Recent Monetary Award

[JustMimi]

Good afternoon,

I recently won an "employee of the year" award, which included $2,800 ($5,000 before taxes...yeesh!). I could use some advice on what to do with it.

My family doesn't have much money. My paychecks go to household expenses, groceries, and prescriptions for my bedridden mother, who I live with and care for.

For now, I've deposited the $2,800 check into my credit union/savings account, but I know that some emergency expense will come up, and I'll begin tapping into it.

What would you do with this money? Is there a safe way to grow it?

PS: I realize that $2,800 is not a lot of money to most people. (I just saw another post about investing $100k.) For me, its more money than I've ever held at once.

[kork13]

You should keep it exactly where you've got it. You're exactly right -- if some sort of emergency comes up, you want it to be available, not invested somewhere in hopes of making a buck. This is especially the case if you are totally responsible for your mother's care and expenses. You haven't given much detail into your financial life, but it is fairly clear that you need the money to stay liquid and readily available.

Is there anything you can do to improve your family's living situation? Reducing your expenses if possible or bringing in additional income (whether on your part or from another family member) sounds like it could do alot to help improve your circumstances. For now though, you should try to save a small portion of your monthly income (even if just $50-$100 each month) to build upon what you have saved right now in order to give your family some much-needed security.

It's only a shame that your employer held back so much in taxes... if you make as little as it sounds, you'll probably get most (if not all) of the witheld $2200 back on your tax return.

[jpg7n16]

Congratulations

As Kork pointed out, everyone should have some form of liquid savings available in the case of emergency. Based on what you said, that's right where I'd put it too. Ideally, you'd have 3-6 months worth of expenses saved up just in cash for emergencies.


I would like to ask you a few questions though in order to better help you out.

Do you mind if I ask how old you are?

Do you have any CC debt?

When's the last time you reviewed your monthly budget?

Based on what you said so far, I'm a bit concerned about your retirement situation. What sort of retirement planning have you done?

[JustMimi]

Thanks so much, kork and jpg, for the great advice. In terms of my financial situation: I'm 40, my siblings are older than I am and live with us, but refuse to offer financial assistance (long story!). I have 401k (only around $15k). I've never played around with the 401k investments, but I hope to during our open enrollment in a few months. I've paid off most of my old CC accounts (what was I thinking when I was younger?!), I do have one remaining that's around $1k. I haven't done up a monthly budget, but I do look at our "luxury-ish" expenses like cable and cell phone plans to see what I can tweak from time to time.

I've been putting $100 into my savings account for a while now...of course, it's never safe once a basement pipe bursts or the roof needs to be fixed.

It's good to know that the readers of this forum are such a great resource. I'm looking forward to seeking your advice again once our 401k rolls around. Thank you again. I really appreciate it.

[Nika]

PS: I realize that $2,800 is not a lot of money to most people. (I just saw another post about investing $100k.) For me, its more money than I've ever held at once.
Reply With Quote

Most people on this forum who have 100K+ in investment did not start with that. They started drop by drop. First by growing their emergency fund, than, when emergency fund gets big enough that they feel uncomfortable letting money sit and do nothing, they start investing parts of it.

Once you see your balances rising, you are willing to allocate a little more to savings. Than, thinking more about money and looking at the figures becomes more fun, simply due to a sense of accomplishment. And devoting more time to looking at your financial picture in detail, in turn, bares more fruit.

That's usually how it happens. Try to grow an emergency fund bigger, so that you don't have to touch this bonus money. Of course, you won't get far until you address leeching family members issue. Living how they live does not help them in the long term either. Unless they do something different, everybody will be in the exact same situation 10 years from now.