Hey Money Minder,
I just started a new job that pays me around $1350 biweekly, which is roughly $2700 a month after taxes. I’m lucky enough to live at home with my parents, so my living costs are only about $500 a month. Plus, I’m still on my parents’ car insurance and my job covers my health insurance. I’m 22 and living in a state with a low cost of living.
My grandfather gave me his old car, so I don’t have any payments on that. I also went to college for free, so no student debt here. And I don’t have any credit card debt either. My credit score is 740, and I only got my first credit card last year.
I have some monthly subscriptions that add up to about $50, which I share with my family.
With my first paycheck, I want to start a Roth IRA and put in around $500 a month. Then, I plan on saving about $600 a month in a high-yield savings account.
My car is getting up there in years, but it’s still chugging along. I think I’ll need a new one in the next 3 years or so, probably a Toyota.
If all goes well, I should have about $1050 left over each month. My question is, do you think I should be saving more?
I know it’s not ideal, but I have some expensive hobbies I really enjoy (camping, shooting, streaming). Would saving $600 a month be enough for someone in their 20s like me? Or should I bump it up to $800 a month?
Thanks for your help!
Sincerely,
Budgeting Beginner
Response from THE MONEY MINDER:
Hello There,
Congratulations on landing a job with a steady income and for being financially responsible at such a young age. It’s great to see that you have already thought about creating a budget and planning for your financial future. From what you’ve shared, it seems like you have a good handle on your finances with low living costs and no debt to worry about.
It’s commendable that you want to start investing in a Roth IRA and a High-Yield Savings Account right off the bat. Contributing $500/month to your Roth IRA and $600/month to your savings is a solid start. This will help you build a financial cushion for emergencies and start saving for bigger financial goals like a new car in the future.
Considering your current financial situation and your desire to invest in your hobbies, you could potentially increase your savings amount to $800/month if you feel comfortable doing so. This will help you reach your financial goals faster while still leaving you with some disposable income for your hobbies.
Ultimately, finding the right balance between saving and spending on your hobbies is key. It’s important to enjoy your interests while also being prudent about your financial future. As long as you are saving consistently and staying within your budget, you are on the right track. Keep reassessing your financial goals and adjust your savings as needed.
Best of luck in your financial journey, and remember to prioritize your long-term financial well-being while enjoying your hobbies.
Farewell from THE MONEY MINDER
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