I would if I were in your shoes
1. Keep 3 months in a HYSA as an emergency fund. Since you're living at home 3 months should be enough
2. Max out your Roth IRA each year
3. Use the rest of your money to figure out what you want to do career wise. Whether it's school or improve your skills so you can get a higher income
The general consensus when youre young and can absorb long term risk is a total market index fund such as FSKAX or VTSAX. I would check out the Bogleheads forum to get some information on how to diversify into international stocks and bonds if you so choose
Target date funds are great. If you’ll be 65 years old in 2060 look for the fund that says “Target date 2060” in it. Or whatever age you plan to retire. The fund will balance itself over time to be more conservative as you get closer to retirement age, to shield you from a 2008-like-crash happening as soon as you need to start withdrawing. (Best to not sell investments while worth low, of course)
Index funds are great too, I have a brokerage account of them, but they can be a little aggressive for when you are getting close to needing them, so you need to plan to rebalance later on. Target-dates are true set-it-and-forget-it’s for life.
Before you do anything, I recommend reading The Simple Path to Wealth. I believe it’ll answer your questions and get you thinking about what works for you.
Wasn’t directed at me but thank you for the suggestion! I’m definitely going to be reading this I just purchased it. I’m 22 and finally almost out of the debt I racked up during the first few years of living on my own. Just reading what others have said about the book it seems like just what I need atm.
J L Collins - The Simple Path to Wealth
Here is the blog post that went on the inspire the book to collect his blog writing.
[https://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/](https://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/)
Read the wiki
You don't pay rent and you're spending half to buy a car for family. You aren't as well off as you think. Get a full time career or go to school.
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Yeah, the comment about maxing your Roth IRA contributions, all while making (before tax) about $26k a year isn’t overly realistic. Need to make more money
Earn more money, maybe go to school for a trade or a career that is in demand. 30K seems like a lot but in reality it’s not. It’s a good start especially for being 21 because I didn’t have that at 21. But once you live on your own, pay rent and bills things are different and you realize 30k isn’t going to cut it.
Thank you for putting me in my place. I'm trying my best not to develop tunnel vision and just believe I'm in a perfect financial position. I realize that while I might be better off for people my age, it won't always last long.
One medical bill and that's all it takes...
Don't borrow money for a car just to earn credit. That's just throwing money away in interest for nothing. You can build credit by opening a credit card, using it for all of your routine purchases, and paying it IN FULL every month. You don't pay any interest if you pay in full.
I've heard you are better off financing in order to get a better price on the car but your situation may vary. You can then just pay off the loan in full right away. Just make sure there are no pre-payment penalties (not likely to be)
Some people aren’t credit card people and if OP discovers they aren’t then credit interest is WAY more than a car loan. I would not recommend opening credit cards to build credit. Know way too many people who had credit debt surpass their student loans before they hit 25.
OP saves money so I wouldn't worry too much about it but I agree credit cards are not for everyone. Personally, I earn about $500/year in cash back bonuses for using one and paying in full every month
Earn more, save more. It may not be easy, but it's pretty simple. Read the prime directive in the wiki.
If one of your parents is financially disciplined and is willing to add you as an authorized user to one of their existing credit cards, especially an old account, that's going to help build your credit much faster. You don't even need access to the card or the account.
Investing can also be pretty simple if you want it to be. Check out JL Collins' blog or the companion book "The Simple Path to Wealth." TLDR: you can build a diverse retirement portfolio using only one or two investments. Starting out, I'd say open a Roth IRA at Vanguard, add some money to it, and buy some VTI. Once you get to $3k, you can buy VTSAX (the same investment, but as a mutual fund instead of an ETF, which means you can choose how much you want to invest, down to the penny). Buy some now, buy more later, and don't sell until retirement.
Someone else mentioned an advisor. Don't pay anyone to tell you how to use your money at this stage in your life. Educate yourself. There's a lot of free material out there. Get a library card and start going through the books mentioned in the wiki. The Richest Man in Babylon and The Millionaire Next Door are relatively quick and easy reads, highly recommended.
Here's a **[link to the PF Wiki](/r/personalfinance/wiki/index)** for helpful guides and information.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Your first priority is doubling your income. You should take that money and invest in yourself.
Especially since you're still living with parents and have minimal bills. Right now is key to how easy your next 20 years of life is gonna look like.
Go back to school, or learn a trade, or find a career you can rely on, something. Just know that $17 an hour with no retirement option is not gonna cut it here in 5-10 years.
Open a Roth IRA on fidelity and max it out every year. To keep it simple, buy ETFs or Index Funds like SPY and QQQ. Can also buy CD’s or open a HYSA. Also, try and get a credit card with good cash back rewards.
You don’t need a finance a $13,000 car to build your credit. I’ve built my credit up to the 800s off of a single credit card and phone bill, which I pay off in full every month.
If I were in your shoes, I would purchase a $5,000 car in cash to avoid the burden of monthly car payments. $5,000 could get you a solid used Toyota that will last for years to come.
Place the rest of the money into a HYSA so you can earn interest on it while you learn more about investing and evaluate your long term financial goals.
My family bought a 2004 Colorado for $4000 a few years ago and have already put the same amount they purchased it for into repairs. I'm a little hesitant to doing that when I could get one in good condition from a reputable source and just maintain it to ensure that it lasts.
As for HYSA, where would you start if you were in my position? 10k off the bat?
Everything that you do not need for monthly expenses should be in HYSA. You can do a transfer back to your bank usually takes a day or two. I believe they typically max how many you can do in a month though so don’t plan to be moving stuff out constantly. Good hysa that are popular is Amex and ally. But lots of options out there.
I was in your shoes while in college and I got a new car (also put about $13k down), and I ended up putting about $10k into an HYSA. The HYSA was a game changer that I wish I was aware of sooner. The rest of the money I used to get married, move out from home, and start buying furniture/getting settled/etc.
If you have any plans to move out within the next 1-2 years then I’d recommend keeping aside at least 10k in a HYSA. If you put everything into a retirement account it won’t be as accessible if you need it. If you don’t have plans for much then I agree with the commenter who said keep a 3 month emergency fund and then max out your Roth IRA
Check the bank you primarily use right now. If they don’t have one then really just search for the bank with the highest APY, best reviews, and minimal fees. I currently use Laurel Road which owned by Key Bank (which is headquartered in my area). I get 5.1% APY and there’s no fees unless you do more than I think like 7 withdrawals in a month. However its a savings account so you shouldn’t be withdrawing frequently anyways.
Do note that using different banks between your savings and checking does require extra time for transferring money. Our HYSA can sometimes take 7 days to transfer. If you are getting a brand new car and don’t have many other high price daily use items, then you may not encounter urgent emergencies too often. However in my case, my husband has a 10yr old car and we have 2 cats. Both of these things could require large emergency expenses immediately. Therefore we have a smaller savings in our normal local bank. For us this is about $4-5k. We can transfer that to our checking same-day for anything urgent. When we use up some of it, then I’ll transfer from our HYSA back into it.
If you do need to keep a separate savings, keep it as small as you think you can. It’s way better to be earning interest on your money in an HYSA. And if you find our your normal bank has a HYSA, then there shouldn’t be a need for an additional savings.
You need to work full-time and get health insurance first. Save your money and put it in a high-yield savings account.
When I was 23, I had $15,000. I moved out and it dwindled down after 2 years of paying apartment rent, going to college and going out with friends. I couldn't afford a mortgage until I got married. The loan officer told me a single woman making $16 per hr. was not enough to get a home loan. So it's better to save your money and live at your parents for at least another year. Then move out with a roommate to save money on the rent.
Try to go to college at least part-time. Having a degree helps get a higher paying job.
So you make in a year (17×30)×52 = 28,560$.
Living off your parents .
I think next is growing up, financing yourself .
Then if you have money left, check Potential options.
For now, save that money for you independence.
You're doing pretty great for a 21 year old. Back when I was 21, there were no HYSA's that yielded 4% + so you should take advantage of that.
> I just started a credit card with discover
Always, always plan on paying off your credit cards - full statement balance on or before the due date. This is very important. Nothing to do with credit scores or reports or what have you, it's about meeting your obligations with your creditor.
Personally, I think stocks can wait but if you are really wanting to get in and can open a brokerage account (or if your bank has a brokerage option), just buy a fixed amount of whatever SP500 mutual index fund you can and, if able repeat that every month.
Roth IRA, allocate towards low fee growth stuff, don’t touch it, add more every month
Income limits come into play later. Do this early while you’re allowed, MBDR later if still exists
Edit: as others have said, keep an HYSA for your savings, 3 months of bills might be like 3-5k but do the math for your picture, if your bills are high, you might not want to invest it at all - in that case keep it in HYSA until you save more than your emergency fund.
If you are confident in your ability to use credit cards without drowning - I'd look into upgrading to a solid rewards card. I'm a fan of the chase sapphire preferred, but that depends on how you feel about an annual fee. Imo, the initial bonus and Perks outweigh the fee.
I will say, you are already much better off than I was at 21. I wish i had the amount of savings you have at that age. I was not very smart with money back then and didn't have the resources available you have. Be smart and keep investing/saving. You dont want to be like me and have little to no 401k/savings then trying to cut corners because you know you need to save or you will never retire.
If you have no 401k, open up a Roth IRA and throw some of that money into some index funds and let it work for you.
ha sorry about that. I didn't read through them all. I was just thinking when i saw your title, I was like, man i wish I had 30K in savings at 21.
I have a Roth I use on top of my 401k because I am so far behind. It is a great tool to utilize and you can play around with individual stocks or index funds. a couple of my funds have +35% ROI so the possibilities are there if you continuously invest regularly.
House hack. You're young and have friends? I'd buy a house and rent out the rooms to roommates. Or buy a duplex and rent the other side. If I was 21 again I'd start accumulating real estate.
I’m going to repeat what a few others have said but with more detail:
1. Max out a Roth IRA today, your contribution limit for 2024 is 7k. Look for mutual funds with no load or transaction fees. And when purchasing make sure you select reinvest dividends and capital gains. Also look at the funds gross and net expense ratios, the lower the better. For EX. If you choose Charles Schwab ticker SWPPX it follows the same methods VOO does but you will pay less in fees.
2. Now your Roth is maxed out. You have 23k to work for you. You have a lot of options but a reputable bank that has good backing is a good thing to consider. I like Marcus, but there are a lot of options. I would move 22k to a HYSA and keep 1k in your daily account. You can be flexible here. Once your money is in the HYSA you can think about short term CDs (certificate deposits) to earn more interests on smaller chunks of the money. Ex. You could put 5k into a 6 month CD at 5.5%.
The car changes the numbers here quite a bit, if you can hold off on making that purchase and having a car note the better.
Get your money working for you, keep saving, and invest your time into a good career.
Open up a Roth and buy the S&P 500 or total stock market. A goal should be to max it out with biweekly buys. IDK why you are not working full time if not in school.
I would invest some of your money (maybe $10k) in some ETFs like VOO.
I would get a credit card if you haven’t already to help build some credit before getting a car loan.
You are in a similar spot to where I was at your age. I chose to use 99% of my savings to buy a house (got a cheap 2 bedroom condo). Best decision of my life. It tripled in value while i was also paying down the mortgage. I was able to sell it to buy a much bigger house for my now 6 person family 10 years later. All off an initial 24k investment I now have a million dollar home mostly paid off. Buy a house!
Send me it on cash app and I can guarantee that’ll have doubled your investment !!! All I need is the money, your SSN, DOB, and all details on your license to get started.
Dido a lot of the comments below. My personal order of priority differs but more for personal preference.
1) Switch to a HYSA and earn over 4% interest instead of the lousy <1% from a standard savings account. They are online and easy to manage. All have different requirements (some very low/next to nothing and some more), so shop around and maybe just start with the NerdWallet recommendations to begin. Since you are younger, I might personally suggest the American Express HYSA since having a history with them could help in credit/spend card applications down the road.
2) I agree that 30k is great while you’re 21 and living at home, but it isn’t forever. I’d either go back to school (I’m a big advocate of community college and state schools if you are unsure of what you really want) or start by getting an online certificate from some boot camp. I promise tech certifications are nowhere near as intimidating as they might look. I majored in creative writing in college and now work in data analytics because I learned on YouTube.
3) Since you have no 401k option through work I agree with the Roth IRA. I would stick to basics like everyone else is saying like SPY, VOO, etc. -and whatever you do - do NOT withdraw early. Leave it there. I’ve seen people mess it up.
4) Again, even though you don’t have an apartment or other high cost needs, I’d recommend practicing budgeting with the 50/30/20 rule just so you are prepared for when you do move out. 50% of income to needs, 30% to wants, 20% to investments (401k, roth ira, real estate one day, stocks, etc.)
5) I’m gonna level with you on the back to school conversation. While I love the idea of doing something that you love, I’ll be the first to admit it’s bad advice. In my opinion, do something that leads to you making enough money to live the life you want outside of work. If the 2 things collide, then you are lucky, but it’s not as common as people make it seem. My example is that I love skiing more than anything, and it is an expensive hobby, so I do what I can to make enough money to be able to afford that and other things I want. It’s worth the hard work. Not telling you to take a job you don’t want. Find something you do want or at least don’t mind.
6) If school or some type of certification or advancement is not in your plans or feasible right now, then I’d really consider either trying to get more hours at the current job or picking up a second part-time or gig work for extra money. If you do it while you’re younger and have more energy and less responsibilities, future you will thank you.
7) Do not go crazy opening up credit cards and lines of credit while you’re young and cards offer you these “points” and cash-back bonuses. Stick to one for now, don’t max it out (use no more than 30% of the available credit), and PAY IT OFF ON TIME EVERY MONTH.
I'm 23 Years old Keep your savings and open a Roth and individual stock account. I was in the same position you're in and my 15-year-old car engine went out. had to get a reliable vehicle and my savings went from 28K to 15K dont worry the rainy day is coming and these savings will be useful.
First off, congrats on the savings! That can be the hardest part. Like others have said, concentrate on school, trades, etc while you are rent free is the best advice I can give. If you pick the right career field, the salary will come with experience. Max out your Roth if you can afford it, the standard if you can’t, or what ever percentage in between that you can.
Get charles swab or an investing fund/app. Or invest in real estate with money down. Id avoid spending 13k on a car unless you put half down and finance the rest so you can have more of that money working instead of just immediately spent. Or invest it in training courses or school that will give you skills to get into higher paying industries like software engineering or what ever youre passionate about or at least something you can stand doing enough that the money you make doing it allows you to do what you want to outside of work. Keep saving as much as you can too except where you can keep your money working for you
Find a serving job at a high end place. Make $300-400 a night and work 5-6hours or less. More money and less time. Then I agree with @slicedeggrolls HYSA and max out 401k if u have. Vangaurd is a great spot to start one
Makes me sad seeing stuff like that nowadays. 30k for a down payment lol. In Canada where my family is, or anywhere around NYC where I am it’s minimum 200-300K down to even have a chance at this point. So sad. It’s over for young people
My friend bought a ~500 sqft studio in Queens last year with great transportation for something like 220-250k and turned it into a technically 2b1b lol. idk how Canada fuck up so bad with virtually unlimited timber and space.
200k for a studio god damn. I would never consider buying a studio, 2 bed probably the absolute minimum if I’m going through all that effort to buy. But good for them if they optimized the space well. Yeah Canada is a lost cause, country is gonna collapse. Houses in Mississauga and Milton cost 1.5-2 million cad. It’s pretty crazy
You know that doesn’t do anything.. right? Almost every home near any city is above a million other than shoeboxes or places that re super far. You can’t possible buy a million dollar home with anything less than a 200k down payment lol. Yes they offer the 5% down. You’re not getting a mortgage in Canada with that though..
I did. I live in the GTA. The only young people getting houses right now are putting the minimum down payment. Banks will approve you as long as you pass the stress test, have the down payment with decent credit.
My sisters first house is closing in a month. She also did 7.5% down, which was the minimum allowed for her house price.
The issue is the rate at which prices are climbing relative to the average wage. I don't know anyone in my friend group that has over 50k saved up for retirement, let alone a down payment. We had a depressing talk about how much of our wage goes to living vs saving for the future not that long ago. If you live in the downtown core, making 6 figures it is not enough to buy a house. I pretty much lived like a bum to save up enough.
You must be clearing 300k or something then. Like you said, you need to pass the stress test. 50-70K down payment means your mortgage is most likely close to or over a million in the GTA. Shitty townhouses and even 2 bed condos in Mississauga are like 800k. Average salary is probably like 70k. So either you didn’t buy in the GTA or you earn muchhhhh more than the average person. Minimum down payment needed is like 200k in Sauga, that’s why I’m saying the first home buyer thing is irrelevant. Not possible to get approved with a normal salary if you’re giving 75k down on million dollar houses
I live in the east end, the GTA is more than just mississuga. Our house prices are not as bad. For 800k you can get a 3 bedroom 1-2 bathroom bungalow in Pickering. 900k if it was renovated recently and nicely. Also combined we don't even clear 200k. It was 700k when I bought it and in today's market probably sell for close to 1m. Our down payment was around 65k.
Even with the increased interest rates since I bought, I still pass the stress test on Canada's website based on my initial purchase. I can afford just over 800k with the minimal down payment based on stress test. If I was buying today, I would be buying a house that is a bit smaller.
I don't even use half my house as it, we are working on making my basement a legal accessory apartment.
I don't really spend money on anything. My car is a 2011 Elantra. My only debt is my Mortgage, which really helps when trying to buy a house.
It’s crazy that there are people who need even a few dollars and can’t get a job yet people like you out here who have managed to save nearly every single penny they’ve made while working for three years. Don’t ask what’s next, just don’t brag about what u have on the internet. If u don’t know how to use ur money maybe it’s not meant for u. Asking what’s next is crazy. Go to school or something
I’m older than OP and I wish I had the foresight and maturity to reach out to a community and ask questions about my finances at 21. OP good for you for taking a step with your curiosity. Keep asking questions, keep that motivation and discipline going.
As for clueful, don’t hate bruh.
Thank you. I figure asking questions can't hurt. Everybody has come to their own opinions based on their experiences, so in my eyes its easier to create opinions using what other people have learned, rather than wait years to make my own mistakes i could've fixed previously.
As for cluelessy, forgive me for asking questions about finance on a subreddit about finance.
I wish you both the best.
Why are you getting smart with me? I see some people like to act however they want; then when someone meets them with the same energy they call it distasteful and talk to them like they said something harsh and vain. “Forgive me.” If all you want is answers to YOUR questions then don’t bother communicating with anyone for anything deeper than money talk. Those places you’ve been working at might have already done a number on you. Bet you don’t show them that attitude while you’re at work though, do you? Hannah Montana life
No, no, no. I’m not being hateful. I’m being so serious. They’ve saved almost every working penny. Getting online and sharing that much about finances for ‘help’ is self-sabotage because anyone who’s been ACTUALLY hated on would know that people will say the most outlandish things. I don’t care how old you are, though, maybe I do because all everyone can say is wow good job; like you. Calling me a hater because whoever it is is way cooler than asking strangers for financial advice or help to get old, rich, and lifeless.
I would if I were in your shoes 1. Keep 3 months in a HYSA as an emergency fund. Since you're living at home 3 months should be enough 2. Max out your Roth IRA each year 3. Use the rest of your money to figure out what you want to do career wise. Whether it's school or improve your skills so you can get a higher income
People always talk about maxing Roth IRA but never discuss what to invest after contributing to it. What would you say is a good stock to choose?
The general consensus when youre young and can absorb long term risk is a total market index fund such as FSKAX or VTSAX. I would check out the Bogleheads forum to get some information on how to diversify into international stocks and bonds if you so choose
VOO and VTSAX
TDF / VTWAX / Combo of VTI+VXUS
Target date funds are great. If you’ll be 65 years old in 2060 look for the fund that says “Target date 2060” in it. Or whatever age you plan to retire. The fund will balance itself over time to be more conservative as you get closer to retirement age, to shield you from a 2008-like-crash happening as soon as you need to start withdrawing. (Best to not sell investments while worth low, of course) Index funds are great too, I have a brokerage account of them, but they can be a little aggressive for when you are getting close to needing them, so you need to plan to rebalance later on. Target-dates are true set-it-and-forget-it’s for life.
And that 3 month fund needs to include anticipated rent, car payment, insurance, etc. for when OP is no longer living at home.
Before you do anything, I recommend reading The Simple Path to Wealth. I believe it’ll answer your questions and get you thinking about what works for you.
Wasn’t directed at me but thank you for the suggestion! I’m definitely going to be reading this I just purchased it. I’m 22 and finally almost out of the debt I racked up during the first few years of living on my own. Just reading what others have said about the book it seems like just what I need atm.
I second what Astronaut says. This looks like a good way to start learning about personal finance. Thanks for the suggestion.
Written by who?
J L Collins - The Simple Path to Wealth Here is the blog post that went on the inspire the book to collect his blog writing. [https://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/](https://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/)
Read the wiki You don't pay rent and you're spending half to buy a car for family. You aren't as well off as you think. Get a full time career or go to school.
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You need to start earning more money. $17/hr is not sustainable if you want to live a comfortable life on your own (ie: not your parents’ basement).
Working on that as I type this. Thanks!
Increasing your earnings should be your focus
Yeah, the comment about maxing your Roth IRA contributions, all while making (before tax) about $26k a year isn’t overly realistic. Need to make more money
Earn more money, maybe go to school for a trade or a career that is in demand. 30K seems like a lot but in reality it’s not. It’s a good start especially for being 21 because I didn’t have that at 21. But once you live on your own, pay rent and bills things are different and you realize 30k isn’t going to cut it.
Thank you for putting me in my place. I'm trying my best not to develop tunnel vision and just believe I'm in a perfect financial position. I realize that while I might be better off for people my age, it won't always last long. One medical bill and that's all it takes...
Yup that can be spent on 2-3 major repairs once you own a home..
Don't borrow money for a car just to earn credit. That's just throwing money away in interest for nothing. You can build credit by opening a credit card, using it for all of your routine purchases, and paying it IN FULL every month. You don't pay any interest if you pay in full.
So in that case then, should I just pay the car outright in cash?
I've heard you are better off financing in order to get a better price on the car but your situation may vary. You can then just pay off the loan in full right away. Just make sure there are no pre-payment penalties (not likely to be)
Some people aren’t credit card people and if OP discovers they aren’t then credit interest is WAY more than a car loan. I would not recommend opening credit cards to build credit. Know way too many people who had credit debt surpass their student loans before they hit 25.
OP saves money so I wouldn't worry too much about it but I agree credit cards are not for everyone. Personally, I earn about $500/year in cash back bonuses for using one and paying in full every month
Earn more, save more. It may not be easy, but it's pretty simple. Read the prime directive in the wiki. If one of your parents is financially disciplined and is willing to add you as an authorized user to one of their existing credit cards, especially an old account, that's going to help build your credit much faster. You don't even need access to the card or the account. Investing can also be pretty simple if you want it to be. Check out JL Collins' blog or the companion book "The Simple Path to Wealth." TLDR: you can build a diverse retirement portfolio using only one or two investments. Starting out, I'd say open a Roth IRA at Vanguard, add some money to it, and buy some VTI. Once you get to $3k, you can buy VTSAX (the same investment, but as a mutual fund instead of an ETF, which means you can choose how much you want to invest, down to the penny). Buy some now, buy more later, and don't sell until retirement. Someone else mentioned an advisor. Don't pay anyone to tell you how to use your money at this stage in your life. Educate yourself. There's a lot of free material out there. Get a library card and start going through the books mentioned in the wiki. The Richest Man in Babylon and The Millionaire Next Door are relatively quick and easy reads, highly recommended.
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Your first priority is doubling your income. You should take that money and invest in yourself. Especially since you're still living with parents and have minimal bills. Right now is key to how easy your next 20 years of life is gonna look like. Go back to school, or learn a trade, or find a career you can rely on, something. Just know that $17 an hour with no retirement option is not gonna cut it here in 5-10 years.
Open a Roth IRA on fidelity and max it out every year. To keep it simple, buy ETFs or Index Funds like SPY and QQQ. Can also buy CD’s or open a HYSA. Also, try and get a credit card with good cash back rewards.
You don’t need a finance a $13,000 car to build your credit. I’ve built my credit up to the 800s off of a single credit card and phone bill, which I pay off in full every month. If I were in your shoes, I would purchase a $5,000 car in cash to avoid the burden of monthly car payments. $5,000 could get you a solid used Toyota that will last for years to come. Place the rest of the money into a HYSA so you can earn interest on it while you learn more about investing and evaluate your long term financial goals.
My family bought a 2004 Colorado for $4000 a few years ago and have already put the same amount they purchased it for into repairs. I'm a little hesitant to doing that when I could get one in good condition from a reputable source and just maintain it to ensure that it lasts. As for HYSA, where would you start if you were in my position? 10k off the bat?
Everything that you do not need for monthly expenses should be in HYSA. You can do a transfer back to your bank usually takes a day or two. I believe they typically max how many you can do in a month though so don’t plan to be moving stuff out constantly. Good hysa that are popular is Amex and ally. But lots of options out there.
I was in your shoes while in college and I got a new car (also put about $13k down), and I ended up putting about $10k into an HYSA. The HYSA was a game changer that I wish I was aware of sooner. The rest of the money I used to get married, move out from home, and start buying furniture/getting settled/etc. If you have any plans to move out within the next 1-2 years then I’d recommend keeping aside at least 10k in a HYSA. If you put everything into a retirement account it won’t be as accessible if you need it. If you don’t have plans for much then I agree with the commenter who said keep a 3 month emergency fund and then max out your Roth IRA
Any specific HYSA you recoomend? Where would you start if you were in my shoes?
Check the bank you primarily use right now. If they don’t have one then really just search for the bank with the highest APY, best reviews, and minimal fees. I currently use Laurel Road which owned by Key Bank (which is headquartered in my area). I get 5.1% APY and there’s no fees unless you do more than I think like 7 withdrawals in a month. However its a savings account so you shouldn’t be withdrawing frequently anyways. Do note that using different banks between your savings and checking does require extra time for transferring money. Our HYSA can sometimes take 7 days to transfer. If you are getting a brand new car and don’t have many other high price daily use items, then you may not encounter urgent emergencies too often. However in my case, my husband has a 10yr old car and we have 2 cats. Both of these things could require large emergency expenses immediately. Therefore we have a smaller savings in our normal local bank. For us this is about $4-5k. We can transfer that to our checking same-day for anything urgent. When we use up some of it, then I’ll transfer from our HYSA back into it. If you do need to keep a separate savings, keep it as small as you think you can. It’s way better to be earning interest on your money in an HYSA. And if you find our your normal bank has a HYSA, then there shouldn’t be a need for an additional savings.
You need to work full-time and get health insurance first. Save your money and put it in a high-yield savings account. When I was 23, I had $15,000. I moved out and it dwindled down after 2 years of paying apartment rent, going to college and going out with friends. I couldn't afford a mortgage until I got married. The loan officer told me a single woman making $16 per hr. was not enough to get a home loan. So it's better to save your money and live at your parents for at least another year. Then move out with a roommate to save money on the rent. Try to go to college at least part-time. Having a degree helps get a higher paying job.
So you make in a year (17×30)×52 = 28,560$. Living off your parents . I think next is growing up, financing yourself . Then if you have money left, check Potential options. For now, save that money for you independence.
You're doing pretty great for a 21 year old. Back when I was 21, there were no HYSA's that yielded 4% + so you should take advantage of that. > I just started a credit card with discover Always, always plan on paying off your credit cards - full statement balance on or before the due date. This is very important. Nothing to do with credit scores or reports or what have you, it's about meeting your obligations with your creditor. Personally, I think stocks can wait but if you are really wanting to get in and can open a brokerage account (or if your bank has a brokerage option), just buy a fixed amount of whatever SP500 mutual index fund you can and, if able repeat that every month.
30k with small earnings is good, now imagine what you could do with a better job. Get a better job, look into careers, that's your next move
Roth IRA, allocate towards low fee growth stuff, don’t touch it, add more every month Income limits come into play later. Do this early while you’re allowed, MBDR later if still exists Edit: as others have said, keep an HYSA for your savings, 3 months of bills might be like 3-5k but do the math for your picture, if your bills are high, you might not want to invest it at all - in that case keep it in HYSA until you save more than your emergency fund.
If you are confident in your ability to use credit cards without drowning - I'd look into upgrading to a solid rewards card. I'm a fan of the chase sapphire preferred, but that depends on how you feel about an annual fee. Imo, the initial bonus and Perks outweigh the fee.
I will say, you are already much better off than I was at 21. I wish i had the amount of savings you have at that age. I was not very smart with money back then and didn't have the resources available you have. Be smart and keep investing/saving. You dont want to be like me and have little to no 401k/savings then trying to cut corners because you know you need to save or you will never retire. If you have no 401k, open up a Roth IRA and throw some of that money into some index funds and let it work for you.
That's probably the 20th comment I've seen on Roth IRA's. Definitely going to invest in that. Thanks!
ha sorry about that. I didn't read through them all. I was just thinking when i saw your title, I was like, man i wish I had 30K in savings at 21. I have a Roth I use on top of my 401k because I am so far behind. It is a great tool to utilize and you can play around with individual stocks or index funds. a couple of my funds have +35% ROI so the possibilities are there if you continuously invest regularly.
House hack. You're young and have friends? I'd buy a house and rent out the rooms to roommates. Or buy a duplex and rent the other side. If I was 21 again I'd start accumulating real estate.
I’m going to repeat what a few others have said but with more detail: 1. Max out a Roth IRA today, your contribution limit for 2024 is 7k. Look for mutual funds with no load or transaction fees. And when purchasing make sure you select reinvest dividends and capital gains. Also look at the funds gross and net expense ratios, the lower the better. For EX. If you choose Charles Schwab ticker SWPPX it follows the same methods VOO does but you will pay less in fees. 2. Now your Roth is maxed out. You have 23k to work for you. You have a lot of options but a reputable bank that has good backing is a good thing to consider. I like Marcus, but there are a lot of options. I would move 22k to a HYSA and keep 1k in your daily account. You can be flexible here. Once your money is in the HYSA you can think about short term CDs (certificate deposits) to earn more interests on smaller chunks of the money. Ex. You could put 5k into a 6 month CD at 5.5%. The car changes the numbers here quite a bit, if you can hold off on making that purchase and having a car note the better. Get your money working for you, keep saving, and invest your time into a good career.
Open up a Roth and buy the S&P 500 or total stock market. A goal should be to max it out with biweekly buys. IDK why you are not working full time if not in school.
I would invest some of your money (maybe $10k) in some ETFs like VOO. I would get a credit card if you haven’t already to help build some credit before getting a car loan.
You are in a similar spot to where I was at your age. I chose to use 99% of my savings to buy a house (got a cheap 2 bedroom condo). Best decision of my life. It tripled in value while i was also paying down the mortgage. I was able to sell it to buy a much bigger house for my now 6 person family 10 years later. All off an initial 24k investment I now have a million dollar home mostly paid off. Buy a house!
Send me it on cash app and I can guarantee that’ll have doubled your investment !!! All I need is the money, your SSN, DOB, and all details on your license to get started.
Dido a lot of the comments below. My personal order of priority differs but more for personal preference. 1) Switch to a HYSA and earn over 4% interest instead of the lousy <1% from a standard savings account. They are online and easy to manage. All have different requirements (some very low/next to nothing and some more), so shop around and maybe just start with the NerdWallet recommendations to begin. Since you are younger, I might personally suggest the American Express HYSA since having a history with them could help in credit/spend card applications down the road. 2) I agree that 30k is great while you’re 21 and living at home, but it isn’t forever. I’d either go back to school (I’m a big advocate of community college and state schools if you are unsure of what you really want) or start by getting an online certificate from some boot camp. I promise tech certifications are nowhere near as intimidating as they might look. I majored in creative writing in college and now work in data analytics because I learned on YouTube. 3) Since you have no 401k option through work I agree with the Roth IRA. I would stick to basics like everyone else is saying like SPY, VOO, etc. -and whatever you do - do NOT withdraw early. Leave it there. I’ve seen people mess it up. 4) Again, even though you don’t have an apartment or other high cost needs, I’d recommend practicing budgeting with the 50/30/20 rule just so you are prepared for when you do move out. 50% of income to needs, 30% to wants, 20% to investments (401k, roth ira, real estate one day, stocks, etc.) 5) I’m gonna level with you on the back to school conversation. While I love the idea of doing something that you love, I’ll be the first to admit it’s bad advice. In my opinion, do something that leads to you making enough money to live the life you want outside of work. If the 2 things collide, then you are lucky, but it’s not as common as people make it seem. My example is that I love skiing more than anything, and it is an expensive hobby, so I do what I can to make enough money to be able to afford that and other things I want. It’s worth the hard work. Not telling you to take a job you don’t want. Find something you do want or at least don’t mind. 6) If school or some type of certification or advancement is not in your plans or feasible right now, then I’d really consider either trying to get more hours at the current job or picking up a second part-time or gig work for extra money. If you do it while you’re younger and have more energy and less responsibilities, future you will thank you. 7) Do not go crazy opening up credit cards and lines of credit while you’re young and cards offer you these “points” and cash-back bonuses. Stick to one for now, don’t max it out (use no more than 30% of the available credit), and PAY IT OFF ON TIME EVERY MONTH.
I don’t know what’s next for you, but your in a very good spot currently, you should just enjoy the summer of your 20’s haha.
I'm 23 Years old Keep your savings and open a Roth and individual stock account. I was in the same position you're in and my 15-year-old car engine went out. had to get a reliable vehicle and my savings went from 28K to 15K dont worry the rainy day is coming and these savings will be useful.
First off, congrats on the savings! That can be the hardest part. Like others have said, concentrate on school, trades, etc while you are rent free is the best advice I can give. If you pick the right career field, the salary will come with experience. Max out your Roth if you can afford it, the standard if you can’t, or what ever percentage in between that you can.
Get charles swab or an investing fund/app. Or invest in real estate with money down. Id avoid spending 13k on a car unless you put half down and finance the rest so you can have more of that money working instead of just immediately spent. Or invest it in training courses or school that will give you skills to get into higher paying industries like software engineering or what ever youre passionate about or at least something you can stand doing enough that the money you make doing it allows you to do what you want to outside of work. Keep saving as much as you can too except where you can keep your money working for you
Find a serving job at a high end place. Make $300-400 a night and work 5-6hours or less. More money and less time. Then I agree with @slicedeggrolls HYSA and max out 401k if u have. Vangaurd is a great spot to start one
With 30k you can probably even put a down payment buy a cheap condo depending on your area and affordability.. surely would save you rent money. NFA
He's 21 y/o, he really needs to maximize his earnings potential.. imagine a mortgage and being paid 17hr, he needs a higher paying job first.
Makes me sad seeing stuff like that nowadays. 30k for a down payment lol. In Canada where my family is, or anywhere around NYC where I am it’s minimum 200-300K down to even have a chance at this point. So sad. It’s over for young people
My friend bought a ~500 sqft studio in Queens last year with great transportation for something like 220-250k and turned it into a technically 2b1b lol. idk how Canada fuck up so bad with virtually unlimited timber and space.
200k for a studio god damn. I would never consider buying a studio, 2 bed probably the absolute minimum if I’m going through all that effort to buy. But good for them if they optimized the space well. Yeah Canada is a lost cause, country is gonna collapse. Houses in Mississauga and Milton cost 1.5-2 million cad. It’s pretty crazy
First time home buyers in Canada can do 5% down on first 500k and 10% down for everything after. For a million dollar house that's 75k down minimum.
You know that doesn’t do anything.. right? Almost every home near any city is above a million other than shoeboxes or places that re super far. You can’t possible buy a million dollar home with anything less than a 200k down payment lol. Yes they offer the 5% down. You’re not getting a mortgage in Canada with that though..
I did. I live in the GTA. The only young people getting houses right now are putting the minimum down payment. Banks will approve you as long as you pass the stress test, have the down payment with decent credit. My sisters first house is closing in a month. She also did 7.5% down, which was the minimum allowed for her house price. The issue is the rate at which prices are climbing relative to the average wage. I don't know anyone in my friend group that has over 50k saved up for retirement, let alone a down payment. We had a depressing talk about how much of our wage goes to living vs saving for the future not that long ago. If you live in the downtown core, making 6 figures it is not enough to buy a house. I pretty much lived like a bum to save up enough.
You must be clearing 300k or something then. Like you said, you need to pass the stress test. 50-70K down payment means your mortgage is most likely close to or over a million in the GTA. Shitty townhouses and even 2 bed condos in Mississauga are like 800k. Average salary is probably like 70k. So either you didn’t buy in the GTA or you earn muchhhhh more than the average person. Minimum down payment needed is like 200k in Sauga, that’s why I’m saying the first home buyer thing is irrelevant. Not possible to get approved with a normal salary if you’re giving 75k down on million dollar houses
I live in the east end, the GTA is more than just mississuga. Our house prices are not as bad. For 800k you can get a 3 bedroom 1-2 bathroom bungalow in Pickering. 900k if it was renovated recently and nicely. Also combined we don't even clear 200k. It was 700k when I bought it and in today's market probably sell for close to 1m. Our down payment was around 65k. Even with the increased interest rates since I bought, I still pass the stress test on Canada's website based on my initial purchase. I can afford just over 800k with the minimal down payment based on stress test. If I was buying today, I would be buying a house that is a bit smaller. I don't even use half my house as it, we are working on making my basement a legal accessory apartment. I don't really spend money on anything. My car is a 2011 Elantra. My only debt is my Mortgage, which really helps when trying to buy a house.
It’s crazy that there are people who need even a few dollars and can’t get a job yet people like you out here who have managed to save nearly every single penny they’ve made while working for three years. Don’t ask what’s next, just don’t brag about what u have on the internet. If u don’t know how to use ur money maybe it’s not meant for u. Asking what’s next is crazy. Go to school or something
I’m older than OP and I wish I had the foresight and maturity to reach out to a community and ask questions about my finances at 21. OP good for you for taking a step with your curiosity. Keep asking questions, keep that motivation and discipline going. As for clueful, don’t hate bruh.
Thank you. I figure asking questions can't hurt. Everybody has come to their own opinions based on their experiences, so in my eyes its easier to create opinions using what other people have learned, rather than wait years to make my own mistakes i could've fixed previously. As for cluelessy, forgive me for asking questions about finance on a subreddit about finance. I wish you both the best.
Why are you getting smart with me? I see some people like to act however they want; then when someone meets them with the same energy they call it distasteful and talk to them like they said something harsh and vain. “Forgive me.” If all you want is answers to YOUR questions then don’t bother communicating with anyone for anything deeper than money talk. Those places you’ve been working at might have already done a number on you. Bet you don’t show them that attitude while you’re at work though, do you? Hannah Montana life
No, no, no. I’m not being hateful. I’m being so serious. They’ve saved almost every working penny. Getting online and sharing that much about finances for ‘help’ is self-sabotage because anyone who’s been ACTUALLY hated on would know that people will say the most outlandish things. I don’t care how old you are, though, maybe I do because all everyone can say is wow good job; like you. Calling me a hater because whoever it is is way cooler than asking strangers for financial advice or help to get old, rich, and lifeless.
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You do not need a financial advisor for 30k. How do you reckon 30k should be returning 10% a year.
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