Is 20000 a lot of money? The answer is absolutely, without a doubt, yes. Too many people don’t understand just how much a lot of money $20,000 actually is. They only look at the money at face value and think it’s not a lot of money. That’s not right. There are more reasons besides that.
When I was 20, I made my first $20,000. I felt like the king of the hill. I thought I was different. While my friends were riddled and saddled with student loan debt, I had a positive net worth to show for it by the end of it all. I thought I had it made. However, what I didn’t understand was just how much power I had.
I didn’t know that I was literally holding the keys to obscene wealth. As a naive 20 year old, I just let the cash sit there in my savings account. Doing nothing but just losing value to inflation. I didn’t know the true power of what $20,000 could bring into my life. If only I had known.
Many people look at $20,000 and think it’s not a lot of money because well, they blow through that money in a matter of months. Especially these days with inflation being 8%. The value of our money erodes faster than we can earn it. Therefore, people discount the true power of what $20,000 brings us.
It actually is literally a life changing amount of money. When someone asks is 20000 a lot of money and the other person responds with no, it shows just how little they know about money. They look at their life as a 30 or 40 year old and think that it’s such an inconsequential amount of money to them. That’s wrong.
Why $20,000 is a lot of Money
Below are the reasons why $20,000 is a lot of money.
1) Median Salary of the United States is Low
Did you know the median annual salary in the United States was $41,535 for 2021? That means half earned more and half earned less. When you know this data, then you know the answer to is 20000 a lot of money a resounding yes. As a 20-year old, I could’ve literally paid someone the median wage for almost six months.
And given them a job. As a 20-year old. I can’t imagine just how much more employees I could employ as time passes. The United States is the wealthiest and richest country in the world. However, that doesn’t mean everyone in the country is doing well financially.
There are ones who make a lot of money and there are ones who don’t. $20,000 can literally buy someone’s labor for a solid six months. That’s a lot of time. Too many people stereotype that every American is rich. That’s not the case. It only has worked for the select few.
2) $20,000 Grows into Massive Amounts
$20,000 invested at an 8% annual rate over 45 years equals to $640,000 by the end of it all. That’s insane! That’s without investing another dollar into the stock market. With just $20,000. If I had invested my $20,000, at the age of 20, it would’ve grown into something close to $35,000 by now.
Is 20000 a lot of money? Of course it is when you realize just how much it can grow into. It’s not that you even have to do any sort of active investing, either. All you have to do is let it sit there and watch the money roll in. Your money is going to do all of the hard work for you.
Let the $20,000 grow into massive amounts because it will grow into a massive amount. Imagine if you put in more money than $20,000 in the stock market over your lifetime. Can you imagine just how much it’ll grow into then? Compound interest is such a powerful concept, many people do not take advantage of it.
3) $20,000 Buys a Lot of Stuff
Even these days, even after all of the inflation, $20,000 buys a LOT of stuff. My entire house was furnished for less than $20,000. That was because of the minimalist lifestyle with my friends giving me a lot of their furniture. It was also because I never shopped at expensive places.
The most expensive thing I own is a $200 dining table. That I got from Walmart. On sale. With discounted gift cards. People don’t think $20,000 is a lot of money until they actually have to go out and spend that money. They won’t know what to do with all of that money.
I bought my car for $10,500 out the door in 2016. That means, with $20,000, I would have reliable transportation AND I would have additional funds leftover for food and water. That’s a lot of money. When looking and taking things into perspective, is 20000 a lot of money is easily answered with a resounding yes.
4) $20,000 is Someone’s Yearly Expenses
In the first few years of graduating college, I literally lived on approximately $20,000 per year. $20,000 buys me an entire’s worth of living expenses! Imagine that! These days, that’s not so easy because of inflation. However, the ability to fund my entire life for an entire year sounds great with me.
Additionally, in many parts of the world, that could fund their life for a solid 2 – 3 years. In countries like Vietnam, Thailand, and the like, $20,000 buys an obscene amounts of goods and services. One dollar in those countries can literally buy a meal. Not just a cheap meal, but a good portioned meal.
Is 20000 a lot of money? Yes, when you consider the fact that there are people who can live on multiple years off that kind of money. It’s someone’s yearly expenses. It used to be my yearly expense until inflation ran rampant and out of control in 2022.
That’s one of the reasons why I know I’ll keep working longer than I thought.
5) Only 5% of Americans Have Savings Between $10 – $20k
According to Fortunly, only 5% of Americans have a savings account between $10 – $20,000. Now, that statistic is a misleading because they could have their money parked elsewhere like in a brokerage account. However, if you adhere to the emergency fund rule and have $20,000 in your savings account, then you are doing well.
You literally have a better cash buffer than 95% of Americans in their savings account. That’s commendable. Is 20000 a lot of money? Yes, when you consider that it’s more money than what 95% of Americans have in their savings account.
$20,000 is not just money to be proud of. It’s money to be darn proud of. Those who think $20,000 isn’t a lot of money these days have no idea what they’re missing out on. They are taking their power, money, and position for granted. It’s a very good chunk of change to have.
My Journey to $20,000
So now, you may be asking, well, how exactly did I amass $20,000 when I was in college? A time when people are supposed to be riddled with debt, making poor financial decisions, and spending their life away? Well, it’s very simple. I simply saved a lot of money by doing a lot of free things.
Every time that a club offered free food in exchange for attendance, I was there. When the school had free events just for their students for entertainment, I was there. Then that’s not all. I worked as much as I could. I worked 2 jobs during the semester and I worked every single summer.
Some were only making $12/hr, others were $18/hr. Either way, I worked like a dog and saved as much money as I could in order to get to that position. Is 20000 a lot of money? Yes. Is 20000 a lot of money for a 20 year old? Absolutely yes. I wish I knew better personal finance habits back then.
I didn’t know that investing that money is what’s going to make it even more crucial. Saving and investing money came easily to me. I wasn’t so good at investing that money. I’m kicking at my 20 year old self for being in such a position.
I cultivated the best position I could’ve ever been in and squandered it.
Life does go on and it’s a lesson I learned for my future kids. When they ask me is 20000 a lot of money, I can tell them all about the good old days of how it mattered the most. $20000 is such a large amount of money, people shouldn’t be messing up if they’re ever in that position.
Is $20,000 a lot of Money? Yes It Is
I hope by now, it’s obvious the answer to the question is 20000 a lot of money is a resounding yes. It’s not even up for debate that it’s a lot of money. It just is. The amount of goods and services it can buy, and the amount of money it can grow into is insurmountable.
An extra $20,000 would propel me close to the half a million dollar net worth mark. Once I get to half a million dollars is when I know my net worth is going to skyrocket into the moon. That’s when, according to the safe withdrawal rate, I can withdraw $20,000 per year safely from my stash.
Having $20,000 is an insane amount of money. Imagine spending $20,000 per year in risk free money that I can spend. That’s when the real magic happens. Too many people are out there thinking, “a dollar isn’t what it used to be worth before” and think that $20,000 is an inconsequential amount of money.
Not at all. It’s a GREAT amount of money to have, and even spend with. It’s a lot of money to have, it’s a lot of money to gift, to have as retirement, to pay for college, to buy a boat, and the like. Too many people don’t understand their position when they actually have $20,000 in the bank.
Is 20000 a lot of money? Yes it is. Don’t let other people tell you otherwise. However, it becomes more important than ever to do something with that money. Investing that money so it grows into a much larger amount isn’t a bad way to go.
If more people do it, then it brings the power back into the employees. Let’s go for it.
