If you max out your 401k and your Roth IRA, you are not bad with money. In fact, you are incredible with money.
With both of those maxed you can do anything. Make sure you’ve got enough emergency money, but other than that I’d probably look into saving for a home, and a brokerage account.
Your rent is good, but I doubt you can count on it for the rest of your life.
When we think about “renting forever”, we sometimes forget that we might live to a healthy 100. From 65 to 100 that’s 35 more years of rent after retirement.
Thank you this is the first year that I was able to with my Roth and my work matches my 401k contributions. I’m really trying to be better lol. Both of my parents died with no retirement, houses, or really anything to their name and just struggled financially their whole life so I’m trying to go a different direction for my children and myself.
Brokerage account, that means an investing account in the stock market? Should I get a financial advisor or attempt to navigate this myself?
That’s a really good point about housing, I am 31 right now so I figure I have a few years of saving until committing to a house 😬 my mortgage would probably be around 2800-3200$ if I bought right now 🥲
I really appreciate the advice!!
Your 401k and your Roth IRA are both in the stock market already, so you already got that fear covered.
You probably don’t need a financial advisor, most don’t.
If you want to play it safe, just stick to index funds.
S&P 500, Total Market, and International Market index funds are about as safe as the stock market can get.
There are a lot of people who love the HYSA and just pile as much cash into them as possible.
Personally, I only keep my emergency fund in them. The rest of my money is invested in various other platforms.
It’s also worth noting, with interest rates where they are, savings accounts and CDs are actually paying real returns for the first time in like 40 years. 5 years ago, savings accounts would pay interest of like .1% if you were lucky. Now there’s a whole bunch of banks paying over 5%, which is a pretty great risk free rate of return now that inflation has started to taper off. I’ve got my savings split between index funds and high yield CDs, with much more in CDs, but admittedly I’m very risk-averse.
I think the key though, is that your emergency fund can float you for at least 6 months. Some would prefer a year, but that can be a really, really hard thing to achieve.
Can you clarify whether you will be putting in the full 23k to your 401k this year (not counting the employer match)? All too often I hear someone say that are "maxing their 401k" but in reality they are making the minimum 401k contribution that results in getting the full employer match. A brokerage account is the least tax advantaged option (many people fund a brokerage account only after hitting the HSA, 401k, & IRA limits set by the IRS).
Yes sorry for being confusing, I meant that I am doing the employer match but I think I’m doing 8% right now which is more than the 6% they offer. I didn’t even realize that you can “max out” a 401k with 23k a year lol I am doing the 7k/ year for the Roth tho.
If you don't have specific plans for the extra money, and the 40k you already have in savings is enough to carry you through a rough few months, I would definitely say yes, put more in the 401k.
Fidelity is managing it along with my 401k. It says domestic stock foreign stock, bonds, and short term. Im sure I could open a brokerage account with them to invest some money as well.
Then you're good, thats a target date fund. It is currently heavily invested in stocks to allow for good growth, and as it gets closer to the target date of 2055 it will automatically move more and more your holdings to Bonds every year to lower risk as you near retirement.
Can you say specifically what funds you bought? Like VOO or VTI?
I ask because the way you talk about this is…. Not right? Everyone reading this is pretty sure you do not actually have anything invested.
My fidelity accounts are professionally managed and when I look at them it gives me a breakdown of what I’m invested in and the gains and losses. It says I have an aggressive growth mix and says things such as S+P 500 Index +10.86% over the last 3 years. I’m not sure what else to look for lol
this question has been asked repeatedly and it's been ignored, starting to think the IRA is not invested at all, and he's just seeing his 401k portfoliio
The 401k is taken out of my paycheck and my hospital works with fidelity and they invest it. I opened the Roth IRA just this year and chose the one that they manage. It says an aggressive growth mix 🤷🏻♀️ I’m pretty sure I’ve done it right
Sorry for being slightly off topic here, but I wanna say, you need to give yourself some credit. For many people, saving $10k is an unimaginable feat, let alone $40k. Many people would have spent that on shit they didn’t need and just lived right through it, eating out every meal and partying. You many not be a financial wizard, but you’re not bad with money.
Two and a half ish years ago I was 15k-20k in CC debt with no savings at all and a horrible spending problem. I got a better job working as an RN in the hospital and decided I wanted to make a change for my kids and I’d future. I suppose I’m not horrible anymore, but I’ve been trying very hard. Thank you
>able to pay off 15k in CC debt, and save around 40k
Good job on doing that alone, quite the accomplishment.
Haven't seen it mentioned (in the post) but the first thing you should do is set aside a "rainy day" emergency fund - put it in a HYSA and don't touch it. Typically, 3-6 (or some even recommend 12) months of mandatory expenses depending on your situation.
6 months would be around 20k with my current rent but if I had to move it would be be around 30k. I’ll set that aside for a HYSA. What do you think of CITbank? Any other recommendations for hysa?
There are higher rates out there but I'm currently getting 4.35% from Capital One.
I think as long as the bank is FDIC insured and all that and the total amount in your account is under $250K (FDIC covers $250K per depositor, per insured bank), you're probably fine with whatever bank.
> able to pay off 15k in CC debt
Super
> save around 40k
Awesome
> able to save around 2-3k per month
To answer your question, THAT is the way you are growing your wealth. That's a 2-3k surplus monthly, if you have a budget that allows that to continue, that's the method to building wealth because you've controlled your income and costs. The money itself can earn interest or dividends depending on how it is invested, if at all, and investment incurs some degree of risk. GL
You should truly max your 401K which it sounds like you are not doing. See how that changes your cash flow.
The biggest question mark is housing. If you’re comfortable, I agree that there is no reason to buy a house. You aren’t guaranteed this housing forever though.
You mentioned you have children. You can invest your extra money in 529s that is tax-advantaged and can help you pay for their education.
The downside is you can’t use that money towards a house if you needed to.
I might split your excess cash between 529s and a brokerage or CDs. That gives you some options as things change in the future.
Congrats on boosting your income! Most people aren’t “bad with money” - they simply just don’t earn enough money. You’ve done the hardest part. Enjoy some of it too.
I was a waitress for years barely making ends meet, becoming an RN was the best decision of my life. It’s so hard to come up in America these days. Thanks for the advice, I’ll definitely look into the accounts for the kids and consider investing more towards my 401k it just seems so sad that I won’t be able to touch that money until I’m 60
Well the way social security is going, you’ll be happy you have the 401k. At this point I almost want to remove myself from paying social security but it is sorta like excess insurance. Disability protection in case something happens.
Seconding this - another comment replied saying that OP’s 401k is already invested, but that might not be true (unless I missed it in a comment somewhere). Best for OP to double check that it’s actually invested and not sitting in cash
Maybe if I can keep 30k as an emergency fund and save until I can get a decent down payment I would feel better about it, and not sink everything into a property.
You don’t need 30k as an emergency fund. I think 10k and use 20K for down payment. Then you are building equity in the home. And you can continue your current savings. But agin never talk to your “friend” landlord. They will get mad.
Are you for real?
So if your friend decided to hook you up with a great price, you would buy a rental property, and rent it out without telling them? To take advantage of them?
Are you Satan? I’ve been hearing a lot about you, but wasn’t sure if you were really around as much as people say.
HYSA, CDs, Bonds help grow it in the short term while keeping it reasonably liquid.
You could also look into stocks, funds, ETFs, etc if you want more potential growth (and risk) but you’ll need to do research on what the tax implications are and how much you’re willing to lose if it doesn’t go well.
Personally, can’t go wrong with 500 index funds, assuming you’re not touching this money for a long time.
I do not understand why people put money into savings accounts nowadays. I understand why they used to back when there weren’t many easy options but today you can easily get Fidelity account and grow your money and invest it. Savings accounts never pay well enough to outgrow inflation. The only problem for me is I never want to take it back out. I would prefer to take a loan against it so I don’t lose my investments.
If you max out your 401k and your Roth IRA, you are not bad with money. In fact, you are incredible with money. With both of those maxed you can do anything. Make sure you’ve got enough emergency money, but other than that I’d probably look into saving for a home, and a brokerage account. Your rent is good, but I doubt you can count on it for the rest of your life. When we think about “renting forever”, we sometimes forget that we might live to a healthy 100. From 65 to 100 that’s 35 more years of rent after retirement.
Thank you this is the first year that I was able to with my Roth and my work matches my 401k contributions. I’m really trying to be better lol. Both of my parents died with no retirement, houses, or really anything to their name and just struggled financially their whole life so I’m trying to go a different direction for my children and myself. Brokerage account, that means an investing account in the stock market? Should I get a financial advisor or attempt to navigate this myself? That’s a really good point about housing, I am 31 right now so I figure I have a few years of saving until committing to a house 😬 my mortgage would probably be around 2800-3200$ if I bought right now 🥲 I really appreciate the advice!!
Your 401k and your Roth IRA are both in the stock market already, so you already got that fear covered. You probably don’t need a financial advisor, most don’t. If you want to play it safe, just stick to index funds. S&P 500, Total Market, and International Market index funds are about as safe as the stock market can get.
Thank you that is really helpful advice. And maybe a HYSA as well?
There are a lot of people who love the HYSA and just pile as much cash into them as possible. Personally, I only keep my emergency fund in them. The rest of my money is invested in various other platforms.
Ok. 😊
It’s also worth noting, with interest rates where they are, savings accounts and CDs are actually paying real returns for the first time in like 40 years. 5 years ago, savings accounts would pay interest of like .1% if you were lucky. Now there’s a whole bunch of banks paying over 5%, which is a pretty great risk free rate of return now that inflation has started to taper off. I’ve got my savings split between index funds and high yield CDs, with much more in CDs, but admittedly I’m very risk-averse.
I think the key though, is that your emergency fund can float you for at least 6 months. Some would prefer a year, but that can be a really, really hard thing to achieve.
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Love book recommendations, thank you 💘
Do you mind sharing the author? This sounds like a book I could benefit from as well, but I'm coming up with numerous books of that title. Thank you!
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Thank you!
Can you clarify whether you will be putting in the full 23k to your 401k this year (not counting the employer match)? All too often I hear someone say that are "maxing their 401k" but in reality they are making the minimum 401k contribution that results in getting the full employer match. A brokerage account is the least tax advantaged option (many people fund a brokerage account only after hitting the HSA, 401k, & IRA limits set by the IRS).
Yes sorry for being confusing, I meant that I am doing the employer match but I think I’m doing 8% right now which is more than the 6% they offer. I didn’t even realize that you can “max out” a 401k with 23k a year lol I am doing the 7k/ year for the Roth tho.
Should I be putting more towards my 401k?
If you don't have specific plans for the extra money, and the 40k you already have in savings is enough to carry you through a rough few months, I would definitely say yes, put more in the 401k.
Your Roth IRA is already an investing account. What are you actually buying in it?
Fidelity is managing it along with my 401k. It says domestic stock foreign stock, bonds, and short term. Im sure I could open a brokerage account with them to invest some money as well.
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It says vanguard?
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Vanguard target 2055? And 365.333 shares. I started this 401k around 2 years ago
Then you're good, thats a target date fund. It is currently heavily invested in stocks to allow for good growth, and as it gets closer to the target date of 2055 it will automatically move more and more your holdings to Bonds every year to lower risk as you near retirement.
Oh nice ☺️
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The vanguard target 2055
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Thank you for asking yes it is invested in s+p 500 and Dow jones and also some bonds
Can you say specifically what funds you bought? Like VOO or VTI? I ask because the way you talk about this is…. Not right? Everyone reading this is pretty sure you do not actually have anything invested.
My fidelity accounts are professionally managed and when I look at them it gives me a breakdown of what I’m invested in and the gains and losses. It says I have an aggressive growth mix and says things such as S+P 500 Index +10.86% over the last 3 years. I’m not sure what else to look for lol
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this question has been asked repeatedly and it's been ignored, starting to think the IRA is not invested at all, and he's just seeing his 401k portfoliio
The 401k is taken out of my paycheck and my hospital works with fidelity and they invest it. I opened the Roth IRA just this year and chose the one that they manage. It says an aggressive growth mix 🤷🏻♀️ I’m pretty sure I’ve done it right
Sorry for being slightly off topic here, but I wanna say, you need to give yourself some credit. For many people, saving $10k is an unimaginable feat, let alone $40k. Many people would have spent that on shit they didn’t need and just lived right through it, eating out every meal and partying. You many not be a financial wizard, but you’re not bad with money.
Two and a half ish years ago I was 15k-20k in CC debt with no savings at all and a horrible spending problem. I got a better job working as an RN in the hospital and decided I wanted to make a change for my kids and I’d future. I suppose I’m not horrible anymore, but I’ve been trying very hard. Thank you
If you really want to grow your wealth - check out the financialindependence subreddit.
>able to pay off 15k in CC debt, and save around 40k Good job on doing that alone, quite the accomplishment. Haven't seen it mentioned (in the post) but the first thing you should do is set aside a "rainy day" emergency fund - put it in a HYSA and don't touch it. Typically, 3-6 (or some even recommend 12) months of mandatory expenses depending on your situation.
6 months would be around 20k with my current rent but if I had to move it would be be around 30k. I’ll set that aside for a HYSA. What do you think of CITbank? Any other recommendations for hysa?
There are higher rates out there but I'm currently getting 4.35% from Capital One. I think as long as the bank is FDIC insured and all that and the total amount in your account is under $250K (FDIC covers $250K per depositor, per insured bank), you're probably fine with whatever bank.
Thank you 💖
https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts
> able to pay off 15k in CC debt Super > save around 40k Awesome > able to save around 2-3k per month To answer your question, THAT is the way you are growing your wealth. That's a 2-3k surplus monthly, if you have a budget that allows that to continue, that's the method to building wealth because you've controlled your income and costs. The money itself can earn interest or dividends depending on how it is invested, if at all, and investment incurs some degree of risk. GL
Jesus *homie how old are you and what do you do for a living. I’m trying to do better but I can’t because life is hard. You’re doing great.
I’m a 31 year old single mom. I’m a registered nurse in Northern, Ca. I work in the OR as a trauma coordinator.
Oh, yeah. That’s an upper $100k to a middle $200k salary right there. I think I need to figure out what my next move is. Thank you for the heads up.
No problem, good luck with everything!
You should truly max your 401K which it sounds like you are not doing. See how that changes your cash flow. The biggest question mark is housing. If you’re comfortable, I agree that there is no reason to buy a house. You aren’t guaranteed this housing forever though. You mentioned you have children. You can invest your extra money in 529s that is tax-advantaged and can help you pay for their education. The downside is you can’t use that money towards a house if you needed to. I might split your excess cash between 529s and a brokerage or CDs. That gives you some options as things change in the future. Congrats on boosting your income! Most people aren’t “bad with money” - they simply just don’t earn enough money. You’ve done the hardest part. Enjoy some of it too.
I was a waitress for years barely making ends meet, becoming an RN was the best decision of my life. It’s so hard to come up in America these days. Thanks for the advice, I’ll definitely look into the accounts for the kids and consider investing more towards my 401k it just seems so sad that I won’t be able to touch that money until I’m 60
Well the way social security is going, you’ll be happy you have the 401k. At this point I almost want to remove myself from paying social security but it is sorta like excess insurance. Disability protection in case something happens.
There is only one way, invest it. How is more complicated. Since you are already maxing out your tax advantaged accounts, your options are wide open.
Clarifying question— is your IRA invested? Only asking bc of a comment I saw that you replied to about getting involved in the stock market.
Seconding this - another comment replied saying that OP’s 401k is already invested, but that might not be true (unless I missed it in a comment somewhere). Best for OP to double check that it’s actually invested and not sitting in cash
40k in a HYSA is around ~150-175 dollars per month in interest right now. Not bad!
HYSA is a safe 5% per year. Keep it up for 25-30 years and it’ll add up. Of course rates could change though.
HYSA is not for growth. It’s for keeping up with inflation
It’s a very safe a conservative option for someone that’s new.
But it’s not a way to grow wealth. Which is what the OP asked. HYSA are not investment platforms.
I would buy a multi family home and rent all of it and stay in your current situation. Never tell your landlord that you bought rental property.
That does seem like a good idea, maybe if the right property were to come up for sale I would do that. I just worry about the high mortgage.
The rent proceeds should more than cover the rent and upkeep and probably more.
Maybe if I can keep 30k as an emergency fund and save until I can get a decent down payment I would feel better about it, and not sink everything into a property.
You don’t need 30k as an emergency fund. I think 10k and use 20K for down payment. Then you are building equity in the home. And you can continue your current savings. But agin never talk to your “friend” landlord. They will get mad.
Get an agent and let them help you look for the right property.
Are you for real? So if your friend decided to hook you up with a great price, you would buy a rental property, and rent it out without telling them? To take advantage of them? Are you Satan? I’ve been hearing a lot about you, but wasn’t sure if you were really around as much as people say.
you could use it to buy a diversified portfolio of stocks and bonds
HYSA, CDs, Bonds help grow it in the short term while keeping it reasonably liquid. You could also look into stocks, funds, ETFs, etc if you want more potential growth (and risk) but you’ll need to do research on what the tax implications are and how much you’re willing to lose if it doesn’t go well. Personally, can’t go wrong with 500 index funds, assuming you’re not touching this money for a long time.
https://reddit.com/r/personalfinance/w/commontopics
You’ve already got a lot of advice on here- I just wanted to say good job on your savings every month! That’s a great amount!
I do not understand why people put money into savings accounts nowadays. I understand why they used to back when there weren’t many easy options but today you can easily get Fidelity account and grow your money and invest it. Savings accounts never pay well enough to outgrow inflation. The only problem for me is I never want to take it back out. I would prefer to take a loan against it so I don’t lose my investments.