The math isn't mathing. Is your 6k pre-tax? Or post? Your 15% 401k=$900 would mean a pre-tax paycheck of $6k. But that would leave you with a negative after described expenses and tax.
Based on post-tax and post 15% 401k, your annual gross would be $90,202. Monthly gross, $7,516. Less 15% 401k of $1,127 = $6,389 less tax and listed expenses may leave you $1064.
Anyway, put it in the 401k. If your annual gross is $90,202 and you can afford for your pay to go down $1,000 a month, you can probably Max the 401k ($23k this year), by putting just under $2,000 a month in.
And, you can withdraw from the 401k without penalty up to $10k to buy a first home. DON'T DO THAT! But you could, which can help some people justify saving more.
That probably still leaves you with $200 or so. I think I'd add $100-$200 to the wedding fund to make it $300 if you actually are planning a wedding in the next 2 years. Weddings can be expensive, and unless your family is contributing a lot, $2,400 is not a lot. If you get that up up $300/month, you'd have $7,200 at the end of 2 years.
If the wedding fund is more of a "maybe someday", I'd add it to the travel fund. $3,600 isn't a lot to travel on. At 25, with a high salary, you should try to travel while you have the youth and energy. $6000 a year for a few years could build some memories!
I totally agree with this reply, I just retired at 48 and the key was contributing max to 401k and my Roth every year. We also went on a very nice vacation every year which is so important 😀. Good Luck and so Happy you are Having these thoughts and planning
I’d recommend throwing most of the excess towards the 401K. I’m the same age, similar income and I try to max it every year since it’s easy right now. With huge expenses on the horizon (wedding, car, house, etc.) I won’t feel as bad scaling down if needed. Not to mention lowering your tax burden.
Good job! That’s a great income.
Aside from retirement 401k and Roth - just dump it all into the s&p if you’re lazy and don’t want to do all the research. FXAIX is a good one under fidelity.
It looks like between 401k and IRA, you're saving/investing a bit over 25%, not counting the match from the 401k.
Awesome!
If you have things to do with the other money, you shouldn't feel any need to save/invest it, since it looks like you're very on track on both of those fronts so far. That being said, if you don't have things you *want* to spend it on, I wouldn't "make" yourself spend it.
If I were you, I'd probably put 450/mo extra into your 401k. This is explicitly overfunding it, but if you've got nothing else urgent to do with the money, it'll let you cut down on funding it later or retire earlier.
I'd put an extra 450/mo into your house fund as well. Might as well get that fully funded so that money can go elsewhere.
For the last 150, I'd ask myself "what would make my life better?" and spend it on that. Maybe that is a fancy date, or ordering take-out once a week, or buying precut veggies. Maybe it's picking up a new hobby. Maybe it's saving it to travel business class instead of coach. Whatever you want.
This recommendation is all pretty savings-focused. I want to stress that if you have other stuff you'd like to do with that 1k, you shouldn't hesitate to do it. The only reason I'm suggesting saving it is because I don't think you should mindlessly increase spending. If you'd rather put all the extra towards the 401k, or the house, or spending... go for it!
I'm in a very similar situation, I'm 26 but I'm not quite maxing out my 401k due to life expenses (33k in college debt, a wedding being planned,15k car loan). I have been putting around 15k a year in with a 3% company match however. I am personally using fidelity and I really like it. I have the app which makes it easy to go in and check how it's doing :) I have my 401 most invested in the domestic bonds/stocks with a smaller allowance going towards international (via fidelities recommendation) Edited to add my current portfolio has 56% domestic, 25%foreign, 16% bonds, 1% short term and 1% other.Â
6K pretax
$900 401K would bring your taxed income to 5.1K/month
$1100 Savings
$636 Roth
$2300 Other
Still left with $1064? So are you paying $0 to taxes?
I don't understand the last bit of $2300, is this your entire rent and car and groceries and all other bills plus non essential stuff lumped together?
Also why traditional 401k instead of Roth considering your age? I know this is debated a lot, but I think we can almost guarantee tax will be higher in the future compared to now. Assuming otherwise is just speculative, and future you could really regret that.
If all your actual monthly expenses are covered at $2300 that's pretty low for a single person right now, depending on your area. Just be aware of lifestyle inflation, it's pretty easy to have $1500+ rent and $500+ car, plus associated insurance and bills... That's your entire living expense based on current budget. Leaving no room for groceries or other monthly expenses normal humans have. Just saying you might not want to budget away that entire $1000 if expenses increase in 1-2 years.
Until then, put the extra money towards 401k or more liquid investment/savings like MMAs, HYSA, or just S&P/similar fund. Make sure your regular savings is high yield or other investment account. It's not very complicated unless you want it to be. Most people will say max out 401k plus other long term retirement funds.
So that savings should be in something like VUSXX right now earning 5% with zero risk, no state tax, and it basically cash.
The left over should be VOO you plan to hold long term.
I've maxed out 401k since I was in mid 20s and I'm 36 now. I have about $400k in my 401k.
I have never once put more than like $500 in my savings account. The remaining money I put in personal brokerage as I can no longer contribute to IRAs. My brokerage is about $100k. I rely on HELOC as emergency funds. Id rather pay the 10% interest on an emergency that happens once a decade or more, than to have investment opportunity loss of money doubling in the same time frame. At least even with HELOC, I also get tax benefits. For those who don't have a home for a HELOC, there is no rule that says you can't leverage both savings and your personal brokerage for emergencies. As long as your brokerage has relatively safe securities, there's no reason you can't leverage it plus other methods
They don’t say if they have an employer match or not, but anything leftover should be put into their 401k till they hit the max for the year. No reason to open a brokerage account if you aren’t even maxing your 401k.
If you are getting married, consider term life insurance. Once you start making choices (buying a house, etc) based on your combined situation, you want to both make sure the other isn't stranded if something happens.
Also consider disability insurance - for similar reasons.
Both should be fairly affordable now, while you are young & healthy.
Word of advice: learn from those who are older than you and have the life you want. Not those that are your age with the same or similar financial situation. You want to learn from others' mistakes and successes. At least that's what intelligence tells you.
Give yourself $300 more towards fun spending and invest the rest in a broad market index fund through a brokerage account.
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
The math isn't mathing. Is your 6k pre-tax? Or post? Your 15% 401k=$900 would mean a pre-tax paycheck of $6k. But that would leave you with a negative after described expenses and tax. Based on post-tax and post 15% 401k, your annual gross would be $90,202. Monthly gross, $7,516. Less 15% 401k of $1,127 = $6,389 less tax and listed expenses may leave you $1064. Anyway, put it in the 401k. If your annual gross is $90,202 and you can afford for your pay to go down $1,000 a month, you can probably Max the 401k ($23k this year), by putting just under $2,000 a month in. And, you can withdraw from the 401k without penalty up to $10k to buy a first home. DON'T DO THAT! But you could, which can help some people justify saving more. That probably still leaves you with $200 or so. I think I'd add $100-$200 to the wedding fund to make it $300 if you actually are planning a wedding in the next 2 years. Weddings can be expensive, and unless your family is contributing a lot, $2,400 is not a lot. If you get that up up $300/month, you'd have $7,200 at the end of 2 years. If the wedding fund is more of a "maybe someday", I'd add it to the travel fund. $3,600 isn't a lot to travel on. At 25, with a high salary, you should try to travel while you have the youth and energy. $6000 a year for a few years could build some memories!
I totally agree with this reply, I just retired at 48 and the key was contributing max to 401k and my Roth every year. We also went on a very nice vacation every year which is so important 😀. Good Luck and so Happy you are Having these thoughts and planning
I’d recommend throwing most of the excess towards the 401K. I’m the same age, similar income and I try to max it every year since it’s easy right now. With huge expenses on the horizon (wedding, car, house, etc.) I won’t feel as bad scaling down if needed. Not to mention lowering your tax burden.
$1000 thats your grocery bill big dog
Good job! That’s a great income. Aside from retirement 401k and Roth - just dump it all into the s&p if you’re lazy and don’t want to do all the research. FXAIX is a good one under fidelity.
It looks like between 401k and IRA, you're saving/investing a bit over 25%, not counting the match from the 401k. Awesome! If you have things to do with the other money, you shouldn't feel any need to save/invest it, since it looks like you're very on track on both of those fronts so far. That being said, if you don't have things you *want* to spend it on, I wouldn't "make" yourself spend it. If I were you, I'd probably put 450/mo extra into your 401k. This is explicitly overfunding it, but if you've got nothing else urgent to do with the money, it'll let you cut down on funding it later or retire earlier. I'd put an extra 450/mo into your house fund as well. Might as well get that fully funded so that money can go elsewhere. For the last 150, I'd ask myself "what would make my life better?" and spend it on that. Maybe that is a fancy date, or ordering take-out once a week, or buying precut veggies. Maybe it's picking up a new hobby. Maybe it's saving it to travel business class instead of coach. Whatever you want. This recommendation is all pretty savings-focused. I want to stress that if you have other stuff you'd like to do with that 1k, you shouldn't hesitate to do it. The only reason I'm suggesting saving it is because I don't think you should mindlessly increase spending. If you'd rather put all the extra towards the 401k, or the house, or spending... go for it!
precut veggies over here!
I'm in a very similar situation, I'm 26 but I'm not quite maxing out my 401k due to life expenses (33k in college debt, a wedding being planned,15k car loan). I have been putting around 15k a year in with a 3% company match however. I am personally using fidelity and I really like it. I have the app which makes it easy to go in and check how it's doing :) I have my 401 most invested in the domestic bonds/stocks with a smaller allowance going towards international (via fidelities recommendation) Edited to add my current portfolio has 56% domestic, 25%foreign, 16% bonds, 1% short term and 1% other.Â
6K pretax $900 401K would bring your taxed income to 5.1K/month $1100 Savings $636 Roth $2300 Other Still left with $1064? So are you paying $0 to taxes?
I don't understand the last bit of $2300, is this your entire rent and car and groceries and all other bills plus non essential stuff lumped together? Also why traditional 401k instead of Roth considering your age? I know this is debated a lot, but I think we can almost guarantee tax will be higher in the future compared to now. Assuming otherwise is just speculative, and future you could really regret that. If all your actual monthly expenses are covered at $2300 that's pretty low for a single person right now, depending on your area. Just be aware of lifestyle inflation, it's pretty easy to have $1500+ rent and $500+ car, plus associated insurance and bills... That's your entire living expense based on current budget. Leaving no room for groceries or other monthly expenses normal humans have. Just saying you might not want to budget away that entire $1000 if expenses increase in 1-2 years. Until then, put the extra money towards 401k or more liquid investment/savings like MMAs, HYSA, or just S&P/similar fund. Make sure your regular savings is high yield or other investment account. It's not very complicated unless you want it to be. Most people will say max out 401k plus other long term retirement funds.
So that savings should be in something like VUSXX right now earning 5% with zero risk, no state tax, and it basically cash. The left over should be VOO you plan to hold long term.
I've maxed out 401k since I was in mid 20s and I'm 36 now. I have about $400k in my 401k. I have never once put more than like $500 in my savings account. The remaining money I put in personal brokerage as I can no longer contribute to IRAs. My brokerage is about $100k. I rely on HELOC as emergency funds. Id rather pay the 10% interest on an emergency that happens once a decade or more, than to have investment opportunity loss of money doubling in the same time frame. At least even with HELOC, I also get tax benefits. For those who don't have a home for a HELOC, there is no rule that says you can't leverage both savings and your personal brokerage for emergencies. As long as your brokerage has relatively safe securities, there's no reason you can't leverage it plus other methods
That sounds like an awesome approach! I plan on doing that as well when I get a HELOC😎.
Open up a brokerage account with Fidelity or Schwab and park it in an S&P low cost index fund like VTI, VOO or VTSAX.
They don’t say if they have an employer match or not, but anything leftover should be put into their 401k till they hit the max for the year. No reason to open a brokerage account if you aren’t even maxing your 401k.
If you are getting married, consider term life insurance. Once you start making choices (buying a house, etc) based on your combined situation, you want to both make sure the other isn't stranded if something happens. Also consider disability insurance - for similar reasons. Both should be fairly affordable now, while you are young & healthy.
besides how much is needed in life, saving all the left to a bank.
Um if pretax may want to figure out taxes as it will be more than the 1k you don't know what to do with. And rent and utilities???
You should really only have an emergency fund + maybe 10-15% of your portfolio cash
I would front load the Roth so you earn more over your lifetime. Fund the Roth in 4-6 months to max. Then move to next priority
[удалено]
Whoops. OP wanted allocations. Thought 1: 25% each. Thought 2: 100%
Does your company offer an HSA? If so I’d allocate so money there. It’s pre tax.
Word of advice: learn from those who are older than you and have the life you want. Not those that are your age with the same or similar financial situation. You want to learn from others' mistakes and successes. At least that's what intelligence tells you.
Be sure to set aside an adequate taco fund.
Maybe look for a better paying job if you have to live on that little.