The title of this post is a Google search term someone used to find my blog. I thought it was a good question. $20,000 of cash is a pretty solid savings milestone in your 20’s, and might make you feel like you have a lot of money. But what is a lot of money exactly? The value of money lies in what it can buy for you.
What $20,000 Canadian can buy you:
3.58 years of university
The cost of post-secondary varies widely by province, but the average university tuition in Canada is $5,581 as of this year. This means that if you have $20,000 lying around, you might only have to fork up tuition for your last semester of university. So is $20,000 a lot of money? It depends what you’re studying.
5.2% down on a home
House prices vary by region, but the average house price in Canada is $387,147. You really should save up at least 20% to put down on a home and account for additional closing costs, so set your savings goal at $80,000. So no, $20,000 is not a lot of money, but it’s a good start.
If you’re 25, $147,168 at retirement
using ING Direct’s saving calculator, putting $20,000 away at 25 at an average rate of 5% will yield over $120,000 in interest in 40 years, giving you $147,168. Yes, that’s a lot of money.
Almost a new car
The average new car price in Canada is $26,755 so $20,000 would almost let you pay in full. I suggest you choose a cheaper car, buy used, or make use of public transit. Personally I haven’t owned a car for 8 years. $20,000 on a new car might actually be the worst of this entire list to spend your money.
A latte from Starbucks every day for 11 years
At $5 a pop, lattes get a lot of criticism. There’s even an entire chapter in The Automatic Millionaire: (essential reading in the personal finance community as far as word on the street goes) about how you’re frittering your financial security away on mochas and pumpkin spice slices of heaven. $20,000 is a lot of lattes, and that’s all I’m going to say about that.
About 160,000 timbits
Because you’re Canadian, and you would buy that.
So is $20,000 a lot of money? What would you do with that much cash?