Saving money is challenging, especially saving to your first milestone of $500 or $1000. This article will explore the question ‘is $1000 a lot of money,’ and what you can do with it.
I remember hitting my first $1000 saved, and I was over the moon. It was such an exciting figure for 15-year-old me to hit, and I couldn’t believe I saw four figures in my bank account.
To answer the question as quickly as possible, $1000 isn’t a lot of money. Still, it’s an excellent starting point for your saving and investing journey. While $1000 was a considerable amount for 15-year-old me, it can be spent quite quickly by 19-year-old me.
Expenses like rent, utilities, phone bills, subscriptions, car payments, and more can quickly eat up to that $1000 amount. So while it’s an excellent place to begin, it isn’t a lot of money technically.
Without trying to deter you from the milestone of $1000, this article will help you figure out what to do with your $1K.
Anyways, let’s further unpack the question of ‘is $1000 a lot of money?’
Is $1000 a Lot of Money?
So, is $1000 much money? Not for the majority of the population, but it’s a great place to start with your finances.
I know it’s a confusing answer, to say the least, but hear me out.
In America, the average rent price for a one-bedroom apartment is $960 a month. Other expenses like utilities, food, healthcare, entertainment, and subscriptions can quickly raise that figure to $2000 a month.
So, $1000 won’t get you far if you’re living on your own in the USA.
It also depends on location, where you could get rent down to $636 a month in Springfield, Missouri.
I live in Australia, and it’s precisely the same principle of location. $1000 in regional Victoria will pay for seven weeks of rent, but in the heart of a major city like Sydney, I’ll barely be able to pay for two weeks of rent.
While $1000 isn’t much money, it’s great if you’ve saved it after your expenses or if you still live at home.
$1K is enough to build an emergency fund, start investing, and more. So while it isn’t a lot of money for someone living on their own, if you can still reside at your parent’s home, then you’re in luck.
I like to think that a comfortable figure for a lot of money is $250,000 – $500,000. If you have this amount invested, you’ll start to make some comfortable returns that you can easily live off.
So, the answer to the question of ‘is $1000 a lot of money?,’ is that it’s not.
Is $1000 a Lot to Have in Savings?
Regardless of what I’ve just talked about, yes, $1000 in savings is still a significant milestone to hit. 69% of Americans have less than $1000 saved, so if you’ve reached that figure, good on you! You’re not a part of that statistic anymore.
It’s undoubtedly a remarkable achievement and one that you should be proud of for hitting.
Saving $1000 has most likely taught you how to become more financially savvy, as well as the skills needed to save more money.
When I hit $1000 in savings, I wanted to hit my next milestone of $2000 as quickly as possible, and so on. Hopefully, you’re hungry for more too!
Top 6 Things to Do With $1000
Now that we’ve concluded the question of is $1000 much money, I’ll now talk about what you should do with it.
If you have this amount saved after you’ve paid off your living expenses, these are six ideas I’d recommend you do with your money.
Keep it saved
The first strategy I’d recommend you do is to keep your money saved. I know it’s a boring start, but just keep adding to your savings and try to hit your next milestone of $2000, and so on.
Since you’ve already hit $1000, why not try to hit $2000?
I also believe that it’s essential to have a savings goal in mind that will help motivate you to keep saving your money with purpose. Otherwise, you might stop saving money if you have no plan in mind.
I recommend creating a SMART savings goal, where it is:
- Specific: What do you want to save for? E.g., I want to build my investments up to $10,000.
- Measurable: How much do you plan to save? E.g., $9000 (I already have $1000 saved).
- Attainable: Is it realistic to save for? E.g., yes, if I cut back on expenses and entertainment costs.
- Relevant: Is it worth saving for? E.g., yes, because I want to hit $10K in investments.
- Timebound: How long will it take to meet the goal? E.g., two years, if I save around $87 a week.
Again, while it’s a boring strategy, keeping it saved is the safest bet with your money.
The second thing I’d do with $1000 is to start an investment account. Investing is such an excellent way to compound your money over time and earn passive income.
While I’m not exactly an expert, I’ve been able to earn over $780 in the past year, purely from passive investments.
It’s such a fantastic way to make money without actually having to do anything. But, while I have made $780 in returns, it isn’t real money I’m spending.
See, with investing, you’ve got to be in it for the long haul, and you can’t expect to make money within a week. All my investments are ones that I’d be happy to keep in the account for 10 – 30 years.
Now I think that $1000 is such a perfect amount to start with investments, and it can get you started on a path to a financially free future.
Don’t believe me?
So, suppose you invested $1000 into S&P 500 (average returns of 10.7%) and contributed another $100 a month for 50 years. In that case, that number could turn into over $2,000,000. 🤯
That’s the power of compound interest over time.
Pay off debt
Another thing I’d recommend if you have $1000 saved is to pay off your outstanding debts.
Instead of paying crazy high-interest rates on credit cards, why not pay them off as quickly as you can.
I don’t see any point in having money saved if you have outstanding credit card debts. You’ll just be spending more money than you’re saving.
I highly recommend paying off your debts with the debt avalanche method.
For example, if you have $5000 in debt, list all of it by their balances, interest rate, and the minimum payment required each month.
Then allocate the minimum payment required, and pay off the credit card with the highest interest rate first.
After that’s been paid off, move onto the second-highest interest rate card, and so on until all of your debt has been paid.
It isn’t exactly a fun method, but you’ll be thankful for yourself after you’ve paid it off.
Build an emergency fund
While it isn’t an exciting method, an emergency fund is a vital thing you should have with your finances.
An emergency fund is money saved that can be used to cover urgent or unexpected costs. $1000 is an excellent figure for a beginner emergency fund and can definitely pay off some unexpected expenses that might come up.
This $1000 emergency fund can be used as a safety net for these expenses, whether due to a job loss or your car breaks down.
A good emergency fund would cover 3 to 6 months of your expenses, which will help you get back on your feet. So, I recommend to keep adding money to the emergency fund, even after you’ve deposited the first 1000 dollars.
Start a business
Another thing I’d recommend doing with your money is starting a business. To begin with, $1000 is a good amount, and you can get quite a bit done with that figure.
While starting a physical business can cost a lot, creating a blog or YouTube channel can be pretty cheap, without much risk involved.
Last November, I started my online business with blogging and have spent around $700 since then. My starting costs were pretty high, and I think you could get it down to $200.
A YouTube channel can also be a lucrative business, with many YouTuber’s earning six to seven figures a year.
While both paths do include hard work and perseverance, the $1000 could be used as an income supplement when starting either platform.
Read next: How to Start a Profitable Blog in 2022
The last thing I’d recommend after you’ve saved $1K is to reward yourself.
While I don’t mean to spend all 1000 dollars, maybe spend $10 – $30 on a treat, like going to the movies or buying your favorite takeaway.
You could also make it a game, like for every $1000 increment you save, you can treat yourself whatever you’d like.
Again, I don’t mean to spend all of your saved money, but make it more fun by rewarding yourself after you hit certain milestones.
So that concludes the question of ‘is $1000 a lot of money?’
While it isn’t a lot of money, $1000 is an excellent starting point for your financial habits and savings.
I remember hitting my first $1K saved and being over the moon, so be proud of yourself for getting there.
Again, as I’ve already talked about, the amount isn’t a lot in most circumstances and will barely cover a month’s rent in the USA.
But, if you use it correctly, you could build an emergency fund or start your investing journey.
You could also use that $1000 for savings, starting a business, or simply rewarding yourself. At the end of the day, it’s your money and your choice of what you do with it.
Is $1000 much money to you? Let me know in the comments below!