Is $5,000 Dollars a Lot of Money

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Once you get into the thousands of dollars, you are talking about a good deal of money in most cases. There are times that 5 grand isn’t going to do it for you, but let’s check out is $5,000 dollars a lot of money?

Is $5,000 Dollars a Lot of Money

Most of the time, 5 thousand dollars is going to be a lot of money for most people. It would be for me, I know that.

But there are times where $5,000 dollars isn’t going to cut it. 

Here is what you need to know depending on the situation.

$5,000 Dollars as a Salary

If you’re talking about a monthly salary, then 5 thousand dollars isn’t bad. 

That would be $60,000 dollars per year and well over $35,000 dollars which is the average salary in the United States.

On the other hand, if you are making $5,000 a year, then you’re in trouble. 

You won’t be able to live off of it unless you are living with your parents. 

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$5,000 Dollars as a Gift

Five grand is a great gift. 

You could do a lot with it. 

Chances are someone isn’t going to hand you $5,000 dollars for no reason, but if they do, good for you.

It’s more likely they have given you this money to pay off credit cards or other debt or to use this extra money as a part of your down payment on a house.

They might have even given it to you as a wedding gift to help you get started in life.

Regardless of the reason, it is a wonderful gift.

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$5,000 Dollars for Retirement

While you can’t retire on $5,000 dollars, it would be nice to have it in your savings account or retirement accounts. 

It is certainly a start and better than nothing.

You’ll need to add to it and invest it earlier rather than later to let it grow, so you have a better rainy day fund.

Things to Buy with $5,000 Dollars

There are a few things you can buy if you have an extra 5 thousand bucks.

These include:

  • A used car
  • A used, small boat
  • 5 decent laptops or one really nice one
  • 5 iPhone’s – hand them out to friends

$5,000 Dollars to Live On

As mentioned, if you are making $5,000 dollars a month, or $60K a year, then you can live pretty well in most parts of the country.

It might be tough on both coasts to live well, but pick a state in the middle of the country or a medium-sized city and you should be doing just fine.

Keep in mind, you don’t want to go crazy and buy an expensive car or a super expensive house. If you do, you may feel a cash crunch.

This is especially true if you have children.

Of course, if you’re only making $5,000 dollars a year, you’re kind of in trouble and won’t be able to live on it.

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$5,000 To Have In Your Savings

Savings accounts don’t pay you a lot of interest, but they are good for emergency funds.

You can also consider high-yield savings accounts or money market accounts. The interest will be better, but there will be more restrictions on what you can and can’t do with your 5 grand.

They will also have minimum balance requirements.

If you already have an emergency fund, then consider paying off some credit card debt. This will help you build up your credit score and make it easier for you to buy a new car or home down the line.

$5,000 Dollars to Invest

If you have $5,000 dollars to invest, it is a great initial investment to make. 

This extra money can really grow for you over the years in the right investment.

For example, if your investment averages 9 percent interest and you leave this money in your investment account for 35 years you will end up with $102,000 dollars.

That can make quite the difference when you retire.

If you leave it just five more years, you’ll end up with $157,000 dollars.

If you’re older, you will want to pick an investment that has a lower level of risk. If you’re younger, you can pick something a bit riskier. 

You’ll want to talk to a professional investment counselor about long-term investments to determine what risk tolerance is right for you.

Here is a compound interest calculator you can play around with to see how your money can grow.

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What Can You Do With $5,000 Dollars?

I can think of a lot of things I could do with an extra $5,000 dollars.

Here are some you might enjoy as well…

  • Take a trip to Europe or elsewhere overseas
  • Use it for a down payment on a new car
  • Start a small business (especially online)
  • Go to Las Vegas and really enjoy yourself

What Can’t You Do With $5,000 Dollars?

While 5 grand is a decent amount of money, it won’t let you do just anything.

For example, you can’t…

  • Buy a new car or house
  • Travel around the world
  • Buy the Hope diamond
  • Get new siding on your house (you’ll need to add another 20K for that!)

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What is $5,000 Per Year an Hour?

Working full-time, a 40 hour week, and making $5,000 dollars a year would mean you are earning $2.40 dollars per hour.

That’s not even half of the minimum wage.

How Much Per Month is $5,000

So, that means, if you are making 5K a year, you would be making $416 a month.

That’s some nice pocket change if you are living at home with no expenses, but otherwise, you can’t survive on that amount of money.

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Can You Buy a House with $5,000 Dollars?

No, you won’t be able to buy a house for 5 thousand dollars.

It is the start of a down payment, but you’ll need more for even that.

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To Sum it All Up:

$5,000 dollars is a nice chunk of change, but it isn’t going to change your life. It is a decent amount of money to put into a savings account or invest, but it won’t let you travel around the world in your retirement.

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