I sadly do not have many people in my life that I can ask, so I am coming to Reddit.
Context:
I am 22 (23 next week if that matters 😅), currently living with my boyfriend and one roommate. My boyfriend owns the home (his mom passed and her life insurance was enough to buy a small starter home), and all three of us put $550 a month into a bank account dedicated to the house. This account pays all the bills associated with the home. I don’t really have anything to do with it, my boyfriend keeps track of it.
I am currently still on my parents health insurance, and I can stay on it until I’m 26. I am also on their car insurance, but I’m in the process of switching over to my own insurance. I moved from NJ to FL to be with my boyfriend, so I need to register my car and find my own insurance.
As of right now, the only bills I’ll have are my car insurance, phone bill, $550 rent, and whatever money I spend on necessities. I also have one secured credit card with a $200 limit. Overall, I think I’m doing pretty well on that side of things, and the fact that my boyfriend already owns his home puts us way ahead of the game.
Now onto what I already have money wise. I just accepted a job offer for $18/hr, 80 hours bi-weekly. I’m still employed at my current job, which I will be leaving. The new job starts on the 26th.
I do not have any savings at the moment. I have just over $1,800 in a traditional IRA with Principal from a previous job. I had a 401k, couldn’t keep it there when I left, so I rolled it over into an IRA. I want to get into investing, so I opened an account with Robinhood and put $1 into VOO and $1 into SPY (obviously I’ll add more over time). I will also be doing a 401k with my new job, and they match up to 3%.
My questions:
– How much money should I be putting into a savings account each paycheck?
– How much money should I be putting into VOO/SPY?
– Is there anything else I should look into for investing?
– What should I do with my IRA? Should I keep it as is or add to it?
– Is there any other advice you’d give for someone in my situation?
Given my lack of bills and living situation, I feel like I have the perfect opportunity to save a LOT. I mainly want to know the best way to go about it. Thanks in advance!
General finance questions to help set me up for a good future
byu/weirdworldyes inpersonalfinance
Posted by weirdworldyes
3 Comments
Get an emergency fund to last you 3-6 months then invest. If your new job does 401k match, take the match and nothing more for now
Check out the prime directive and read the wiki. Congratulations on making sure you’re on top of this at your age! If you internalize the basic materials on the wiki, you’ll stay ahead of 99% of people for the rest of your life.
For emergency fund and those VOO/SPY investment establish a Roth IRA. You could keep all your savings in a tax deferred vehicle and not pay tax on interest, dividends, and capital gains. Roth ordering rules allow you take out your original contributions at any time tax and penalty free. So, for someone at your income level, it can even serve as the location of your emergency fund so that interest on those funds is not taxed. You cannot use the earnings in the account tax and penalty free unless you meet one of the limited exceptions or have held a Roth account for 5 years and meet one of the qualified distribution criteria.
Once you hit the $7,500 limit for 2026 contributions, then you can save into a taxable account or simply up the deferral into your 401k (how much more you want to use that vehicle depends on how much admin costs you bear for the 401k and what the plan choices are).