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Started By
Message
How much money should I be saving?
Posted on 6/30/14 at 1:08 pm
Posted on 6/30/14 at 1:08 pm
I just graduated college and started working. Financially, I'm set up pretty well. I have no money saved up, but I don't have any debt. My first year of work, I cannot put money into the company's retirement plan so my thought process is I will put a certain amount of money into my savings account each paycheck. I'm living at home right now while I find a place, so expenses are extremely low and I figure I can save more. I have to pay $25/month for my car insurance and I pay my parents $400/month in rent (which they are just holding for me until I get my own place- so that I don't get too used to the no expenses aspect and then they will give it back.) After taxes, I'm getting $1300 every 2 weeks. Since I don't buy groceries or pay much on bills, I was thinking I could put 800$ away every two weeks and get by on 500$. I don't spend alot of money, I could make that work. Really, I'm very new to all of this so I don't know what is a good or bad idea. Any and all help would be appreciated
10
Posted on 6/30/14 at 1:09 pm to Tigerfan56
quote:
My first year of work, I cannot put money into the company's retirement plan so my thought process is I will put a certain amount of money into my savings account each paycheck.
you can start a roth IRA
Posted on 6/30/14 at 1:11 pm to Salmon
quote:
you can start a roth IRA
Heard of this. Know very little about how it works, though. What would be the advantages to using this instead of a regular savings account?
Posted on 6/30/14 at 1:21 pm to Tigerfan56
quote:
Heard of this. Know very little about how it works, though. What would be the advantages to using this instead of a regular savings account?
Oh boy. That is very little. It might be better to just go to wikipedia, investopedia, etc and read up on ROTH IRAs. Then come back when you have some foundation for further questions to clear things up.
This post was edited on 6/30/14 at 1:22 pm
Posted on 6/30/14 at 1:22 pm to Tigerfan56
Compounding interest. LINK
Wise and cool move by your parents, BTW.
quote:
I pay my parents $400/month in rent (which they are just holding for me until I get my own place- so that I don't get too used to the no expenses aspect and then they will give it back.)
Wise and cool move by your parents, BTW.
This post was edited on 6/30/14 at 1:53 pm
Posted on 6/30/14 at 1:51 pm to Tigerfan56
Go open a savings account. Pile up as much money as you can.
How long do you think you will stay with the parents?
Go read up on retirement investments, and consider throwing some money into a Roth, into a low-cost index fund.
The important thing at your age is to save money. The how, why, and where can come as you gain experience and knowledge. Just save as much as you can.
Congrats on the degree and new job. If you have student loan debt, consider attacking that.
How long do you think you will stay with the parents?
Go read up on retirement investments, and consider throwing some money into a Roth, into a low-cost index fund.
The important thing at your age is to save money. The how, why, and where can come as you gain experience and knowledge. Just save as much as you can.
Congrats on the degree and new job. If you have student loan debt, consider attacking that.
Posted on 6/30/14 at 1:56 pm to Tigerfan56
I would suggest reading some kind of beginner level finance book. I did not know much at all about savings accounts, credit cards, or retirement when I first graduated and read "I Will Teach You To Be Rich" by Ramit Sethi. It gave me a good understanding of all of these things, and was written well towards someone in our age group.
Posted on 6/30/14 at 2:56 pm to Tigerfan56
quote:As much as possible and then some more. I've begun to realize how important it is to get a legit bank roll at as young an age as possible due to the exponential way that money grows. Sacrifice everything you have to for a year or two, learn about investments and within 5 years you'll be well on your way to being an OT baller assuming the market cooperates a little.
How much money should I be saving?
This post was edited on 6/30/14 at 3:00 pm
Posted on 6/30/14 at 3:20 pm to Tigerfan56
quote:
I was thinking I could put 800$ away every two weeks
So, $1,600/mo to save:
$458/month in Roth IRA (call Vanguard and set one up...very easy). $5,500/yr is max allowed.
$500/month in taxable Vanguard funds or ETFs (something like Total Stock Market with small mix of Total Bond Market fund). You may need $3,000 to start...ask when inquiring on the Roth IRA.
$642/month in savings to build for future vehicle and/or home purchase
In a year when eligible, pull some on savings and taxable investments and contribute as much as you can to 401k at work.
Start with these great habits and increase slightly each year, and you will be in great shape to retire early and live happy.
Posted on 6/30/14 at 9:36 pm to Tigerfan56
I started with an emergency fund of 10k. And then I started with other stuff It's always good to have a stash of money around for rainy days
Posted on 6/30/14 at 9:38 pm to Tigerfan56
Cover your expenses, put back a little for spending, and stockpile the rest in an index fund.
Posted on 6/30/14 at 10:12 pm to Tigerfan56
Make sure to adequately account for the hookers and blow.
Posted on 7/1/14 at 8:37 am to iknowmorethanyou
quote:
Make sure to adequately account for the hookers and blow.
I wish this type of junk would stay on the OT and not ruin a good board. The Money Talk board is better than this stupid comment.
Posted on 7/1/14 at 8:49 am to lnomm34
Lighten up, Francis.
Anyway, hit that Roth fast and hard. If you ever get desperate and need the money, you can pull it out, but you can never get back the years of lost contributions.
Anyway, hit that Roth fast and hard. If you ever get desperate and need the money, you can pull it out, but you can never get back the years of lost contributions.
Posted on 7/1/14 at 12:28 pm to Tigerfan56
Pretty similar to my situation. I am enrolled in a company 401k though which takes out 7% of my pay. usually after taxes and 401k my check is a little over $1000. $200 of that goes directly into a savings account that i set up that do not plan to touch except maybe for a down payment on house or car. I have a realtively small amount of student debt( >$10 grand). I am paying more than the minimum each month to pay off early. This is what works for me right now. Pay should increase over the next two years and will be able to increase my savings. I live at home but pay my car insurance, cell phone, and cost of the storage unit my belongings are in.
Posted on 7/1/14 at 12:44 pm to Tigerfan56
If you can save $1,600/month, I'd split up savings three ways.
1) Make SURE you contribute $458.33 every month toward your Roth (that's the maximum contribution of $5,500/year)
2) $500 toward a Vanguard ETF...VYM is a good one that pays dividends.
3) Save $641.67 in cash every month until you get a really solid emergency fund (you might as well find a high yield online savings account for this)
Thats what I would do.
ETA: I see this has already been mentioned. There's your confirmation! Also, you don't need $3,000 to start on the ETF. It trades for about $66/share so you'll buy about 8 shares every month. You'll be financially stable really soon!
Lastly, there's no need to call Vanguard if you don't want to. I set up my Roth IRA through them online in about 10 minutes.
Most will tell you to buy an "aggressive" fund for your Roth--one with 90% stocks and 10% bonds. That's not bad advice, but I bought the VGSTX fund which has returned 9.85% for the past 29 years.
1) Make SURE you contribute $458.33 every month toward your Roth (that's the maximum contribution of $5,500/year)
2) $500 toward a Vanguard ETF...VYM is a good one that pays dividends.
3) Save $641.67 in cash every month until you get a really solid emergency fund (you might as well find a high yield online savings account for this)
Thats what I would do.
ETA: I see this has already been mentioned. There's your confirmation! Also, you don't need $3,000 to start on the ETF. It trades for about $66/share so you'll buy about 8 shares every month. You'll be financially stable really soon!
Lastly, there's no need to call Vanguard if you don't want to. I set up my Roth IRA through them online in about 10 minutes.
Most will tell you to buy an "aggressive" fund for your Roth--one with 90% stocks and 10% bonds. That's not bad advice, but I bought the VGSTX fund which has returned 9.85% for the past 29 years.
This post was edited on 7/1/14 at 12:58 pm
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