Top Financial Moves To Make When Your Savings Reaches $100,000

As we go through life, we all have financial milestones that we strive to reach. One of the most significant milestones is when we are able to save $100,000.

This can be a huge accomplishment, and it’s natural to feel proud and relieved when you reach this level of savings.

However, reaching this milestone also means that you have some important financial decisions to make.

It’s important to use your $100,000 wisely and make smart financial moves that will help you achieve your long-term financial goals.

But with so many options available, it can be overwhelming to know where to start. That’s why it’s important to take the time to create a financial plan and consider your options carefully.

In this article, we’ll explore seven financial moves to make when your savings reach $100,000. From creating a budget and financial plan to maximizing your retirement savings and protecting your assets, these tips will help you make the most of your hard-earned money.

Remember, everyone’s financial situation is different, and what works for one person may not be the best fit for another. That’s why it’s important to seek professional advice and consider your unique financial goals and circumstances when making financial decisions.

But by following these general principles, you can set yourself up for financial success and peace of mind.

7 Top Financial Moves To Make When Your Savings Reaches $100,000

1. Create a budget and financial plan

When you have $100,000 in savings, it’s important to have a clear understanding of your financial goals and how you plan to allocate your savings to achieve them. A budget can help you track your income and expenses and ensure that you are saving and spending wisely. A financial plan, on the other hand, is a roadmap that outlines your long-term financial goals and the steps you need to take to achieve them.

For example, let’s say you have a goal to buy a house in the next five years. Your financial plan might include saving a certain amount of money each month for a down payment, paying off any high-interest debt, and potentially even increasing your income. By creating a budget and financial plan, you can make informed decisions about your money and ensure that you are on track to reach your financial objectives.

2. Build an emergency fund

An emergency fund is a set amount of money that you save for unexpected expenses or income disruptions. It’s a good idea to have at least three to six months’ worth of living expenses saved in your emergency fund.

For example, let’s say you have a sudden medical emergency and need to pay for a surgery. Or perhaps you lose your job and need to pay your bills while you look for a new one. In either case, having an emergency fund can provide financial security and peace of mind, knowing that you have a financial cushion to fall back on.

3. Pay off high-interest debt

If you have any high-interest debt, such as credit card debt, it’s a good idea to focus on paying it off as quickly as possible. The longer you carry high-interest debt, the more money you will pay in interest charges.

For example, let’s say you have $10,000 in credit card debt with an interest rate of 18%. If you only make the minimum payment each month, it could take you over 20 years to pay off the debt and you will end up paying over $14,000 in interest charges. On the other hand, if you focus on paying off the debt as quickly as possible, you can save money on interest and be debt-free much sooner.

4. Maximize your retirement savings

If you haven’t already, consider contributing to a 401(k) or IRA to save for retirement. The earlier you start saving, the more time your money has to grow through compound interest.

For example, let’s say you are 25 years old and you start saving $500 per month in a 401(k) with an average annual return of 8%. By the time you retire at age 65, you will have over $1.3 million saved. On the other hand, if you wait until you are 35 to start saving, you will only have about $600,000 saved by the time you retire, even though you are saving the same amount each month.

See, Biweekly Money Saving Challenge for 2023

5. Diversify your investments

It’s important to diversify your investment portfolio to reduce risk and increase your chances of achieving your financial goals. 

This means having a mix of stocks, bonds, and other investment options that align with your risk tolerance and financial objectives.

For example, let’s say you have all of your money invested in a single stock. If that stock performs poorly, you could lose a significant portion of your investment. On the other hand, if you have a diversified portfolio, you are less likely to experience significant losses if one particular investment performs poorly. Diversification can help to smooth out the ups and downs of the market and increase your chances of achieving your financial goals.

6. Protect your assets

Consider purchasing insurance to protect your assets and income. Options to consider include life insurance, disability insurance, and property and casualty insurance.

For example, let’s say you have a mortgage, a car loan, and several other debts. If something were to happen to you and you were unable to work or pay your bills, your loved ones could be left with a financial burden. Life insurance can provide financial security and peace of mind, knowing that your loved ones will be taken care of if something were to happen to you.

Similarly, if you own a home, it’s a good idea to have property and casualty insurance to protect it from events like fires, storms, or burglaries. And if you are unable to work due to an illness or injury, disability insurance can provide income replacement to help you pay your bills and maintain your standard of living.

See, The Basics of Life Insurance: How It Works and Why You Need It

7. Seek professional advice

If you’re not sure where to start or have questions about your financial situation, consider seeking the advice of a financial planner or advisor. They can help you make informed decisions about your money and guide you towards achieving your financial goals.

For example, let’s say you have a complex financial situation, with multiple investments, debts, and other financial commitments. A financial planner can help you understand your options and develop a plan that is tailored to your specific needs and goals. They can also provide valuable insights and advice that can help you make smart financial decisions.

Overall, reaching the milestone of $100,000 in savings is a significant accomplishment, and it’s important to use this money wisely to achieve your financial goals. By creating a budget and financial plan, building an emergency fund, paying off high-interest debt, maximizing your retirement savings, diversifying your investments, protecting your assets, and seeking professional advice, you can set yourself up for financial success and peace of mind.

Conclusion

In conclusion, reaching the milestone of $100,000 in savings is a significant accomplishment that requires careful planning and decision-making. By following the financial moves outlined in this article, you can make the most of your hard-earned money and set yourself up for financial success and peace of mind.

Remember, everyone’s financial situation is different, and what works for one person may not be the best fit for another. That’s why it’s important to consider your unique financial goals and circumstances when making financial decisions. But by creating a budget and financial plan, building an emergency fund, paying off high-interest debt, maximizing your retirement savings, diversifying your investments, protecting your assets, and seeking professional advice, you can take control of your financial future and achieve your financial goals.