#FirstPaycheck #SavvySaver #InvestingAt17
Hey everyone! ๐ So here’s the scoop: I just received my very first monthly paycheck, and itโs around $500! ๐ As a senior in high school, Iโm working fewer hours because I really need to keep my focus on school.
Now, the exciting partโI donโt have many personal expenses at the moment, which got me thinking: what should I do with this extra cash? Should I stash away like, 80% in savings for college, or maybe dive into the world of investing? ๐ค I definitely want my money to grow over time!
Here are some things on my mind:
-
Savings for College:
- Putting away a chunk for college seems super responsible. ๐
- It gives you a cushion for unexpected expenses later on.
- Learning to Invest:
- Investing can be a great way to grow your money over time, especially if you start young! ๐ฐ
- Plus, itโs a good skill to have for the future.
But letโs be real; managing your first paycheck can feel a bit overwhelming, especially with so many options! Here are some reasons why this can be tricky:
- Lack of Experience: Not having prior experience in managing finances can lead to uncertainty on how to allocate funds effectively.
- Fear of Loss: With investing, there’s always the fear of losing money, which might discourage some from even trying.
- Pressure to Make the Right Choice: You might feel pressured to โdo the right thingโ with your money, but thereโs no one-size-fits-all answer.
Possible Solutions:
- Create a Budget: Start by figuring out how much you need for immediate expenses, and then decide what to save or invest.
- Educate Yourself on Investing: There are tons of resources for beginners. Consider apps that allow you to invest small amounts so you can learn as you go.
- Talk to Someone: Maybe a family member or friend who is savvy with finances could give you some advice or insights.
I’d love to hear from you all! What did you do with your first paycheck? Do you have any tips for a newbie like me? Letโs chat! ๐โจ
Right now with limited income, I wouldnโt invest because once you do invest, you shouldnโt be touching that money for a long time. Otherwise, you might have to come out with a loss if you try to pull out early to cover other expenses. Iโd recommend you just stick it in a HYSA or high yield savings account. I use Wealthfront and Ally and they offer 4.5% and 4% APYs respectively. In the mean time, do learn to invest. Once you get a stable job and have actual money left over that you wouldnโt need, only then invest it.
Read books on investing. More the better, earlier the better.
There’s two options I would suggest. Maybe even both would be good for you.
1. Put some of it in a high yield savings account. Right now rates are at about 4-5% depending on company. Read the fine print.
2. Open an investment account, Fidelity, Empower, etc. There are many companies out there. Invest the money in that account into the S&P500.
Please please please PLEASE as soon as you get a job who offers a 401k match, sign up for it and contribute at least up to what they match or 5%.
Look up the 50/30/20 rule. I’m currently using it rn.
Invest as much as you can in low cost index funds. Time is more powerful than money and you have so much time.
Congratulations on your first paycheck!
If no one has told you yet, I am very proud of you. You are working hard and earning money on your own AND asking for help on how to save for the future! Bravo!
I wish I was this forward thinking when I was your age! Seriously, no sarcasm or even advice to give. Just joy. ๐คฉ
Save the money for now in a hysa. I think market watch has an option to โtradeโ fake money. I would play around with that for a few years. See some dumb losses. See some steady growth, just learn about the market. After a few years you should understand enough to make an investing plan.
Invest in education with adderall
I would start a Roth IRA. Put 25% of my paycheck in it and invest in a S&P500 index fund. I go with SWPPX at Charles Schwab. Learn about IRA rules, and keep consistently investing in your future. Then I’d start saving some cash as an emergency fund. I put my cash in SNSXX at Charles Schwab as well.
Qylg and Xylg. Good dividend and growth !
Pay off your bills, start budgeting and try to stick to it. Put your savings in HYSA. Search for HYsA that pays sign up bonus
I would go to a shop I like and don’t go often too and buy myself one thing and put the rest on a saving account where you can withdraw at any moment
Congratulations!
HYSE for college if you arenโt going to be getting a full scholarship/ money from parents.
Enjoys being a teenager!
Check back in here once you start working in your early 20โs.
I bought myself something with the first paycheck at every job as a token/reminder of that 1st paycheck joy. Always jewelry.
Anywho – save at least 50% regardless. Get into the habit of NOT spending it all.
First check? Easy. Cash it, spend it. Spend the hell out of it. Celebrate. Share.
Then.
Then go back to work the next week. See how it goes to know the work effort needed for some quick disposable thrills.
It’ll make your future budgeting decisions carry more weight.
And I join other internet strangers in being proud for you.
Congratulations and welcome to the working world!
As others have said, you should save and/or invest.
I think if I were you, with no expenses I would save that money in a high yield savings account and continue to save it until you hit $10k.
You can treat yourself once in a while but the main goal would be to save. When you hit $10k that would be your starter emergency fund and that would already put you leagues above the average American.
You may not have any expenses or obligations now, but you most certainly will and you will be glad you had this money set aside.
And when I say emergency I mean a true emergency, not “my friends want to go on this once in a lifetime vacation.” Or “I want to upgrade my car ” I’m talking a true emergency. Now is the time to set that up as you are less likely to have them at your age.
Then I would start contributing to a Roth IRA. This will act as one of 3 investment accounts that you can set aside for retirement. The best thing about being 17 is that you have time on your side. If you consistently save and invest that money you will almost certainly be a millionaire by the time you retire with the possibility of being able to retire early if you choose. This is the magic of compound interest.
When you get a full-time job, if they offer a 401k and a match please take it. This would be another way to invest for retirement and if they match them that is free money.
A great resource I would suggest is the “money guy show” on YouTube. They are certified financial planners and advisors who give free advice and can really put you in the right path. You don’t even have to watch, just have them on in the background and listen.
I’m literally twice your age and oh do I wish I could go back to your age and start all over financially.
Best of luck to you!
Consider putting it in a Roth IRA if you donโt need the money, or a 529 if you need it for college.
My husband did this with his dishwashing paychecks in high school. (He was privileged, his parents just made him work a job to learn hard work). Due to the power of compounding his few hundred dollars each month have grown a lot and he doesnโt have to pay taxes on it.
Hey OP congrats on the first paycheck! I remember getting my first one 13 years ago and I was over the moon lol. Take a little bit of that money ($100) and reward yourself with something you enjoy that isn’t an item you can get regularly. Maybe a nicer dinner, a pair of shoes you’ve been eyeing, something along those lines since you’ve worked hard for your money, then put the rest away.
First thing is like others have said, look into a high yield savings (HYS), I have mine through Marcus and have been satisfied as there is no fees, no minimum to open an account, and mine is currently returning 5%. $500 won’t gain a ton initially, but if you keep at it there will be gains and set you up better in the future. I would not invest $500 in the stock market or anything just yet as that requires research and risk vs HYS is no risk and works like a regular account.
Stick it in a roth ira until you hit the $7000 max for the year, then the rest in a regular brokerage account – buy VTI and VXUSand call it a day
Nice job! thinking ahead.
What I generally recommend at your age is cash in the bank. That doesn’t mean your local big bank with stinky rates. Look at Credit Unions, and look online for HYSA. HYSA stands for High Yield Savings Account and it’s nothing more than a savings account with competitive rates. Your Credit Union or local bank might have a HYSA option…particularly considering your age — some banks or credit unions sometimes incentivize kids saving. And from their standpoint, under 18 is a kid.
Now… why cash in the bank? Because a lot goes on in the first few years of becoming an adult. It was just over 40 years ago I was your age….and a lot of things are different. There weren’t big banks back then — interstate banking was ***illegal*** except when legalized by a specific agreement between the two states in question. Of course no internet as we know it today.
I learned to invest starting with my workplace retirement account (401k)…and my only investment for my first 10 years post-college was that 401k. Better I think to have cash accessible to cover expenses rather than borrowing on a credit card for something. Having too much invested can actually be bad, because it encourages you to borrow more so as to not unplug your investments.
I was fortunate that my mom worked at the local StateU, and that my parents divorce decree included a statement about paying for college. So I graduated loan-free. But setting up life post-college-graduation took money. I chose a career that required me moving across the state. To take that job I had to move.
My career has done great for me, but so has our discipline to save. I think setting up that discipline today is the best thing you can do — learn how to set aside some money for the future, and to budget for some money to spend today. Once you have that discipline down it becomes much easier to add on investing as well as saving.
Ofcourse invest it but in something you can easily pull out without downsides.
Vanguard account. And put it in VOO index fund. All free accounts and very low cos for index fund. You can take it out anytime and it’s quick. No penalties, just some taxes if there is a gain which in your case should be very low to none.
Blow it on new clothes or shoes. You deserve it.
Put in a high yield savings account. The day you turn 18, open a Fidelity brokerage account. Invest in some large funds (do some research now) and let them sit for a very long time. Re-invest your dividends and keep adding to new funds or stocks. It is not play money – leave it alone to grow. Ask people what they invest in, and why / when they buy. Ask people what they sell off, and why / when.
When you reach $10-25k in investments, find a fee-only investment advisor and get some professional advice. Keep adding to it.
If you make this a habit now, it will be second nature by the time youโre 30 and set you up for a lifetime of financial health.
I was poor growing up, i got my first job at 14 to buy things i wanted. My first paycheck was like $200 back in 2014. You know what i did? I bought 3 pairs of vans ($50 per shoe,) (they were really in style back then) and wore them to school. I was so happy bc i was able to wear shoes that the “richer” kids wore. Best first purchase of my first paycheck ever.