For context, I’m in my mid 20s and Ive begun to make actual money for the first time in my life through the military. I’m making around $1000 per month, and I don’t have to pay for housing, food, utilities, or really anything at all so almost all of the money just sits in my bank account. I know savings and investing properly are a huge part of making money for the future and have a stable financial position but I know next to nothing about any of it. Where do I start? Suggestions and tips would be much appreciated.
First time getting a consistent paycheck and having leftover money. How should I start saving and investing?
byu/AVeryBigToe inpersonalfinance
Posted by AVeryBigToe
4 Comments
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1) congrats! 2) open a high yield savings account (HYSA) and put your money in there so you’re at least getting something better than 0.1% at traditional banks. Make sure it’s FDIC insured (usually up to 250k). 3) have any loans? Start chipping away at those and make extra payments to PRINCIPAL when you can. 4) open and fund a Roth IRA. Assuming you’re single and that’s how you file taxes, put $7,500 in said account and by index funds/ETFs- VOO, VTI, FXAIX, etc. Low expense ratios are your friend. That’s a solid start.
Read the Wiki/FAQ for this sub. (It will be linked in a reply to my answer.) It will tell you everything you need to know.
First open a HYSA paying 3% or more to stash your money in. This is your emergency money. Don’t touch it unless your have an actual financial emergency. For example if you separated from the military and needed to pay all of your own bills. Calculate what your monthly expenses would be if you had to pay housing, food, utilities, etc, plus whatever you pay for now, multiply by 6, and shoot for having that much in the account.
Once you have enough in that account, open a Roth IRA and start contributing to that. Or maybe split between the emergency fund and Roth IRA, $500 each.
And don’t buy a Charger.
Usually a Camero with a 25% APR, 30 year loan