Young, clueless, and just starting out saving

[cavalofun]

Hey fellow MMians,

  I am 24 years old living at home with minimal expenses and always have been a saver but I recently graduated from college (no loans or debt thank GOODNESS!!!) and like many of my post grad friends feel at a loss with ANYTHING financial.  I've been talking to a lot of them and no one seems to have a clue about how to start investing, what are living expenses, how much money we even need to make to be "adults".  It's a really big problem and I'm seeing some of my older friends falter and some of my current friends on the brink.  My parents are blue collar and i love it cause I've learned important lessons that some of my richer friends haven't, like anything can be fixed, buying used can still feel like something new, and how to live cheaper.  But in reality, I find us 20 year olds have no clue financially.  I volunteer a lot in my community and would like to do so for the rest of my life and retiring early certainly would help with that.

I've scrimpt and saved and have saved up $20000 in savings, $5000 in an Roth IRA, and $5000 in another vangaurd account index fund but honestly picked it randomly based on a friends father's advice.  Currently i make $26,000 /yr after taxes working as a dental hygienist and freelance graphic designer but don't really expect a pay increase like you and our wife experienced.  DO you have any tips for a fellow saver just starting out?

Help... :/

[chasesfish]

This blog is a good place to start, just dedicate yourself to learning about money.  This is a lifelong process.  You're already doing well with more than a years salary saved up and the person who gave you the advice to go to Vanguard made a good recommendation.

[adasafa]

I am also fairly new to this whole thing but I think you made a great choice using Vanguard. From the research I have done, it's the best company to use for Roth IRA or a general savings account.

[BoulderTC]

To learn about stocks and investing, start at jlcollinsnh.com, and click around to find his series on stocks/investing. I read the whole series start to finish and found it to be well worth my time and now feel empowered to invest without a financial adviser. Give it a try, and pass it along!

[sleepyguy]

You seem to be doing pretty well.  Yes check out Colins site it's fantastic for US investors using a DIY simple approach.  Also 26k seems awfully low for a DH?  They make about 40-50k here in  Canada so that's why I'm pretty confused.  Try to up that salary... 26k is like starbucks like and you should be striving for at lease 40-50k... but you're doing pretty well with zippo debts.  Good job at such a young age!  At 24 I think even though I had no student loans I had a negative net worth and maybe about $50 in the bank, lol :)

[cavalofun]

Yeah unfortunately the industry has started to lag in my area that's part time around 20 hours a week looking for more hours by adding an additional office but  jobs are scarce right now. And thanks I will check out that site I love reading.   From everything I've read online I like keeping the 20000 as a safety net but do you think that's too conservative? Should I put more in investments or keep it the same? Should I stay with index mutual funds any particularly good funds, think about blue chip stocks with dividends, or even think of someday rental property investments? I'm handy I even know how to drywall at a commercial level.  Any thoughts?  Thanks so much for everybodys input! :)

[Victorious Secret]

I'm just getting started myself too, cavalofun.  Don't know about you my friend but I feel blessed to have found this place at such a young age!  Cheers to the 'stache

[NWstubble]

From everything I've read online I like keeping the 20000 as a safety net but do you think that's too conservative?

Unless you put an extra zero on that by mistake, I would say yes that is very conservative. Put your dollars to work, don't let them be lazy. But, to each their own with regards to "safety net comfort".

The MMM blog and this forum are a treasure trove of knowledge. My recommendation, if you haven't already, is to read the blog all the way through starting from the first post. If you have specific questions, such as how much to have in an emergency fund, try searching the forums. Many topics have already been discussed at length.

Welcome and Enjoy!

[plantingourpennies]

You're off to a great start =)

Vanguard is a very smart choice. Head over to bogleheads to learn about asset allocation, depending on your plans you might want to select a fund with a target retirement date.

The 20k safety net is probably too conservative, but without knowing your monthly budget it is tough to say.

Some odd advice-consider starting a PF blog. Its a very supportive community and the accountability has helped Mrs. PoP and I.

best,
Mr. PoP

[cavalofun]

Update:

Thank you all so very much for your advice! I've been looking into boggle heads and have used their advice to alter some of my investments as well as keep around $10,000 as a safety net and dump more into vanguard to get my "little workers" working for me harder.  Also per the blog started using mint to track my spending. 

Current Stats:

Net Worth: $41, 727.57

- $9332.32 Checking/ Debit accounts at .10% Yield (APY)
- $20,853.27- Vanguard Account
          -Divided between:
                   -VHDYX- $6,052.21
                   -VBMFX- $3,048.98
                   -VGTSX- $4,641.92
                   -VTSMX- $7,110.16

- $11,541.98 Roth IRA Vanguard Account
           -VHDYX- $6,293.90
           -VTSMX- $5,248.08

Income:

$33,280 (After taxes avg.s $26,000) (Yes I know desperately trying to up this, make $32 an hour but only work 2 1/2 days a week and really looking for adding more work but job market is floundering right now. Hoping really soon.)

Debt/loans: $0

Spending:

- As mentioned prior still living at home to conserve funds (fortunately have amazing parents willing to help me out as long as I continue my volunteering)

Average Spending for month: $445
Cell phone: tracphone $42 /mon. (paid yearly already paid for 2014 [not included in the $325])
Rent: $120 /mon. (I know see comment above about amazing parents, only child I think they wanna keep me for as long as they can.   
   ;) And I know this is a valuable limited opportunity of time in my life, thats why I'm also so desperate to save now.)
Restaurants
and Groceries: $100 /mon. (face punch me I know working on this, struggling with antimustashian friends)
Gym: $10 /mon. (happily canceling this tomorrow)
Gas: $50 /mon.
Mis. expenses/entertainment/Grocery shopping (other than food)/personal care: $165

Any more ideas, help or advice?! Its much appreciated!!!

[windawake]

Is there anything you could do with the abundant free time you have right now to make some extra cash? Work as a dog walker, take some free/cheap classes to learn a new skill, or get another part-time job that's not entirely related to your degree? Obviously you want to maximize saving, and it's frustrating to not have as many hours as you want, but you're moving along at a good clip with your savings so as long as you keep your eyes open for something else, I wouldn't worry too much.

[apoclater]

With that low of rent, I think you're doing just fine.  Your groceries are quite low (especially if you're including restaurants), you don't have a ridiculous cell phone bill, etc.

That being said, I'm the same age as you and I could not live with my parents, even for that dirt cheap rent.  I love them, don't get me wrong, but I would need more freedom and privacy.  If you up your income and work full time you'd probably make 45-50k/year if not more.  Why not move and get that freedom?

[cavalofun]

Yeah lol, living homes not always that easy not gonna lie.  And yeah even one more day would up my salary significantly.  Thank you windawake yeah just recently have been thinking I might need to do something like that.  Currently the free time is slightly being used up helping with a local org. similar to habitat for humanity in my area. (They've taught me construction skills for free and I'm currently on the drywall crew even training others only over the course of a short year, can't say enough for what useful mustachian skills you learn for being a willing volunteer, something for others to think about. ;) )  But that's mostly on some weekends and fridays and if my job search yielded something I could def. scale down.  I also have my graphic design degree and get freelance clients when I can but recently thats dried up a bit too.

Also, for a single person I'll be honest those numbers are mostly restaurants less groceries.  I KNOW I need to get better with that working on it, have scaled back coffee trips by getting my own mug and brewing at home most days but still slip up sometimes. The young 20 something thing everybody does in my area is going out to eat so balancing it socially is going to be necessary but hard. Also the office I work at everybody grabs lunch but working on bagging my lunch full time now, have paired down a lot but still can do better.

I've also started selling my fine art photography at fairs and art shows locally and have set up a site- http://www.redbubble.com/people/earthart/shop/framed-prints?ref=artist_shop_product_refinement

and run a small t-shirt site but with the vastness of the internet so far my sales have been minimal, more success at the art fairs and showings.

Any ideas on my invesetments? Do you think I've made good choices and/or do you think there's room for improvement?  Any other ideas? 

[mh1361]

Personally, I'd rather just put it all in VTSAX if that's an option. It's easier to manage and will probably outperform the other funds long term. Also, considering your situation, I don't know if you need that much in an emergency fund. Check out MMM's article on Springy Debt. http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/ I'm 22 and I plan on keeping 2-3k in a checking account and using credit cards as a back up. People who own homes need to keep more available for emergency house repairs, but I rent, as you are right now, so we don't have to worry about those repairs. But it comes down to what you're comfortable with as well.

[cavalofun]

Another option employer just started offering a 401k to me matching up to 3% @ 100%, then 50% for the next 2%, but I know these are managed funds with higher fees than vangaurd.  It's through a company called AXA Equitable and have management fees ranging from .63- 1.00% depending on the fund choices.  Is this a good idea?  Should I only contribute up to the match?  Or more?  I can't afford to max but should I be thinking more Roth or more 401k???  Also the 401k has a vesting schedule and who knows how long i'll be at this job should that effect anything as well or is the tax benefits that great in the 401k for it not to matter as much?  Thanks! ;)

[Thegoblinchief]

Prioritize the Roth. The match is free money, but the expenses eat it quickly.

[TomTX]

Prioritize the Roth. The match is free money, but the expenses eat it quickly.

I disagree. It takes a LONG time for an 0.63% expense to eat up a 50% match. More like 0.53%, when you subtract Vanguard's expense ration. Likely a much longer time than he'll be at that company.  At the very least, get the 100% match.

Once you leave the company (a few 401(k) will let you do it while still there) - call Vanguard Concierge services and initiate a rollover from the 401(k) to an IRA.