Is $ 10,000 a lot of money
I inherited $ 10,000 and did these 3 things with it
- When my grandfather died, my father gave my sisters and me $ 10,000 each from his inheritance.
- I used it to pay off debts, buy a used car, and raise an emergency fund.
- It all set me on a path to financial security that changed my life.
A few months after my grandfather's death, I woke up and received an email from my father with the subject line: "Have a look at your account".
The email was sent to my sisters and me. “I am amazed that my mother and father were able to raise seven children on a single income. We weren't rich, but we lived a nice middle class life. My mother was the queen of coupons, ”my father wrote.
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“What is even more astonishing is that on a single income they were not only able to start a family, but also save. My father left a considerable legacy to his children and I want to share some of it with you girls. "
He had deposited $ 10,000 in each of our accounts. I could not believe it.
To someone with a huge trust fund, that probably doesn't sound like a life-changing sum. But the legacy has completely changed my finances and the way I think about money.
I used the money to pay off some debts, buy a car and put it into an emergency fund - my whole life has changed
Around the time I got this email from my father, I had been working for the previous two years paying off credit card debt accumulated after moving overseas and changing jobs. I had $ 3,000 remaining on my credit card and only six months before the interest rate on my remaining balance would increase.
So the first thing I did that morning after realizing what I'd read was pay off my debt. I was officially debt free just like that. It felt like a great burden had been lifted from me - I could do anything!
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I still had $ 7,000 left. Towards the end of the email, my father had written, “Don't just pay bills (although you may need some of them). Think about how you can use at least part of it for something that is memorable and meaningful for you. "
I thought for a while about how I could use the rest of the money in ways that would make a meaningful difference to my life - and not just for the short term. I knew I wanted to save some of it, but I also wanted to spend a little on something special.
Basic financial security has greatly improved my quality of life
I moved to Costa Rica a few years ago and have been car-free there ever since. I enjoyed life without a car, but it was difficult to get anywhere without a car because the bus only comes once a day in the small rural town where I live.
Apart from the fact that everyday errands were a bit of a chore, I could hardly take advantage of life in a land of beauty without a car. Because trips to the beach or to a new hiking area were torture without a car. So I spent $ 3,000 on an older, used car that I paid for in cash.
I deposited the remaining $ 4,000 into a profitable savings account. That was the beginning of my emergency fund, which I had wanted to invest in as soon as I had paid off my debts. As a freelancer with an insecure income and as someone who lives abroad, far from any family, I needed one.
I've since increased that fund to $ 30,000 so that I have enough to cover emergencies or lost work, but also to invest in myself and take risks when opportunities arise. That has improved my quality of life as well as the freedom from debt.
Why my family's generosity made me want to build wealth myself
If someone had asked me a few years ago what $ 10,000 could mean for my life, I would have listed the things I could use. I knew that money could help me materially, but I had no idea how much it would change my mentality, the optimism and the freedom I would feel on the way to financial security.
The feeling of financial security changed every aspect of my life, from my sanity to my career to my relationship. I could have gotten to this point without the $ 10,000. But that timely boost was exactly what it took me to see the light at the end of the tunnel and realize that I was able to take control of my financial life.
Read also: How the 10 richest women in the world got their billion dollar fortune
It made me realize the power even small gifts can have in someone's financial life, especially in times of need. I'd never thought about wealth accumulation or leaving anything behind because I wasn't planning to have children. But through my grandfather's gift, I realized that I wouldn't need children to give something back like he did. If I can build up a little fortune, it will give me the opportunity to help my loved ones and give them financial support if they one day need help.
I could save money to fund a niece or nephew's college education, give my youngest sister a trip to graduate, or help my best friend pay for an expensive car repair shop. Maybe one day I could go on a trip with my father as a thank you for everything he has done for me.
The basics of wealth accumulation
That motivated me to increase my savings rate and finally, for the first time in my life, to invest. The basics of wealth creation are these: make more money, save more money, and invest more money.
Read also: 12 Unusual Tricks To Save Money Every Day - According To Financial Experts
Last year I set myself the goal of increasing my freelance income and have already achieved it. Therefore, my goal for this year is to set myself further goals and at the same time further diversify my sources of income in order to get additional stability.
My second goal is to save at least 50 percent of my income, which is possible because I live with very few fixed costs - for example a low rent, thanks to the fact that I live in a rural area and have a relatively high level of income Proportion to these costs.
If I only thought of myself, I wouldn't be able to build a fortune
On the one hand, I pay the part of my money that I save into a savings account in order to have enough cash reserves that I can access at short notice. I use the remaining money to build up my medium and long-term investments.
If I only thought of myself, I wouldn't feel compelled to build wealth. I can get by with relatively little money and, as I said: I don't want to start a family. But the generosity of my grandfather and father made me want to be able to do the same for others.
This article was published by Business Insider in January 2020. It has now been reviewed and updated.
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