Do This NOW – Once You Save $1,000!

Do this once you save $1,000. A step by step guide on how to prioritize spending, saving, and investing a thousand dollars

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I googled what to do once you save $1,000 and that gave me a finance article on Yahoo which says to do these 4 steps.

Step #1: Hire a wealth manager (I’m not sure why it would recommend hiring a wealth manager when you just saved your first $1,000)
Step #2: Let Acorns be your piggy bank (good app but it’s not the best savings account with the highest interest rate)
Step #3: Get another specific company to pay your bills (it’s at that point I realized the entire article was just an affiliate link)

I wanted to create my own guide on what to do after you save $1,000 so hopefully this video will rank higher and teach you more personal finance and investing skills that are much more useful. Here is my personal list on what I would do with one thousand dollars.

#1: $1,000 is best served for investing in yourself. That means getting a real estate license, learning a trade, or a hard skill – preferably something that does not tie trading your time for making money or a specific location. This could also mean starting your small business

#2: Emergency Fund, make this your priority to save between 3 to 6 months of expenses so you can avoid being one of the 59% of Americans who can’t cover a small $1K emergency expense. The last thing you want to do is use money from your retirement accounts to pay for life’s unexpected surprises.

#3: Pay Off Loans, if you loans are 4% or larger, then you should pay off those loans first – especially if you have credit card loans because those can exceed 19% in comparison to the stock market which will give you around 7 to 8% per year. Investing is a risk, and you’re not guaranteed to make a positive return on money unlike paying off your debt.

#4: Generate Interest. Get yourself a high yield savings account so you can start generating at least 1% interest on your savings account. This is for those who want to put their money to work but don’t want to risk it in the stock market (I recommend Ally bank).

#5: Invest Conservatively. You can put your money in a CD, which is a certificate of deposit. It’s an “investment” that’s more like a contract between yourself and your bank which asks you to put a certain amount of money away and locks that money in for a certain period of time anywhere between a month to 5 years. You won’t be able to use that money until the contract is fulfilled, which is called the “maturity date”. An alternative to CDs are bonds. Municipal Bonds is another option which is where the government borrows your money, and this investment is tax free.

#6 Start investing. I prefer the stock market with the following split to get you started.

– $600 VTI / VOO (Vanguard Total Stock Market) and (S&P 500), these are nearly identical funds (ideally you should put these in a ROTH IRA account if you haven’t already created one)
– $100 QQQ (Tech heavy ETF)
– $100 into the international market ETF which is VXUS. That $100 will let you own the entire international market including emerging markets.
– $100 VYM (Vanguard High Dividend Yield ETF). This is my favorite way to save and invest money because this stock pays me money regardless of the share price, and will continue to pay me for the rest of my life (assuming the stock market as a whole is still functional).
– $100 Individual Stocks. With the remaining $100, you can buy up to 100 stocks and see how you compare against the indexes. It’s a fun learning lesson.

#7 529 Account for College: This is a triple tax advantaged account like the HSA. Money that is invested in this account gets put in tax free, grows tax free, and is withdrawn tax free as long as it’s used for college related expenses.

#8 Track Your Net Worth: I use Mint, but Personal Capital is another app that you can use to link all of your bank accounts and track exactly what your net worth is.

#9 Save and invest the different for as long as possible, and if you can do that with 50-65% savings rate, you’ll be considered wealthy in just 10-17 short years of work.

*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

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