About to start as a first year - how the hell should I think about money
Starting my first full-time job this year with incredible pay. Looking at between $150k-$200k all in comp... which to me is absolutely mind blowing to think about having made a fraction of that despite working through high school and college. Never been a huge spender or anything but how should I think about managing this money. I understand that being and adult is expensive (paying rent in a city), eating out, etc. but to those who have been here before, how did you spend/save your paycheck, and what do you wish you did/didn't do with your money?
Thanks in advance.
Make sure you hit the full company match (usually 6 or 8%) on 401k, but most people don't max the full 401k out in year 1 which is okay - no reason to live like a complete pauper just to max it out on base salary. You can usually adjust your bonus allocation to give a higher % to your 401k, which is what I would do.
I personally don't get crazy with backdoor Roth, etc... too complicated for someone like me who wants to think about my personal finances as little as possible. IMO focus on managing your life and basic expenses (simple things paying your own credit card, rent, etc) year 1 and if you want to get more complex do that after you've gotten in the rhythm a bit. Don't start out with a massive, complicated laundry list of things to do, great way to feel overwhelmed and demoralized for some very small % of incremental savings.
Put together a rough budget (you can find some Excel templates online) - i.e. how much does it cost me to pay rent, utilities, groceries in a month? Can I set aside $500 a month to invest in my 1. rainy day fund, and then 2. Fidelity account? You can tweak this as you get some data points on your spending but good to have an idea of where it all goes.
Rent amount is also a tough balance - you want somewhere you can relax and unwind from a stressful job, but also if in NYC or other large city, rent can easily eat up a ridiculous amount of pay. I would reflect on how important a nice apartment is to you - if you don't care and want to save more, cool. If your home environment is how you de-stress, maybe pay a bit more and have a nicer place.
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I'm not in Finance yet but I was a travel nurse making $125k/year. In school for my accounting degree so I think I can chime in a bit here
1. Pay off all your debts first. It's a guaranteed rate of return.
2. Roth IRA/Backdoor Roth Ira. Pretty sure you'll have to do a backdoor though since you make too much
3. Emergency fund in a high yield savings account. Most people like to do 6-12 months of expenses. Just depends. I put $100/week into it (Well when i was working)
4. Match your employers 401k match. It's free money. No need to max that out though.
5. Health savings account. Pre tax money can be put in here and you can use it for medical treatment without being penalized. I don't have this though cause I'm on my parents insurance. Just something to look into
6. Invest into the market. I'm sure 99% of the people on this board do that already.
7. Budget/Keep track of your money. I used youneedabudget (Not sponsored). Helps you see where your money is going.
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