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Well I am a 26 year old adult that has a salary of approximately 31K after taxes. I have very little debt as I slowly paid it off. I have a few credit credits and a car note of 200/month with about 2 years left. I have a 401K that my employer currently will pay 1.50 per 1.00 I put in up to 2.5% of my contribution (hope that makes sense, novice here). I am currently just putting 2.5% which started about a year and currently has about $1300 in my 401k. I think my next step is increasing my contribution. I have started becoming financial literate and have been educating myself. My main question(s) is what else do I need to be doing so my money is working for me? I'm just looking for some general advice and perhaps some general education. Thanks!
edit:
I have approximately $1700 in my savings accounts.
Well I am a 26 year old adult that has a salary of approximately 31K after taxes. I have very little debt as I slowly paid it off. I have a few credit credits and a car note of 200/month with about 2 years left. I have a 401K that my employer currently will pay 1.50 per 1.00 I put in up to 2.5% of my contribution (hope that makes sense, novice here). I am currently just putting 2.5% which started about a year and currently has about $1300 in my 401k. I think my next step is increasing my contribution. I have started becoming financial literate and have been educating myself. My main question(s) is what else do I need to be doing so my money is working for me? I'm just looking for some general advice and perhaps some general education. Thanks!
edit:
I have approximately $1700 in my savings accounts.
How much can you save every month after taxes? I would say contribute more towards 401K contributions, but need to know how much you can save and rent or mortgage and interest rate.
Do you have any emergency funds or is the $1700 your total savings?
Total savings. I have checking account that I use for bill paying.
Quote:
Originally Posted by darrell2525
How much can you save every month after taxes? I would say contribute more towards 401K contributions, but need to know how much you can save and rent or mortgage and interest rate.
That is a good question. Currently I have anywhere between $50-$200 I can possibly save. I gave that range because I am a 26 year old that does like to go out and socialize. I don't put myself in debt to do so and also realize sacrificing some fun time/blow off steam time so I can contribute more to more financial future is needed.
I would definitely focus first on building up your savings account to at least 3 months worth of your average expenses. After that, I'd pay off the rest of your bills, highest interest rate first. Only after those two things were done would I look at increasing your 401k contribution. Getting the full company match is a no brainer, so good job there, definitely keep that up.
DV1033,
A better solution would be investing in your 401(k) first, hoping you have had good fund choices. Do not delay putting money in your investments. The reasons are simple: time. Compounding is the greatest gift to mankind. Delaying putting money into the 401(k) until after you pay off credit cards throws away the valuable time function. Time to pay off your debt will always be there. Time to build your retirement will not. If you want to retire rich, as in a $million+, simply invest the 1st hour of every working day. At $31k/year, you probably earn about $18.75/hr. So put the 1st hour earned every day into the 401(k). To make it simple, this is 12.5% of your income. Learn to life without it. As long as you save the 1st hour earned every day, you can work for minimum wages and still have more money at retirement than most people on this site.
Dave
DV1033,
A better solution would be investing in your 401(k) first, hoping you have had good fund choices. Do not delay putting money in your investments. The reasons are simple: time. Compounding is the greatest gift to mankind. Delaying putting money into the 401(k) until after you pay off credit cards throws away the valuable time function. Time to pay off your debt will always be there. Time to build your retirement will not. If you want to retire rich, as in a $million+, simply invest the 1st hour of every working day. At $31k/year, you probably earn about $18.75/hr. So put the 1st hour earned every day into the 401(k). To make it simple, this is 12.5% of your income. Learn to life without it. As long as you save the 1st hour earned every day, you can work for minimum wages and still have more money at retirement than most people on this site.
Dave
Well looks like I know what direction I should begin/continue to take. 12.5% seems steep, but I certainly fully grasp the concept of compounding interest.
I would say to gradually up it to a higher percentage. bump it up to 5%, then after you see how much money your paycheck is and how you adjust your spending, up it again, do the same, up it again, etc.
Well looks like I know what direction I should begin/continue to take. 12.5% seems steep, but I certainly fully grasp the concept of compounding interest.
Appreciate the replies everyone.
12.5% is actually on the low end of what you need to save. It's true most people don't have that much. That's the problem. We have a lot of Baby Boomers who didn't save anywhere near enough for retirement.
I see you're in the great city of Houston! So you currently make about $31k/year. Are you in a field where you expect to be making a lot more in the future? If that's the case, your taxes are relatively little now (especially with no state income tax). I would recommend saving in the 401k as you do to get the maximum company match, then opening a Roth IRA and maxing out your contributions there. I believe the max Roth IRA contribution is $5500/year, but it may have gone up. If you're then saving enough to get the max 401k company match and are maxing out the Roth IRA and still have more $ to save, then increase the 401k contributions.
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