How do I use my $10k to kickstart my savings plan?

With $10,000 already put aside, you’ve already done one of the hardest things with money. We are humans and unlike many creatures on our planet we are just not programmed to save. Maybe because over thousands of years, having no savings may have limited our options but is rarely terminal.

I appreciate this is not always the case, but thankfully there has often been family, friends, a community group, a charity or a government who will lend a hand. Many creatures have a pretty simple, instinctive drive to save, in the form of food for the winter ahead, or die.

That is a very gloomy statement, but many of us find it really hard to save. There are plenty of good reasons for this and we have all been there.

Bad things happen to all of us. For us it was around 1988 to 1992. With young children at home, a big mortgage and mortgage rates hitting 18.75%, we sold things such as our car and literally “dissaved”, meaning we spent more than we earned for nearly four years. The good news was that we really learnt a lesson and saved diligently every year after that!

Saving is defined as postponing consumption. We got such a fright that, as interest rates started to fall after the peak of 1990, we retained more frugal habits.

You must have postponed consumption to build $10,000.

The great thing is that good habits rarely die, so I am less concerned about where you invest your $10,000 than with you sticking with my Rule Number One of Money: spend less than you earn.

Keep adding to your $10,000 in a safe and simple term deposit, in particular if a home deposit is your goal. If you don’t need the money, consider topping up your super, preferably through salary sacrifice. Maybe start an investment into a low-cost, managed fund or exchange traded fund (ETF), with extra monthly contributions.

You will read and hear many smart people with smart money ideas. That is good. But the secret to money success is painfully obvious, though easier to say than do. Spend less than you earn, cut unnecessary expenses and invest on a regular basis.

Earning extra is also great, but you will pay tax on additional income, so your dollar earned may be reduced after tax and the Medicare levy. But however you save, by earning more or spending less, remember a dollar saved gives you a dollar to invest. And that works for you forever.