Hey there, really struggling and could use some advice. I am 26M and I always tend to invest my emergency fund into stocks to earn higher return.
My monthly net paycheck is $2,200 a month after 20% into my 401k ($787/paycheck or $1,574 a month), I put another $265 into Acorns, $500 into brokerage, and $250 into my Roth (all monthly).
My emergency fund is $6k with $1k in another savings account and $1k in checking.
My Roth IRA has $55k, Traditional has $24k, brokerage has $40k, 401k has $35k.
I want to increase my Emergency Fund to $20k and have about $3k in my checking so I don't fret about living "paycheck to paycheck." Another $2k in a new checking account for quick emergencies so I don't dip into savings.
I decreased my 401k to 14%, which should increase my net paycheck to $2,500. I also decreased my brokerage to $250, the other $250 will go to my checking. Acorns decrease from $265 to $100 a month, same logic here. I also plan on cutting expenses and building some wiggle room for my emergency fund build. Essentially I am just shuffling money around.
Any other ideas or tips on building this? BTW, I opened another checking account to help organize my expenses. My emergency fund will be in a HYSA, which is already opened.
My net worth is about $200k (I haven't included gold, watches, or other assets).
Best Way to Reorganize My Investments and Money?
byu/boss_man14 inpersonalfinance
Posted by boss_man14
2 Comments
Your emergency fund should be around 6months expenses. In the HYSA. Do NOT invest this money, you don’t want to risk the market dropping right when you need it… in an emergency. You can use MM or treasury funds, but not stocks. The purpose of this money is for security, not growth.
Checking should be around 1 month expenses. Its just an in/out buffer. Paychecks come in, bills go out.
Then contribute to match in your 401k.
Then max your Roth IRA.
Then continue in your 401k to try and max.
Then you go to a brokerage for anything else.
Acorns I don’t think is worth it.
The goal is around 15% into retirement. If you can do more, great.
If you have goals for within 5 years, keep in the HYSA.
If more than 5, in the brokerage.
5k across two checking accounts is kind of silly.
Keep 1k in one checking account. Pay for everything with credit card. End of the month, paychecks are now in your checking. Pay the credit card and put all but 1k of the rest in savings.