I am a 27 year old with a full time job in the education system and I also so coaching on the side. In total I bring in about 80 grand pre tax. I have about 30k in savings which is receiving the money from coaching monthly. I haven’t touched it all. I have no money in investments but am looking to spread some money out to allow it to work for me. Any advice?
Seeking financial advice for 27 year old who teaches public school and coaches on the side.
byu/Helpful-Bag-2585 inpersonalfinance
Posted by Helpful-Bag-2585
6 Comments
That’s solid base to start with! At your age having 30k saved already puts you ahead of most people. I’d suggest maybe putting some portion in index funds – they’re pretty straightforward and don’t require too much research. Also check if your school district offers 403b matching since that’s basically free money you don’t want to miss.
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You need to be contributing to retirement accounts and investing in stock index funds. I’d aim for 20% savings to start
for the most mathematically efficient way to utilize your dollars, it’s typically build a starter (not full yet) emergency fund > get the employer match from your 403b plan if there is a match > pay off high interest debt like credit cards > build a full emergency fund that is 3-6 months of your living expenses > fund a roth ira and hsa if you have one > keep filling up the 403b until you’re saving 15-20% of your gross income in total. definitely get started on investing soon, the best time to invest was yesterday, the second best time is today
edit: forgot a step
Make a budget. You need to know where your money is going now, so you know how to best direct it. Start by reviewing your *actual* spending habits, not your ideal ones. There may be some surprises! Also, check your credit score. You may not need credit now, but chances are, you will.
Build an emergency fund. Sounds like you already have this covered pretty well! Ultimately, you want 6 months of living expenses set aside. This protects you in case of something major – like losing your job. Put this money in a separate, high yield savings account. That way it earns interest but is not at risk of losing value, and does not get easily comingled with your everyday funds.
Pay off any debt. Paying off higher interest loans first saves the most money, but paying off lower balances first to reduce the total number of debts is good for a psychological win.
Open a Roth IRA. This is a great way to save for retirement when you’re younger and making less money. You add money after tax (so no break on your yearly taxes) and can only put in so much ($7,500 in 2026, and the amount generally increases each year). The reason a Roth is so great is that the money grows tax free! And, if you do have a situation in which you need the money before retirement age, you can withdraw the principle at any time, penalty free. Invest this money in low cost mutual funds and let it grow. Ideally you want to save 15+% of your income for retirement, so look at your other account options too. And as someone else said, always go for that employer matching if available as it is free money!
If you do all this and still have some money leftover, you can open a regular brokerage account for further investing. Stick with mutual funds as they are much safer than individual stocks. Be sure to keep that emergency fund liquid though, as all investments can lose value and you don’t want to be forced to sell at a low point.
Depends on your priorities too!
A Roth IRA is your best option if you want to prioritize retirement.
If you plan to use that money for a big expense, such as down payment on a house or something like that, in the next 5 years, do not put it in a retirement account.
ETFs and mutual funds are a great simple option. Start with a simple index of the S&P. Look for funds that are more than 1-2 years old, have good ratings, and high volume with low expense ratios. Determine the level of risk you’re comfortable with and go from there.
If you have a lower risk tolerance, CDs and bonds are your options. These are good if the money is short term.
Higher risk tolerance and long term is better to go with ETFs, mutual funds, and sector-specific of your choice!