Hi Money Minder,
Hey there, I’m Mark, a 21-year-old guy who just finished college and landed a sweet software engineering job making $125k a year (around $75-80k after taxes). I’ve got a few different accounts set up right now:
- Checking
- Savings
- High yield savings account
- Brokerage account
- 401k with Vanguard through my company
After all the deductions, I’m taking home $6k a month. I’m also about to start a masters degree program that will cost me $2400 a month for the next two years, but it’s interest-free with a payment plan. My main expenses right now are gas, groceries, and insurance.
I really want to save up as much money as possible, whether it’s in cash or other assets, because my ultimate goal is to buy a house after I finish my graduate program. I’ve always been pretty good about spending my money on experiences and having fun with my significant other, but I also want to save up a good chunk of it. I know that during my time in school, I won’t be going out as much, so that’s another opportunity to save.
I’ve tried budgeting in the past with various apps and spreadsheets, but I always seem to fall off the wagon. Any advice, tips, or resources you can provide would be really helpful. Thanks a bunch!
Best,
Mark
Response from THE MONEY MINDER:
Hello There,
Congratulations on your recent graduation and landing a lucrative job in the software engineering field! It’s commendable that you are already thinking about how to invest and save your hard-earned money wisely. Given your income, expenses, and financial goals, here is a practical approach that can help you maximize your savings potential.
First and foremost, let’s address your current financial setup, which includes a checking account, savings account, high-yield savings account, brokerage account, and a 401k with Vanguard. It’s great that you have multiple accounts in place to manage your finances effectively. Since you mentioned struggling to stick to budgeting apps and spreadsheets in the past, it might be helpful to automate your savings. Consider setting up automatic transfers from your checking account to your savings and investment accounts each month. This way, you can prioritize saving without the need for constant monitoring.
Given your goal of saving for a future home purchase, it’s essential to have a clear savings plan in place. With your after-tax income of 6k per month and limited expenses, you have a significant opportunity to save. Since you mentioned that you will be starting your master’s degree soon and will have additional expenses, such as tuition payments, it’s crucial to factor these costs into your budget. Planning ahead for these expenses will help you maintain a healthy balance between saving for your future and managing your present financial obligations.
Consider leveraging tax-advantaged accounts like your 401k with Vanguard to maximize your retirement savings. Since your company offers a 5% match, make sure to contribute enough to receive the full employer match. Additionally, you may want to explore other investment options within your brokerage account to diversify your portfolio and potentially earn higher returns.
When it comes to budgeting for experiences and leisure activities, it’s essential to strike a balance between enjoying life now and saving for the future. You can allocate a portion of your income towards entertainment and experiences while prioritizing saving for your long-term goals. It’s crucial to set realistic spending limits and track your expenses to ensure you are staying within your budget.
In conclusion, by automating your savings, planning for future expenses, maximizing retirement contributions, and maintaining a balance between spending and saving, you can set yourself up for financial success. Remember, financial planning is a journey, and it’s okay to make adjustments along the way. Stay focused on your goals and be mindful of your spending habits to achieve your desired financial outcomes. All the best from THE MONEY MINDER!
