What Would You Do With $10,000?

If you grew up in the eighties and the era of game shows, you may remember watching game shows like the Price is Right, Let’s Make a Deal and Press Your Luck. There was also a show in the eighties focused around a Pyramid, with several monetary values in the title – one being the $100,000 Pyramid. In this game, contestants would answer trivia questions with a chance to win a prize of $100,000. There was also a $10,000 version of this game when it originally aired in the 70s.

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Imagine You’ve Won

As humans, it’s natural to imagine what would happen if we won large sums of money such as the lottery. However, we don’t often imagine what happens if we win a smaller, more manageable amount of money – like $10,000. So try an exercise where you’ve played a game show and won a more modest prize of just $10,000. How would you allocate those funds? There are some likely scenarios:

1. Paying down existing debt.

2. Putting that money toward a child’s education.

3. Spending it on a nice vacation for your family.

4. Putting it all toward your emergency savings.

5. Investing it directly into the markets.

6. Giving it to a charity.

7. Improving your home.

8. Purchasing something that you’ve been putting off, like a car or a medical procedure.

9. Spending it all on a splurge item .

The Real-World Implications

While this is a fun exercise, there’s a method behind it. For many of us, $10,000 is an attainable amount of money that you may receive in your lifetime, either through an inheritance, a work bonus or raise, or through a contest etc. It’s not an unfathomable amount of money that you could receive as a lump sum, like the lottery may be. It’s easier to think in terms of how you’d spend $10,000 than millions or billions of dollars.

This amount of money can also impact change, but not all of the change at once. You can’t implement all of the nine items listed above at the same time with that amount of money, but you could prioritize one or two of them. Whichever items popped into your mind first are showing you how you should prioritize your money currently. If, when thinking about winning $10,000, your instinct was to pay down your credit card debt, then guess what? You should likely be prioritizing paying down that debt right now. If your first instinct was to bulk up your emergency savings, then perhaps you can add a little bit more to it right now over time.

While this exercise may seem fun and silly, it can help to provide you with some additional guidance as to how you may wish to plan for your financial future, one step at a time.

By Andrew Rosen, Contributor