Smart Saving: How to Make the Most of Your $100,000 in Savings

Reaching $100,000 in savings(Smart Saving) is a huge financial milestone—congratulations! It likely took a lot of discipline, smart money habits, and hard work to get here. Now that you’ve built this impressive nest egg, the big question is: What should you do with it?

It’s completely normal to feel unsure about your next steps. After all, managing a large sum of money comes with responsibility, and you want to make sure you’re making the smartest moves. Fortunately, there are proven strategies to help you put your savings to work. Here are four smart ways (Smart Saving) to make the most of your $100,000.

1. Pay Off High-Interest Debt

If you have high-interest debt—like credit cards or personal loans with an annual percentage rate (APR) above 6%—paying it off should be your top priority. Why? Because the interest you’re paying on these debts is likely costing you more than any investment or savings account could earn.

For example, credit card interest rates average over 21% these days, and personal loan rates are often above 12%. Compare that to even the best investment returns, and you’ll see why eliminating high-interest debt is a guaranteed win. Paying off debt frees up more of your income, reduces financial stress, and improves your overall financial health.

2. Build an Emergency Fund through smart saving

Once your high-interest debt is gone, the next step is to establish or beef up your emergency fund. Unexpected expenses—like medical bills, car repairs, or home maintenance—are inevitable, and having a financial cushion can prevent you from going into debt when they arise.

A good rule of thumb is to have three to six months’ worth of living expenses set aside. The best place to keep this money is in a high-yield savings account (HYSA) or a money market account (MMA), where it stays easily accessible while earning some interest.

3. Create Sinking Funds for Future Goals

After securing your emergency fund, consider setting aside money for specific upcoming expenses. These are called “sinking funds,” and they help you plan for big-ticket items without disrupting your finances.

Some common sinking fund categories include:

• A dream vacation
• A wedding
• Buying a car or making a down payment on a home
• Home renovations
• College tuition
• Planned medical procedures
• Taxes if you’re self-employed

Since you don’t need this money immediately, you might consider placing it in a certificate of deposit (CD) or Treasury bills, which offer better interest rates than a regular savings account.

4. Max Out Your Retirement Contributions

Once your short- and mid-term savings goals are covered, it’s time to focus on the future. Boosting your retirement savings is one of the best ways to secure long-term financial freedom.

If you have access to a 401(k) or other employer-sponsored retirement plan, contributing up to the annual maximum is a smart move. If your employer offers a match, make sure you’re contributing enough to take full advantage of it—that’s free money!

For 2024, here are the retirement contribution limits:

• 401(k) Contributions: Up to $23,000 (or $30,500 if you’re 50 or older)
• IRA Contributions: Up to $7,000 (or $8,000 if you’re 50 or older)

If you haven’t maxed out your contributions yet, you still have time—you can contribute to your retirement accounts for the 2024 tax year until April 15, 2025.

Final Thoughts

Deciding what to do with $100,000 can feel overwhelming, but by following these steps—paying off debt, building an emergency fund, setting aside money for upcoming expenses, and investing in your retirement—you can ensure your money is working for you.

The key is to prioritize your financial goals and make intentional decisions. If you’re unsure about your best path forward, consider speaking with a financial advisor to create a plan that fits your unique situation. No matter what, making smart choices now will set you up for long-term financial success.

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