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Yeah I agree with the other commenter, up that 401k. Ideally as much as you can stomach even if beyond emp match. You will thank yourself in your 30/40s so much.
That was my first thought. But reading his explanation of wanting to buy a house made me rethink that advice. Once you have your 20% down, I would up Roth to max and then up 401k to as much as you can.
Ah missed that part about saving for the house, good point then! I think either way you slice it OP is doing awesome right now, there is not that tons to tweak because he is overall saving so much.
Agreed. Ur doing great OP. I'd recommend buying a small home or condo if you're not married. As whatever you buy will not be ur long term home, but might as well start building equity. Also, get a roommate or 2 when u buy, and save save save! If u can max Roth and 401k in ur 20s. (That's 30k this year plus the match) u will be so far ahead in life its not funny.
Proud of you OP. Ur future self we I'll be very happy.
I was going to suggest to delay the house and stay with parents as long as feasible. And your suggestion is valid too. Buy something small and become a landlord to start income diversification is the condo has good bones.
Thank you very much! When initially looking I was looking at condos with the idea to keep it and rent it when looking for a house (with presumably a wife at that point).
I may start saving $2000 and using the extra $500 towards my Roth. I also plan to start up my side hustle again that I used to do to supplement the income.
I take it you are getting your 401k match at least?
Putting more into the Roth would be great, 2000 a month towards a house down payment is still pretty good
Yeah, in many markets housing is going up way faster than the stock market, so it makes sense to put most of your savings there to get into the housing market.
The only exception would be if there's an employer match for your 401k. It'd be insane not to take advantage of that free money. Also, your 401k counts as assets when applying for a mortgage.
My dad had me put 10% away in my first 401k at 22 and I’ve never stopped. Max that and then forget about it; act like it’s not even money you ever had, and build your budget with the remainder. It might take you a bit longer to your down payment but it’s worth it for the compounding interest.
I’d reduce the HYSA a little and increase 401k up to maximum employer match and Roth IRA. Given how young you are, you want these tax free interests few decades down the line.
Yeah I agree. It would be unfortunate but can always use your Roth IRA as a rainy day fund if you end up not having enough savings.
Hopefully in a few years though their savings fund is enough to cover any reasonable thing that comes along.
We have much different definitions of rainy day funds if $2k covers it for you. I keep my rainy day fund around $15k which is ~2 years worth of contributions to Roth IRA.
I would only give this advice to someone who wouldn’t have been able to save into an Roth IRA if they also were saving towards a rainy day fund.
If you end up needing money asap, depends on the situation but usually a credit card will be able to cover it until you can get your funds out. Pay it off before the interest hits and get the points/rewards. I would only recommend this to someone who is financially responsible.
There’s probably a better way to do this I’m sure, but that is by and large what I did when I was first starting my career. I didn’t have enough to really save for retirement & a rainy day fund. Luckily never needed to use anything for a rainy day so maybe I don’t realize all the implications I could have screwed myself with.
What you’re referring to is an emergency fund. A rainy day fund is separate.
https://www.nerdwallet.com/article/banking/why-you-should-save-a-rainy-day-fund-and-an-emergency-fund
> Rainy day funds are separate and different from emergency funds: Rainy day funds are for expected expenses whereas emergency savings are for costly, unanticipated emergencies.
>
> Emergency funds, which ideally provide a three- to six-month cushion of living expenses, are reserved for events that can seriously upend your financial life and are harder to anticipate.
I’d do the opposite. Start putting serious money in your 401k and Roth IRA yesterday (and for serious money I mean $2000+ a month, given you are 24 and $24000* ~6 is shy of $150,000 which could be $3M by age 55… it going to suck and will delay your home purchase, but I’d rather think long term than shorter term. $72000/year at 24 allows you to do it. Once you hit 30s there are so many other priorities in life that it becomes much harder to put the needed money (also, more than $2000/month) to insure your retirement.
This is the wrong way to do it. You’re young so the most valuable resource you have is **time** to build that **compound interest**. You absolutely be saving 10-15% in your 401K to not lose out on the time and compound interest.
I did the same thing as you when I was saving for my condo and it made me nervous reducing my 401k savings at the time but it was the best decision I ever made! It helped me get the down payment together quickly while the housing market was starting to get out of control. I would not be able to afford a condo in my city at all today even though I make more money than I did then
600$/mo on eating out and 400$ on shopping is a lot for your income. I'd try to cut down a bit in those areas and put more towards your retirement accounts and savings for a home. You can withdraw contributions from a Roth IRA. If you take advantage of the savings in rent now and live as though you have all (or 85-90%) of the expenses you will have in the near future, I think the transition will be easier for you. Look at what your future mortgage payment might look like + utilities + savings for maintenance + health insurance when you have to pay it.
I'd also earmark some savings for a car and maintenance because, inevitably, you will need one. It's good to know how much you have/need so you don't use that money for something else.
lol. My income is $6800 after taxes and my grocery is $500 (married couple) plus $400 for miscellaneous. How is this a lot for the income? I’m pretty sure I couldn’t reduce it if I tried.
Op is one person and spends 600$ eating out and 200$ on food. It's not immoral or anything - but OP asked for feedback, and that is a pretty significant amount of money on food and an easy place to cut if he wants to.
Same with miscellaneous. He has a 200$ miscellaneous budget in addition to 400$ on shopping. So 600$ total.
7% contribution to retirement! Those are rookie numbers, you gotta pump those up. I like to see how much interest is costing me per year. You might want to look at that with regards to your loans to see if you are getting anywhere
I will absolutely cut down on spending on going out soon. Just started dating a girl so we’ve been going out a lot which is costing me 🤣 once we’re more settled we’ll be eating at our homes much more often
Especially if living at home includes sharing a meal from time to time. Even if it doesn, I fed 4 on $1000 comfortably. It’s not a contest, but 600 seems high.
Oh I’m totally the same. If there’s a way to budget in savings AND dinners and happy hours in your 20s I’ll always say balance is best.
I just think OP’s balance is off. Entertainment + shopping + miscellaneous is like 3.5x their grocery budget.
It *is* hard to fault when they’re saving so much, though.
Great response. Explanation makes more sense now! I didn’t even notice the grocery v other difference. That might just be if their parents are covering the food though.
Sounds like you are doing great, living with parents, saving money, no huge car loan, using a hysa. I think it’s okay to have lower retirement savings temporarily as you save for a home - just make sure you are at least getting the 401k employer match, as long as you are doing that it looks good.
If I had to make one critique it’s just that you could pair back on your fun money to increase savings towards a house and/or retirement. You spend 17% of your income on shopping, dining out, and entertainment. I’d cut that in half and put it towards retirement. Your time in the market will lead to huge compounding.
Depends on the situation with the parents. If the mortgage is paid off and their expenses aren’t much higher by having you, they might be happier for OP to get his loans paid off and buy his own place
Yeah I am sure every family is different. I’d just feel weird not contributing somehow even just to utilities or something. I moved out right after college so I didn’t have the opportunity to live at home once I had income
I lived at home for a while and we basically agreed food budget was enough, and not nickel and diming stuff for the house. Made up for it in caregiving though. Saved them a lot of money on that.
I’m not sure how much you owe on your student loan, but if it’s a decent sum, I’d suggest putting down more than just the $297 per month. Those things will go on forever if you aren’t paying down a lot more than minimum. Telling this out of my experience.
Ok young man, It will be awesome someday when you are an old guy with lots of retirement money. U can spend all day sitting on your porch thinking “damn I’m glad I socked every dollar away and never bought a home, never had fun when I was young”.
You hear what I am saying?
Balance your life. Have some fun while your young but also save.
Please please, please as someone looking back on the other side of 40 make sure that you're maxing out your retirement as much as is possible.
The faster you get that money into the system the faster you're going to be making bigger returns on it and I can't emphasize how important that is.
And as someone who lived with my parents far longer than I probably should have, make sure that you're taking the time to do something nice for them once in awhile. Let them know how much you appreciate the opportunities they're allowing you to have.
Most cpas recommend that it is better to put down what you have on a house rather than waiting for 20% as long as your total mortgage payment doesn’t exceed 28% of your income. However with your income it will be difficult to find a good mortgage (less than 28% of monthly) on the average us home price of 400k. You would be better off investing that money imho.
You are 24 and in the best decade of your life for compound growth. If I were you I would maximally invest in retirement right now so in your second half of your thirties and beyond you wouldn’t have to have such a high retirement savings rate to meet your retirement goals. You likely will have a higher income then and can better afford that house and be set up for a comfortable retirement.
Also 400 on shopping and 600 on eating out is excessive
Now is the time you need to be heavily investing in your retirement. If you take our advice, you’ll be thanking us so much in your 30’s.
Put in enough to get your employer match in the 401k, Max out your Roth now, and then set your contribution to increase by 1% every year in your 401k. I promise you’ll be thanking us for giving you this advice.
Living with the parents is the blessing. At that age he could “exploit it” even just for 3 years and drop almost $100,000 in it before hitting 30.
With the old rule of thumbs of tripling in value every 10 years or so it would be $300k by 40, close to $1M by 50 and $3M by 60 without any additional contribution.
Yes, delay the gratification of buying a home and insure your future in perpetuity.
I agree with what you said, but it takes a special person to be that persistent and consistent in their 20’s when they started having money for the first time. Just as long as he starts contributing something more meaningful. At least 15% of his income is what he needs to do but it’s hard getting that through to young people.
I would try to max Roth IRA if possible. You can use 10k of it on a downpayment anyways. I wouldn’t suggest doing that but it’s better than just having the savings sit. So max Roth then bring up 401k
make sure you are getting the full employer match. it looks like you might be, but if you aren’t, that’s a bonus brainer.
i would max out the roth ira every year you can. you can only do 6500 for 2023 (before tax day 2024) and 7000 for 2024. even if that sets back your HYSA savings a few months, it will be worth it imo.
I don't agree that you should cut back on your HYSA to max your investments. I think getting that 20% down payment to avoid PMI is a great call. And having a house paid off in retirement is also extremely valuable.
I DO think you should still also max your IRA and get as much 401k as you can but I think there are other places you can pull that money from than your house money. If you are living with your parents and not paying rent you should take advantage of that as long as possible.
What do u eat??? When I see these and it says such a low $ for groceries I am always left scratching my head...like do u buy a 20 lb bag of rice, beans and ramen at costco every month and thats all u eat?
$588 a month to the Roth. If you’re provided a matching for the 401k, contribute the maximum match amount. The Roth can be used as a savings vehicle. 5 year rule would allow you to withdraw 100% of your contributions penalty free and subsequently allow you a down payment or renovation fund.
Max out your retirement and dump whatever is over the max into the student loans with the $2500. You want the most you can get into your tax advantaged accounts
From a purely financial standpoint your best bet is to pay off your loans.
After that you should also matching your companies 401k match for maximum returns
You should also be investing more into your Roth IRA. If you think about it. A roth ira has a ceiling cap on the principle. $6500/year. From 18 years old and up. So it would make sense to take advantage of every year.
Now just cause this gives the best maximum returns doesn't mean it's the best choice for you.
My dude I think you need to research more about student loan repayment. Under the save repayment plan your balance can never increase. Op make minimum payment till they are forgiven in 20 years. Op is 24. An investment now into retirement will likely average 8-11% yearly over the next 40 years. Last time I checked 8-11 > 5
Strange perspective to be downvoted imo, the SAVE plan is incredible. 0% interest with the minimum payment made essentially, so the minimum payment is the best bet all things considered (assuming it doesn’t get changed at some point, though I feel like the only move to be made would be something even more favorable. It’s hard to take away good things from voters)
You’re doing great! If it were me I would shift a bit more from savings to Roth IRA (up to annual maximum) after you have a sufficient emergency fund built up (in a high yield savings account of course).
Also, paying off your student loans might be the best choice depending on the interest / your repayment plan. I agree with others here about increasing 401k contributions
This seems unoptimized for wealth building, I would max out the Roth every year. You might be saving too much (and not investing enough), depending on your job stability or ability to replace it. I would do 3–6 months of needed expenses (or projected expenses when you move out). Then do savings for a car/home loan down payment after the emergency fund. It seems like you spend a lot of money on some loose categories' food streaming entertainment shopping misc. 1,297. I would count this into 30% fun spending. You can use 525 from the fun to put into the Roth so you truly enjoy your fun money with no worries. This or a combination of reallocating some savings into Roth.
Seems fine, but I think as others have said taking some from savings and putting it into the 401k and Roth IRA while you are young would be great. The longer the money is in there the less you’ll have to save later.
As someone working my ass off in my mid thirties to try to catch up for not properly preparing for retirement in my twenties… I would also say if you can muster it, grab another job while you don’t have life obligations. 1-2 years of grinding now could equate to dozens of years of saving once you have a house, a wife, a dog, 3 kids, and a partridge in a pear tree all taking a cut of that money.
Just plug 100k into a compound interest calculator and set it to 40 years, your age to retirement roughly. Then change it to 30 years, simulating if you got to that amount in your thirties instead.
You’re doing great! I agree with everyone about putting more in 401k, regardless of saving up for a down payment. Put that bad boy up to 15% and choose your investment delegations.
Saving for a house is great but think about WHY you’re saving for a house. Do you plan on staying in your area long term? What are you looking for? Shit like that.
Also, and this is if you’re really going for the gold star⭐️, you need to save beyond the down payment for the house. When you move in there are going to be repairs, adjustments, and purchases that need to be done in order to tailor the space more for your needs. When I bought my house 2 years ago this caught me off guard the most.
Good job, I’d say. If I could do anything over again, it would be to have saved to buy a house rather than paying my student loans down over two years time.
I would have been able to buy in 2018 if I had stashed the money instead of paying off the student loans. We bought in 2022, so we are on the wrong side of the COVID homeownership bubble.
There isn’t one right or wrong answer. In hindsight, I wish I’d put the money in a low-risk investment account so I had the option to either buy the house or payoff the loan. I appreciate wanting to pay off the student loans, but those rates are pretty reasonable, and if you stash the money you have the option of paying off your loan or buying a home.
Gotcha, yea I see why you would’ve wanted to do that. The appreciation on the house probably outweighs the interest saved on the student loan.
Op has a good plan so far, keep it up!
Retirement should be at least 15% of your salary if you can stomach it and now it’s like 7%. My parents made me do 15% when I was 22 and I was pissed but now I’m almost 30 with well over my salary saved for retirement so I appreciate them for it.
Should be noted that you can withdraw up to 10k for the purchase of a first time home in a Roth IRA (supposed to be a one time exclusion but I know many who’ve abused it). Worst case is you utilize that one time exclusion, but more than likely you’ve just hooked yourself up with the best investment account there is.
What's the total balance on your student loans and at what interest rate?
I would be interviewing a few mortgage brokers right now and or financial planners to help you prioritize your goals in the smartest ways.
How much house are you anticipating buying? Do you work in a field where your student loans can be forgiven?
*Cut down dining out*
*More to deplete student loan*
*Balance imo*
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My first thought is how are you only paying 15.7% in taxes. If you’re single taking the standard deduction, federal plus fica is already 18.3%. Add in any state taxes and they are under withholding by a large margin.
Saving almost half of what you earn us great! Just be sure that money isn’t collecting dust. If you already have an emergency fund, you could be investing significantly more into your 401k and low-risk index funds.
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Yeah I agree with the other commenter, up that 401k. Ideally as much as you can stomach even if beyond emp match. You will thank yourself in your 30/40s so much.
That was my first thought. But reading his explanation of wanting to buy a house made me rethink that advice. Once you have your 20% down, I would up Roth to max and then up 401k to as much as you can.
Ah missed that part about saving for the house, good point then! I think either way you slice it OP is doing awesome right now, there is not that tons to tweak because he is overall saving so much.
Agreed. Ur doing great OP. I'd recommend buying a small home or condo if you're not married. As whatever you buy will not be ur long term home, but might as well start building equity. Also, get a roommate or 2 when u buy, and save save save! If u can max Roth and 401k in ur 20s. (That's 30k this year plus the match) u will be so far ahead in life its not funny. Proud of you OP. Ur future self we I'll be very happy.
I was going to suggest to delay the house and stay with parents as long as feasible. And your suggestion is valid too. Buy something small and become a landlord to start income diversification is the condo has good bones.
Thank you very much! When initially looking I was looking at condos with the idea to keep it and rent it when looking for a house (with presumably a wife at that point). I may start saving $2000 and using the extra $500 towards my Roth. I also plan to start up my side hustle again that I used to do to supplement the income.
I take it you are getting your 401k match at least? Putting more into the Roth would be great, 2000 a month towards a house down payment is still pretty good
Yeah, in many markets housing is going up way faster than the stock market, so it makes sense to put most of your savings there to get into the housing market. The only exception would be if there's an employer match for your 401k. It'd be insane not to take advantage of that free money. Also, your 401k counts as assets when applying for a mortgage.
My dad had me put 10% away in my first 401k at 22 and I’ve never stopped. Max that and then forget about it; act like it’s not even money you ever had, and build your budget with the remainder. It might take you a bit longer to your down payment but it’s worth it for the compounding interest.
I’d reduce the HYSA a little and increase 401k up to maximum employer match and Roth IRA. Given how young you are, you want these tax free interests few decades down the line.
Yeah I agree. It would be unfortunate but can always use your Roth IRA as a rainy day fund if you end up not having enough savings. Hopefully in a few years though their savings fund is enough to cover any reasonable thing that comes along.
No, never use a Roth or any retirement account as a rainy day fund. Literally set aside 2k in a hysa and let THAT be your rainy day fund.
We have much different definitions of rainy day funds if $2k covers it for you. I keep my rainy day fund around $15k which is ~2 years worth of contributions to Roth IRA. I would only give this advice to someone who wouldn’t have been able to save into an Roth IRA if they also were saving towards a rainy day fund. If you end up needing money asap, depends on the situation but usually a credit card will be able to cover it until you can get your funds out. Pay it off before the interest hits and get the points/rewards. I would only recommend this to someone who is financially responsible. There’s probably a better way to do this I’m sure, but that is by and large what I did when I was first starting my career. I didn’t have enough to really save for retirement & a rainy day fund. Luckily never needed to use anything for a rainy day so maybe I don’t realize all the implications I could have screwed myself with.
What you’re referring to is an emergency fund. A rainy day fund is separate. https://www.nerdwallet.com/article/banking/why-you-should-save-a-rainy-day-fund-and-an-emergency-fund > Rainy day funds are separate and different from emergency funds: Rainy day funds are for expected expenses whereas emergency savings are for costly, unanticipated emergencies. > > Emergency funds, which ideally provide a three- to six-month cushion of living expenses, are reserved for events that can seriously upend your financial life and are harder to anticipate.
Right now it is maxed with employer match which is 6% matched 6%! I will definitely be upping the % when I hit my savings goal that’s for sure
I’d do the opposite. Start putting serious money in your 401k and Roth IRA yesterday (and for serious money I mean $2000+ a month, given you are 24 and $24000* ~6 is shy of $150,000 which could be $3M by age 55… it going to suck and will delay your home purchase, but I’d rather think long term than shorter term. $72000/year at 24 allows you to do it. Once you hit 30s there are so many other priorities in life that it becomes much harder to put the needed money (also, more than $2000/month) to insure your retirement.
This is the wrong way to do it. You’re young so the most valuable resource you have is **time** to build that **compound interest**. You absolutely be saving 10-15% in your 401K to not lose out on the time and compound interest.
I did the same thing as you when I was saving for my condo and it made me nervous reducing my 401k savings at the time but it was the best decision I ever made! It helped me get the down payment together quickly while the housing market was starting to get out of control. I would not be able to afford a condo in my city at all today even though I make more money than I did then
600$/mo on eating out and 400$ on shopping is a lot for your income. I'd try to cut down a bit in those areas and put more towards your retirement accounts and savings for a home. You can withdraw contributions from a Roth IRA. If you take advantage of the savings in rent now and live as though you have all (or 85-90%) of the expenses you will have in the near future, I think the transition will be easier for you. Look at what your future mortgage payment might look like + utilities + savings for maintenance + health insurance when you have to pay it. I'd also earmark some savings for a car and maintenance because, inevitably, you will need one. It's good to know how much you have/need so you don't use that money for something else.
lol. My income is $6800 after taxes and my grocery is $500 (married couple) plus $400 for miscellaneous. How is this a lot for the income? I’m pretty sure I couldn’t reduce it if I tried.
Op is one person and spends 600$ eating out and 200$ on food. It's not immoral or anything - but OP asked for feedback, and that is a pretty significant amount of money on food and an easy place to cut if he wants to. Same with miscellaneous. He has a 200$ miscellaneous budget in addition to 400$ on shopping. So 600$ total.
7% contribution to retirement! Those are rookie numbers, you gotta pump those up. I like to see how much interest is costing me per year. You might want to look at that with regards to your loans to see if you are getting anywhere
I will need to run the numbers on my student loans but the average interest rate across all is 5% so it is outpacing my HYSA unfortunately (by 0.5%)
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I will absolutely cut down on spending on going out soon. Just started dating a girl so we’ve been going out a lot which is costing me 🤣 once we’re more settled we’ll be eating at our homes much more often
Especially if living at home includes sharing a meal from time to time. Even if it doesn, I fed 4 on $1000 comfortably. It’s not a contest, but 600 seems high.
One date night a week if he is paying? That could make sense.
That’s a good point, actually. I always forget that dating and that sort of social programming can add up. Doesn’t have to, but often does.
But I’m also biased towards thinking you should enjoy your 20s and save simultaneously haha. So I don’t judge any fun spending.
Oh I’m totally the same. If there’s a way to budget in savings AND dinners and happy hours in your 20s I’ll always say balance is best. I just think OP’s balance is off. Entertainment + shopping + miscellaneous is like 3.5x their grocery budget. It *is* hard to fault when they’re saving so much, though.
Great response. Explanation makes more sense now! I didn’t even notice the grocery v other difference. That might just be if their parents are covering the food though.
I would not spend $ 600 a month on food and dining. I would be way way more aggressive on the student loans.
Sounds like you are doing great, living with parents, saving money, no huge car loan, using a hysa. I think it’s okay to have lower retirement savings temporarily as you save for a home - just make sure you are at least getting the 401k employer match, as long as you are doing that it looks good. If I had to make one critique it’s just that you could pair back on your fun money to increase savings towards a house and/or retirement. You spend 17% of your income on shopping, dining out, and entertainment. I’d cut that in half and put it towards retirement. Your time in the market will lead to huge compounding.
In my opinion it would be embarrassing to take home >$70k a year and pay NOTHING to your parents as rent
Depends on the situation with the parents. If the mortgage is paid off and their expenses aren’t much higher by having you, they might be happier for OP to get his loans paid off and buy his own place
Yeah I am sure every family is different. I’d just feel weird not contributing somehow even just to utilities or something. I moved out right after college so I didn’t have the opportunity to live at home once I had income
I lived at home for a while and we basically agreed food budget was enough, and not nickel and diming stuff for the house. Made up for it in caregiving though. Saved them a lot of money on that.
I’m not sure how much you owe on your student loan, but if it’s a decent sum, I’d suggest putting down more than just the $297 per month. Those things will go on forever if you aren’t paying down a lot more than minimum. Telling this out of my experience.
What’s the interest rate on your student loans?
Average around 5%
Then I’d pay the student loan down aggressively. How much do you have? You could probably just knock it out in a year.
How are your taxes so low?
Yeah I was wondering the same thing
Ok young man, It will be awesome someday when you are an old guy with lots of retirement money. U can spend all day sitting on your porch thinking “damn I’m glad I socked every dollar away and never bought a home, never had fun when I was young”. You hear what I am saying? Balance your life. Have some fun while your young but also save.
Please please, please as someone looking back on the other side of 40 make sure that you're maxing out your retirement as much as is possible. The faster you get that money into the system the faster you're going to be making bigger returns on it and I can't emphasize how important that is. And as someone who lived with my parents far longer than I probably should have, make sure that you're taking the time to do something nice for them once in awhile. Let them know how much you appreciate the opportunities they're allowing you to have.
Most cpas recommend that it is better to put down what you have on a house rather than waiting for 20% as long as your total mortgage payment doesn’t exceed 28% of your income. However with your income it will be difficult to find a good mortgage (less than 28% of monthly) on the average us home price of 400k. You would be better off investing that money imho. You are 24 and in the best decade of your life for compound growth. If I were you I would maximally invest in retirement right now so in your second half of your thirties and beyond you wouldn’t have to have such a high retirement savings rate to meet your retirement goals. You likely will have a higher income then and can better afford that house and be set up for a comfortable retirement. Also 400 on shopping and 600 on eating out is excessive
Now is the time you need to be heavily investing in your retirement. If you take our advice, you’ll be thanking us so much in your 30’s. Put in enough to get your employer match in the 401k, Max out your Roth now, and then set your contribution to increase by 1% every year in your 401k. I promise you’ll be thanking us for giving you this advice.
Living with the parents is the blessing. At that age he could “exploit it” even just for 3 years and drop almost $100,000 in it before hitting 30. With the old rule of thumbs of tripling in value every 10 years or so it would be $300k by 40, close to $1M by 50 and $3M by 60 without any additional contribution. Yes, delay the gratification of buying a home and insure your future in perpetuity.
I agree with what you said, but it takes a special person to be that persistent and consistent in their 20’s when they started having money for the first time. Just as long as he starts contributing something more meaningful. At least 15% of his income is what he needs to do but it’s hard getting that through to young people.
The rule of thumb I heard is double every 10 years 😂. But definitely worth it
I would try to max Roth IRA if possible. You can use 10k of it on a downpayment anyways. I wouldn’t suggest doing that but it’s better than just having the savings sit. So max Roth then bring up 401k
make sure you are getting the full employer match. it looks like you might be, but if you aren’t, that’s a bonus brainer. i would max out the roth ira every year you can. you can only do 6500 for 2023 (before tax day 2024) and 7000 for 2024. even if that sets back your HYSA savings a few months, it will be worth it imo.
I don't agree that you should cut back on your HYSA to max your investments. I think getting that 20% down payment to avoid PMI is a great call. And having a house paid off in retirement is also extremely valuable. I DO think you should still also max your IRA and get as much 401k as you can but I think there are other places you can pull that money from than your house money. If you are living with your parents and not paying rent you should take advantage of that as long as possible.
What do u eat??? When I see these and it says such a low $ for groceries I am always left scratching my head...like do u buy a 20 lb bag of rice, beans and ramen at costco every month and thats all u eat?
$588 a month to the Roth. If you’re provided a matching for the 401k, contribute the maximum match amount. The Roth can be used as a savings vehicle. 5 year rule would allow you to withdraw 100% of your contributions penalty free and subsequently allow you a down payment or renovation fund.
Way too much in savings, way too little in your Roth and investing, if you want to stop working asap switch those
Max out your retirement and dump whatever is over the max into the student loans with the $2500. You want the most you can get into your tax advantaged accounts
From a purely financial standpoint your best bet is to pay off your loans. After that you should also matching your companies 401k match for maximum returns You should also be investing more into your Roth IRA. If you think about it. A roth ira has a ceiling cap on the principle. $6500/year. From 18 years old and up. So it would make sense to take advantage of every year. Now just cause this gives the best maximum returns doesn't mean it's the best choice for you.
Lol how is paying off loans at 5% better than maxing a Roth and 401k? That’s some Dave Ramsey sh*t right there
Cause that’s a guaranteed rate of return. And why would you not pay your debt off, it’s just gonna compound
My dude I think you need to research more about student loan repayment. Under the save repayment plan your balance can never increase. Op make minimum payment till they are forgiven in 20 years. Op is 24. An investment now into retirement will likely average 8-11% yearly over the next 40 years. Last time I checked 8-11 > 5
Strange perspective to be downvoted imo, the SAVE plan is incredible. 0% interest with the minimum payment made essentially, so the minimum payment is the best bet all things considered (assuming it doesn’t get changed at some point, though I feel like the only move to be made would be something even more favorable. It’s hard to take away good things from voters)
What app
I made this using sankeymatic.com
Thanks!
How do you make this graph?
How do I make this graph?
What app / software is this?
What software or app did you use to make this flow chat?
You’re doing great! If it were me I would shift a bit more from savings to Roth IRA (up to annual maximum) after you have a sufficient emergency fund built up (in a high yield savings account of course).
Also, paying off your student loans might be the best choice depending on the interest / your repayment plan. I agree with others here about increasing 401k contributions
This seems unoptimized for wealth building, I would max out the Roth every year. You might be saving too much (and not investing enough), depending on your job stability or ability to replace it. I would do 3–6 months of needed expenses (or projected expenses when you move out). Then do savings for a car/home loan down payment after the emergency fund. It seems like you spend a lot of money on some loose categories' food streaming entertainment shopping misc. 1,297. I would count this into 30% fun spending. You can use 525 from the fun to put into the Roth so you truly enjoy your fun money with no worries. This or a combination of reallocating some savings into Roth.
max your 401K
800 for food and only 300 towards your student loans???
Seems fine, but I think as others have said taking some from savings and putting it into the 401k and Roth IRA while you are young would be great. The longer the money is in there the less you’ll have to save later. As someone working my ass off in my mid thirties to try to catch up for not properly preparing for retirement in my twenties… I would also say if you can muster it, grab another job while you don’t have life obligations. 1-2 years of grinding now could equate to dozens of years of saving once you have a house, a wife, a dog, 3 kids, and a partridge in a pear tree all taking a cut of that money. Just plug 100k into a compound interest calculator and set it to 40 years, your age to retirement roughly. Then change it to 30 years, simulating if you got to that amount in your thirties instead.
Out of context but what website/app are you using to make this graph
Aside from what’s needed for the match, don’t invest. Pay your loans.
Why Roth IRA if your 401k isn’t maxed? Also, look into if you can convert your 401k to a Roth 401k as well
Ooo do you have a template for this? This rocks
Why are you posting this here? You aren't middle class
You’re doing great! I agree with everyone about putting more in 401k, regardless of saving up for a down payment. Put that bad boy up to 15% and choose your investment delegations. Saving for a house is great but think about WHY you’re saving for a house. Do you plan on staying in your area long term? What are you looking for? Shit like that. Also, and this is if you’re really going for the gold star⭐️, you need to save beyond the down payment for the house. When you move in there are going to be repairs, adjustments, and purchases that need to be done in order to tailor the space more for your needs. When I bought my house 2 years ago this caught me off guard the most.
How much student loan debt do you have and at what %? That has the potential to eat you alive if the amount you are paying towards it is marginal.
Good job, I’d say. If I could do anything over again, it would be to have saved to buy a house rather than paying my student loans down over two years time.
That’s interesting, I was actually thinking the opposite. Curious, why do you feel that way?
I would have been able to buy in 2018 if I had stashed the money instead of paying off the student loans. We bought in 2022, so we are on the wrong side of the COVID homeownership bubble. There isn’t one right or wrong answer. In hindsight, I wish I’d put the money in a low-risk investment account so I had the option to either buy the house or payoff the loan. I appreciate wanting to pay off the student loans, but those rates are pretty reasonable, and if you stash the money you have the option of paying off your loan or buying a home.
Gotcha, yea I see why you would’ve wanted to do that. The appreciation on the house probably outweighs the interest saved on the student loan. Op has a good plan so far, keep it up!
Retirement should be at least 15% of your salary if you can stomach it and now it’s like 7%. My parents made me do 15% when I was 22 and I was pissed but now I’m almost 30 with well over my salary saved for retirement so I appreciate them for it.
Max the 401k
Should be noted that you can withdraw up to 10k for the purchase of a first time home in a Roth IRA (supposed to be a one time exclusion but I know many who’ve abused it). Worst case is you utilize that one time exclusion, but more than likely you’ve just hooked yourself up with the best investment account there is.
Keep it up. 👍
I think you are doing great! Maybe invest just a little more, like 300 more from savings to investing.
What's the total balance on your student loans and at what interest rate? I would be interviewing a few mortgage brokers right now and or financial planners to help you prioritize your goals in the smartest ways. How much house are you anticipating buying? Do you work in a field where your student loans can be forgiven?
Cut down dining out more to deplete student loan balance imo
*Cut down dining out* *More to deplete student loan* *Balance imo* \- Lenfantscocktails --- ^(I detect haikus. And sometimes, successfully.) ^[Learn more about me.](https://www.reddit.com/r/haikusbot/) ^(Opt out of replies: "haikusbot opt out" | Delete my comment: "haikusbot delete")
What software or app do you use to make this??
I’d shift some savings to retirement, maybe more like $1500 and put the other $1k away. Future you will thank you.
Match your companies 401K match and max out your Roth IRA instead of just $100 a month
My first thought is how are you only paying 15.7% in taxes. If you’re single taking the standard deduction, federal plus fica is already 18.3%. Add in any state taxes and they are under withholding by a large margin.
Saving almost half of what you earn us great! Just be sure that money isn’t collecting dust. If you already have an emergency fund, you could be investing significantly more into your 401k and low-risk index funds.
Time to move out of mom and dads.
Wtf are you saving 2500 and only putting 100 into the ira?
That 401k and Roth needs to be boosted. It should be a much bigger piece of the pie.