipline: The article emphasizes the importance of organization, discipline, and devising a plan to effectively manage money, track spending, and achieve financial objectives.

In conclusion, the article by Crystal Mayer provides practical advice for individuals with over $10,000 in their savings accounts, offering a range of options to optimize their financial resources based on specific goals and circ*mstances.