‘I want to make good financial decisions so I can actually enjoy my 20s’: I have conflicting priorities between renting a nice place and saving for future goals. How should I prioritize my expenses as a new adult with a $95k salary?

Hi Money Minder,

Hey there! I’m a fresh-faced new adult, 25(F), just stepping into the working world after school. I could really use some guidance on how to manage my money. I bring in around $4800 a month after all the deductions, thanks to the 401k and health insurance. By the way, do you think putting down 10% for the 401k with a 9% company match is a smart move?

So, here’s the deal – I’ve stashed away about $4400 in a HYSA (High Yield Savings Account), no student debt, but do have about $2700 hanging over me in credit card debt.

My shiny new car is sucking up $411 every month for the next 5 years. And don’t even get me started on my insurance! It skyrocketed from $165 to nearly $300 because I moved to this city with insane insurance rates. Sometimes I wonder if having a car is worth all this hassle, but let’s be real, navigating through this city without one is a nightmare.

I’m really trying to adult properly and get my finances in order. I’m also weighing up how much I can set aside for renting my own dream pad. I’m talking about a place with all the bells and whistles – gym, in-unit laundry, swanky interior, and city proximity. But finding something like that without going broke seems like mission impossible. Initially, I thought $1500 would cut it, but now I’m not so sure, considering my other expenses.

Ultimately, my goal is to make wise financial decisions so I can relish my 20s, have enough cash for hobbies, travel adventures, supporting my fam, and future plans like buying a house, launching a business, and retiring early.

Cheers,
Velvet Financial Dreamer

Response from THE MONEY MINDER:
Hello There,

Congratulations on landing your first job out of school! It’s great that you are already thinking about planning your finances responsibly at such a young age. From what you’ve shared, it sounds like you have a good foundation to build upon.

Firstly, let’s address your 401k contribution. Putting down 10% with a 9% company match is an excellent idea. This not only helps you save for retirement but also maximizes the free money your company is offering. Keep this up!

Next, tackling your credit card debt should be a priority. With $4,400 saved in a High Yield Savings Account, you have a good emergency fund already, so I would recommend using a portion of it to pay off your credit card debt. This will save you money in the long run since credit card interest rates tend to be high.

Regarding your car expenses, it seems like the costs are adding up, especially with the increase in insurance. If owning a car is crucial for your lifestyle, consider finding ways to cut down costs, such as refinancing your auto loan or shopping around for cheaper insurance rates.

As for renting a place of your own, it’s essential to find a balance between your desired amenities and budget. A practical approach would be to reassess your budget and see how much you can comfortably allocate towards rent after accounting for all your expenses, including debt repayment and saving for future goals like buying a house or starting a business.

Remember, enjoying your 20s doesn’t have to mean overspending. By making smart financial decisions now, you can set yourself up for a secure financial future while still being able to pursue your passions and goals. All the best from THE MONEY MINDER as you navigate this exciting journey!