Howdy all,

Recent grad looking for some opinions/advice on how I should be saving my money. Lots of smart folks on this forum, thought Id ask here.

In my mid 20s and work FP&A at a large corporation in DFW area. As of right now, Im allocating 9% to 401k for my company match, 12% to brokerage fund to save for a DP on a house, 4% to Roth IRA, and 1% to emergency fund (already built up to 4-5 months of expenses). Totals to roughly 26% of gross annual income.

Mostly asking if yall would recommend allocating a different % amount to each "bucket"?

Short term goal is to buy a home in 2024 but the more I allocate to that bucket, the more I need to take away from something else.

Thanks!

How much money you make would be helpful information so your percentages could be turned into actual dollars

How much are you trying to save for the down payment?

Are you married?

How much is 4-5 months of expenses and is any of it payments to high interest debt?

Do you have access to an HSA account?

Gross income is 78k, so 9% 401k, $800/month to house savings, $250/month to roth IRA, and $100/month to gen savings/emergency fund.

- maybe 50-60k? Depends on the price of the home (which is also dependent on interest rates and the housing market over the next 18 months) but I think thats a decent target. Please let me know if this sounds reasonable or not. I currently have slightly over half of that goal saved

- not married

- 10k, I have a student loan but its paused right now (and likely until August of '23) and int rate is 4%

- Im not sure to be honest. I am still on my parents health insurance so I haven't thought about that yet

Bizarro Jerry said:

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You should be maxing out the Roth IRA. Increase that to $500/mo starting in January and then forget it.

These dollars are growing tax free for the rest of your working life. Once the tax deadline passes, the chance to put that $6,000 in is gone forever.

With 4-5 months of expenses already saved and you being single with no dependents, there's really no need for the $100/mo going to the emergency funds IMO

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Agree on the ROTH. Also, worse case, you can withdraw the capital from it if you have to. Go ahead and double your monthly contribution to it.

I would do the following (in order):

1) Contribute into 401k to get full match, not a dollar more.
2) Max Roth IRA, $6,500 for 2023.
3) Stop adding to emergency fund and move it to a HYSA. As mentioned above, you have Roth contributions to fall back on in a worst-case scenario.
4) Move house down payment money into HYSA (different than emergency fund account) and keep adding until you get to your goal.

I'm not sure what match you are getting, but with the numbers provided that is a 20-25% retirement savings rate. Be sure to blow a little cash along the way and make some memories, too!

CC09LawAg said:

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Tangentially related, but I would not buy a house until you're engaged/married unless you plan on keeping it and turning it into an investment property.

Most women don't want to live in your bachelor pad and so now you're in a situation where you may have only lived there a couple of years and you're already looking to sell with no idea what the housing market conditions will be like.

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concur

thanks all for the replies, really appreciate it!