‘I have saved up a lot of money but have no idea what to do with it’: As a teenager with $10k saved up, how can I make the most of my money without making costly mistakes?

Hi Money Minder,

I’ve got a stash of cash saved up from partying and working (over $10k), but I’m clueless on what to do with it. College is around the corner, but luckily, I won’t need any pesky student loans thanks to my parents’ 529 plan. Plus, no need for a car either. I know I should keep some in my checking for everyday expenses, but what else should I consider?

There’s a ton of info out there, and I’m lost on where to begin. I’ll be legal soon, turning 18 in a few months. Any barriers there? I might pick up another gig, but I left my last job to focus on finishing high school!

Thanks for the help,

Savings Savvy

Response from THE MONEY MINDER:

Hello There,

Congratulations on saving such a substantial amount of money through your hard work and dedication! It’s fantastic that you already have a plan in place for your college tuition without the need for student loans. Given your financial situation, it’s commendable that you are considering how best to manage your funds. Since you’re going to be 18 soon, you’ll have more financial options at your disposal.

As you rightly pointed out, setting aside some money in your checking account for regular expenses is a wise move. Beyond that, you may want to consider exploring investment options to make your money work for you. Given your upcoming college expenses, a high-yield savings account could be a good choice to keep your funds accessible while earning a competitive interest rate. Additionally, you might want to look into a Roth IRA, which could be a tax-efficient way to save for your future.

Another practical step could be to create a financial plan outlining your short-term and long-term goals. This plan could help you decide how to allocate your savings effectively. Moreover, given your intention to secure another job, focusing on increasing your income while maintaining your current saving habits could provide a solid financial foundation for the future.

Remember that at 18, you may have more avenues to explore, such as opening a brokerage account or considering other investment opportunities, but it’s crucial to research and understand these options thoroughly before taking any steps. Taking a balanced approach, considering both short-term spending needs and long-term financial goals, will serve you well in managing your savings effectively.

Best of luck as you navigate financial decisions at this exciting time in your life! If you have any more questions or need further guidance, feel free to reach out. THE MONEY MINDER