#PersonalSavings #FinancialAdvice #FirstJob
Understanding the Basics
Congratulations on landing your first job! It’s great that you’re already thinking about personal savings and financial planning at such a young age. It’s never too early to start setting yourself up for a secure financial future. Here are some tips to help you get started:
Setting Financial Goals
Before diving into specifics, it’s important to set clear financial goals. Think about what you want to achieve in the short-term and long-term. Whether it’s saving for a house, funding a dream vacation, or retirement, having goals will help guide your savings strategy.
Allocating Your Savings
When it comes to saving for retirement, the general rule of thumb is to contribute at least 15% of your income. Start by maxing out your employer’s 401K match if they offer one. This is essentially free money that can boost your retirement savings significantly. In addition to your 401K, consider opening a personal Roth IRA. This can provide additional tax advantages and flexibility in retirement planning.
Creating a Rainy Day Fund
It’s also crucial to have an emergency fund for unexpected expenses or financial hardships. Aim to save at least three to six months’ worth of living expenses in a high-yield savings account. This fund will give you peace of mind knowing you have a financial safety net in place.
Additional Tips
Here are some additional tips to help you make the most of your personal savings:
– Keep track of your expenses and create a budget to control your spending
– Avoid accumulating unnecessary debt and prioritize paying off your student loans
– Take advantage of financial resources such as apps, online tools, and professional advice to enhance your financial literacy
Remember, personal finance is a journey, and it’s okay to seek guidance along the way. Don’t hesitate to consult with a financial advisor who can provide personalized advice based on your specific situation. Best of luck on your savings journey! 🌟
The more you can save young the better off you will be.
The money guy show has a wealth multiplier chart. Every dollar you invest at 22 has a value around 66 dollars at retirement age. Every dollar you invest at 32 the wealth multiplier goes down to 18 dollars.
My advice the most you can invest while still finding enjoyment in life.
50-30-20 is a rule of thumb for budgeting. Look it up.
Deposit your income into a High yield savings account and only transfer expenses and fun money in exact amounts to your checkings account. This requires you to proactively budget and know where all your dollars are going. Look up best accounts on nerdwallet.com for best deals and apy.
Your rent is low so stay there until you have a rainy day emergency fund set up. Amount should cover 6 months to 1 year of your current expenses including bills, rent, and anything you need to stay fed.
For roth ira, max should be 7k/annually so that’s $583/monthly. If your company does matching for 401k, do it since that’s free money. Any left over money should go into a individual brokerage account for investing if you think you can get a higher return on investing than your savings account.
As someone that graduated a year ago I think you’re on a solid path here. I would start by having three accounts. 1 checking and 2 hysa. 1 hysa for an emergency fund with 6+ months worth of expenses and secondary hysa for short term financial goals.
I’d also sit down and make a solid budget. You have to stick to the budget! I would start by putting in your % company match for 401k then change it to a higher amount once you have a solid budget set and feel comfortable with it if you can. I kept mine at my company match for 2-3 months and then raised it to what I was comfortable with.
As for Roth IRA I try to see the yearly amount I can put in and divide it by number of checks for that yr and put in that amount per check. I also wait for my tax return to add a lump sum into it if I get money back.
I think with your expenses being fairly low you should be able to max out your Roth IRA and put a good chunk into your 401k every year at this job especially if you’re on a strict budget.
You should at least put as much into your 401k to get the maximum match by your company. It’s free money. And starting investing early will mean thousands of more dollars in your account if you wait until til later to start saving.
Open a ROTH IRA immediately and max out your annual contributions. Use the ROTH IRA to Invest in the SPE 500 and other index funds or mutual funds. I would avoid stocks if you don’t anything about investing. Lower risk but steady return on index funds. Open an account with Charles Schwab. Roth IRA is the best invest you can make since you won’t pay taxes on the money you pull out after you retire
Contribute to 401k or whatever plan your employer matches. As much as your comfortable with
Save for a rainy day fund, like 20% of each paycheck.
Pay off student loans faster if you can since the interest rates will result in you paying back much more than you borrowed
Max out your 401K if possible.
Save Save Save
Get a Roth & put the max amount per year into it. I think it’s like 6-7k per year. Then I would just do a basic account for your 401k. Have an emergency fund for a $$ amount you’re comfortable with then I would say invest some too! Like have a budget for how much goes to EVERYTHING. Then I would invest in things that interest you, actual stocks( stable or more risk) and I would invest in the development of yourself. You got this!!
The !sidebar has the PRIME DIRECTIVE which has a great flowchart on what you should do with your money. Try to save between 15-20% of your income, get $1,000 in your Emergency Fund, then save up to the full employer match in a 401k, then back to your Emergency Fund for 6+ months expenses.