‘Only recently have I become more conscious about my money’: I have $1000 in a ROTH IRA, $1200 in Robinhood, $1000 in credit card debt, and no emergency fund. Am I prioritizing my finances correctly?

Hi Money Minder,

Hey there, I’m starting to get my act together with money and trying to plan for the future. But I’m not sure if I’m going about it all wrong. Here’s the deal:

I’m currently putting $100 a month into a ROTH IRA, which has a balance of around $1000. I’ve got about $1200 hanging out in Robinhood. I don’t have an emergency fund, and I’ve got around $1000 in credit card debt.

Do you think I should be switching things up or am I on the right track? Is it a good idea to keep my money in a ROTH IRA, or should I consider a different approach?

Thanks for your help,

Response from THE MONEY MINDER:

Hello There,

I appreciate you sharing your concerns about your current financial situation. It’s great that you have started being more conscious about your money and planning for your future. Looking at your current financial snapshot, there are a few key steps you might want to consider to optimize your financial health.

First and foremost, it’s crucial to prioritize building an emergency fund. Having a safety net of 3 to 6 months’ worth of living expenses set aside in a savings account will provide you with financial security in case unexpected expenses arise.

Next, addressing your credit card debt should be a top priority. High-interest credit card debt can quickly accumulate and hinder your financial progress. I recommend focusing on paying off the credit card debt as soon as possible to avoid accruing additional interest charges.

Regarding your investment strategy, contributing to a Roth IRA is a wise decision for long-term financial growth. However, given your current financial obligations, you may want to consider temporarily pausing contributions to your Roth IRA until you have built up your emergency fund and paid off your credit card debt.

When you are in a more stable financial position, you can resume contributions to your Roth IRA and continue to invest for your future retirement goals. It’s important to strike a balance between saving for the future and addressing immediate financial needs.

Remember, financial well-being is a journey, and it’s essential to take small steps towards your goals. By prioritizing building an emergency fund, paying off high-interest debt, and strategically investing for the future, you are setting yourself up for financial success.

All the best from THE MONEY MINDER.