Hi! I recently found out about MMM a few days ago as I started looking into how to better utilize my money. I'm 23 year old software engineer in NYC. I've been fortunate with earning money, but as a result I know next to nothing about utilizing it well.
I'm most interested in thoughts on where I should put my money as well as how much I should allocate towards saving and spending. I made estimates of my fixed costs (they can be rather variable per month), but regardless they're largely unnecessary and I plan to cut most of them out. I realized that some other case studies are more focused on reducing expense items, but I'd like to focus on establishing a reasonable estimate on how much I should be spending on living costs rather than how much I can reduce the cost of each item. I feel the low-hanging fruit here is to cut out the majority of the food/drink/clothe expenses; I can worry about further improvements after I make these changes and reevaluate how much I'm spending per month.
Income: 120000/yr; 10000/mo
Current Expenses:
- rent: $2650
- electric: $70
- internet: $60
- gym: $85
- phone: $0 (parent's plan)
- spotify/netflix: ~20
- healthcare/dental: $11
As mentioned, I haven't calculated fixed expenses as they can vary a lot for me. I have the following estimates on min/max ranges, but I don't know the actual average per month.
- restaurants: $150-400
- bars: $30-250
- alcohol: $0-250
- clothes: $0-500
- misc: $0-500
- groceries: $5-30
Assets:
- checking: $12000
- savings: $21000
- some options in my company, but we're still private
Debt:
- $0
Notes:
- I don't own a car or a bike. Everything I have been using on a day-to-day basis is within walking distance.
- My company provides lunch and dinner, so food largely just concerns weekend meals.
- Obviously, my main non-rent costs come from my spending habits. Fortunately, I had independently come to the conclusion to cook more / drink less, so I'm not anticipating very many issues with cutting back significantly here.
- Grocery costs will go up; the current cost is primarily just for breakfast.
As mentioned above, I'm primarily interested in how I should distribute my income amongst savings and living costs. I made the following estimate earlier today that quite doable.
~86k left after taxes
~54k left after rent
~36k left after putting 18k into a 401k
~30k left after putting 6k into an IRA
15k left after putting everything else into some form of investment
-> 1250/mo for all non-rent expenses; ~1050/mo after recurring expenses
This is slightly off since my understanding is that 401k is pretax; the extra money can go into long term investing.
Additional Notes / Questions:
- I'll want to own a place someday, but I don't know when/where that would be.
- I don't have any other future plans/goals in relation to money.
- "some form of investment" will probably be Betterment. I'm under the impression that it would be useful for me to learn to balance my own portfolio, but it's most important to me to start my money doing something. Is there a point where it's better to do things on my own than through Betterment?
- I'm still not very knowledgable about investing and don't know anything regarding how/where to invest my money other than surface level details. I'm reading and doing my research, but there's a lot of information to go through. Are there any errors or specific details / concerns that I overlooked?
Thank you in advance!
EDIT: Forgot to add internet.