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Any advice/strategies to building up a cash nest egg for a young professional?
Posted on 2/17/16 at 9:05 am
Posted on 2/17/16 at 9:05 am
I've been working a year and a half now full time, salaried, out of school. I haven't saved near as much money as I feel I should have. My cash and savings total is around $1,500. I do put away 10% of my salary into a Roth 401k and max out my Roth IRA each year, but I still expected to build up more cash in savings. My salary is 47,500 and I feel kind of worthless that I've saved only 1,500 in almost two years, with no debt.
I have started a QuickBooks file this year to better track my money and see where I can cut the fat. Honestly though, I feel I don't spend very frivelously. Most of my money goes to bills, groceries, and retirement. Any tips/suggestions/habits to try to develop? I would like to build to at least 5,000 cash and ideally 10,000.
I have started a QuickBooks file this year to better track my money and see where I can cut the fat. Honestly though, I feel I don't spend very frivelously. Most of my money goes to bills, groceries, and retirement. Any tips/suggestions/habits to try to develop? I would like to build to at least 5,000 cash and ideally 10,000.
7
Posted on 2/17/16 at 9:09 am to Tigerfan56
This is just my opinion but if you are maxing out your IRA and making 10% contributions to the 401K, then you are off to a great start. I didn't start contributing till I was 2 years into work and missed out on plenty of retirement funds.
That said, you can always back off those two accounts for 2-3 months and get your savings account built up. Should have at least 6 months worth of living expenses liquid. Once you have that, turn everything back to the retirement accounts.
That said, you can always back off those two accounts for 2-3 months and get your savings account built up. Should have at least 6 months worth of living expenses liquid. Once you have that, turn everything back to the retirement accounts.
Posted on 2/17/16 at 9:12 am to Tigerfan56
quote:
I do put away 10% of my salary into a Roth 401k and max out my Roth IRA
If you eat out a lot, stop. That will save you a ton of money. BTW, you're better off than most by having no debt so congrats
Posted on 2/17/16 at 9:38 am to Tigerfan56
I'm in an extremely similar situation as you. Only difference is that I only contribute 4% to 401K cause I get 4% employer match. I have been able to save up close to $15, 000 in a little less than a year.
I think thats awesome that you are getting a great start on your retirement accounts, but at the same time I would probably stop all contributions after your employer match for right now. Once you have built up some savings then you can start again.
I would recommend mint.com for keeping track of all your stuff, its awesome. As for cutting unnecessary spending, don't eat out and cook alot of stuff at home. Where do you live and how much does it cost? What are the bills? My total rent/utilities is around $600/month and I think thats a pretty solid price for your (and my) income. I know some people with a similar income paying $1,000+ to live in a nice 1 bedroom place, which I'm sure is great for living, but I don't see how any of them can save any money.
If I were you (which I feel like I pretty much am in this scenario), I would save at least $10,000. Once I met that goal, I thought about what my next large expenses are going to be. Now I am working to pay for the down payment on a house that I will hopefully buy within the next 2-3 years.
I think thats awesome that you are getting a great start on your retirement accounts, but at the same time I would probably stop all contributions after your employer match for right now. Once you have built up some savings then you can start again.
I would recommend mint.com for keeping track of all your stuff, its awesome. As for cutting unnecessary spending, don't eat out and cook alot of stuff at home. Where do you live and how much does it cost? What are the bills? My total rent/utilities is around $600/month and I think thats a pretty solid price for your (and my) income. I know some people with a similar income paying $1,000+ to live in a nice 1 bedroom place, which I'm sure is great for living, but I don't see how any of them can save any money.
If I were you (which I feel like I pretty much am in this scenario), I would save at least $10,000. Once I met that goal, I thought about what my next large expenses are going to be. Now I am working to pay for the down payment on a house that I will hopefully buy within the next 2-3 years.
This post was edited on 2/17/16 at 9:40 am
Posted on 2/17/16 at 9:42 am to Tigerfan56
I'd add that reading some personal finance blogs of super frugal people can be educational.
There are a few folks out there who pulled off absurd savings rates early in their careers so that they could retire early/not worry about that later on. They also picked up odd jobs (like Uber) even though they had great primary occupations.
Not saying to approach 85% savings like they did, but they may be able to point out some ideas that you can try out.
There are a few folks out there who pulled off absurd savings rates early in their careers so that they could retire early/not worry about that later on. They also picked up odd jobs (like Uber) even though they had great primary occupations.
Not saying to approach 85% savings like they did, but they may be able to point out some ideas that you can try out.
Posted on 2/17/16 at 9:44 am to Tigerfan56
You're off to a great start. One thing that helped me out a lot was to automate my savings. Set up an automatic withdrawal from your checking account every payday to transfer into savings.
Posted on 2/17/16 at 9:52 am to Tigerfan56
--Look carefully at your "bills". Do the math on what you're spending annually on cable/satellite TV, cell phone, high speed internet. You can probably drop cable/satellite & tweak the other two and save $500-$1500 annually.
--Learn to cook. It's the best way to save money on groceries. Try not to throw food away--repurpose things into lunches or second meals.
--Brown bag your lunches. Sure, you need the occasional social lunch for colleagues, holidays, etc. but packing a lunch from home can save $25+ a week.
--Shop around for cheaper car insurance. Maybe you're still with the company your parents used, or you got a policy years ago and just keep renewing it. Chances are, you can be saving $$.
--Look at your gas/fuel consumption. How much are you spending on driving around? Can you plan your commute or errands more efficiently rather than driving 1/2 way across town for various tasks?
One trick that's worked well for me is to automatically save any pay increases. If you get a COLA of 2.5%, go ahead and have the increased pay direct-deposited into your savings and keep living on the same amount of money.
Good luck...money in the bank equals freedom and peace of mind.
--Learn to cook. It's the best way to save money on groceries. Try not to throw food away--repurpose things into lunches or second meals.
--Brown bag your lunches. Sure, you need the occasional social lunch for colleagues, holidays, etc. but packing a lunch from home can save $25+ a week.
--Shop around for cheaper car insurance. Maybe you're still with the company your parents used, or you got a policy years ago and just keep renewing it. Chances are, you can be saving $$.
--Look at your gas/fuel consumption. How much are you spending on driving around? Can you plan your commute or errands more efficiently rather than driving 1/2 way across town for various tasks?
One trick that's worked well for me is to automatically save any pay increases. If you get a COLA of 2.5%, go ahead and have the increased pay direct-deposited into your savings and keep living on the same amount of money.
Good luck...money in the bank equals freedom and peace of mind.
Posted on 2/17/16 at 9:58 am to Delacroix
quote:
Set up an automatic withdrawal from your checking account every payday to transfer into savings
+1
Pay yourself first.
Posted on 2/17/16 at 10:00 am to AgMoney2143
quote:
nly difference is that I only contribute 4% to 401K cause I get 4% employer match.
quote:
have been able to save up close to $15, 000 in a little less than a year.
What job do you have making 200k in your first year of work?
Posted on 2/17/16 at 10:04 am to barry
quote:
What job do you have making 200k in your first year of work?
I don't think he's saying all his savings are in his 401k after 1 year.
I could save 15,000 on half of 200k gross annually pretty easy between a 401k match and ROTH.
IE 100k @ 4% = $4,000 plus $4,000 from employer = $8,000
ROTH = $5,500 + $8,000 = $13,500
$1,500 in taxable savings = $15,000.
This post was edited on 2/17/16 at 10:07 am
Posted on 2/17/16 at 10:04 am to barry
I was just thinking the same thing.
Posted on 2/17/16 at 10:05 am to barry
quote:
What job do you have making 200k in your first year of work?
I think he is saying he contributes 4% to his 401k, and then outside of that he has saved 15k. Not that 15k is 4% of his salary.
Posted on 2/17/16 at 10:34 am to barry
4% is a seperate account. 4% of salary goes to retirement, and the 15K is from the rest of the take home pay
Posted on 2/17/16 at 6:34 pm to Tigerfan56
This is a hijack- But I was having trouble finding anything about it online and don't think it merits a new thread.
Is anyone familiar with an investment vehicle for High School tuition that is similar to the ones available for college? (529, LA START). If not, and it looks like there isn't, does anyone have any advice on how to begin preparing for that bill?
I have no kids just as an FYI.
Is anyone familiar with an investment vehicle for High School tuition that is similar to the ones available for college? (529, LA START). If not, and it looks like there isn't, does anyone have any advice on how to begin preparing for that bill?
I have no kids just as an FYI.
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