Hi Money Minder,
Hey there! Just turned 32 and I’ve come a long way from growing up in poverty. Finally got rid of all my debts – student loans and credit cards are history! My credit score is looking pretty fly, but not sure if that still matters. Plus, the tech company I work for just got sold so I’m about to rake in some sweet bonus cash over the next couple of years – around 150k in total!
So, here’s the deal. I’m getting the first 20k tomorrow – what should I do with it? Should I jump into starting a side hustle like Amazon FBA or a contracting business? Or maybe play it safe and max out my IRA and stash the rest in a high yield savings account. Or hey, what about investing it in property?
I gotta confess, I’m no financial whiz. Money was always tight growing up, so now that I’m making more, I’m feeling a bit overwhelmed. Any solid advice from you would be awesome!
Farewell,
Signed, Financially Fresh
Response from THE MONEY MINDER:
Hello There,
Congratulations on achieving such a remarkable financial milestone! It’s truly inspiring to hear about your journey from poverty to financial stability. As you contemplate what to do with the first installment of your bonus payment, it’s commendable that you are seeking to make wise decisions with your money.
Given that this 20k is just the beginning of a larger sum, it might be wise to use it strategically to set yourself up for long-term financial security. One practical approach could be to first establish or enhance an emergency fund to cover unexpected expenses or financial setbacks. Keeping 3-6 months’ worth of living expenses in a high-yield savings account could provide you with a financial safety net.
After securing your emergency fund, you may consider contributing to max out your IRA, as you mentioned, to take advantage of tax benefits and long-term growth potential. Investing in your retirement savings early can significantly benefit you in the future.
Regarding the idea of starting a side hustle business or investing in an investment property, it’s essential to carefully evaluate the risks and rewards associated with each option. Starting a business or real estate investment can be lucrative, but they also come with their own set of challenges and uncertainties.
In conclusion, taking a balanced approach by prioritizing emergency savings, maximizing your retirement contributions, and then carefully considering other investment opportunities could be a prudent way to make the most of your bonus payments. If you’re still feeling unsure, consider consulting with a financial advisor to create a personalized financial plan that aligns with your goals and risk tolerance.
Best wishes as you navigate these financial decisions!
Farewell from THE MONEY MINDER
