{ "media_type": "text", "post_content": "Need some advice. I take home roughly 4k/month after taxes and IRA contributions (6% 401k and 3% Roth). My rent is around 900 and I usually spend 300-400 on my credit card. Cont...", "post_id": "58bc3892281fbd0016177b5c", "reply_count": 11, "vote_count": 1, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting" }

Need some advice. I take home roughly 4k/month after taxes and IRA contributions (6% 401k and 3% Roth). My rent is around 900 and I usually spend 300-400 on my credit card. Cont...

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General rule of thumb is at minimum to save 10-15% of income. Better to target 70%, tho most can't start there. Next is to take full advantage of ALL retirement accounts (401k, IRA, HSA) and max them out. Reason being, they are completely shielded from capital gains tax (15% of gains) and you can't beat that. Then when you reach a point of surplus discretionary income, drop that into a brokerage account. If you build your budget off of general rules of thumb, and shave your categories where possible, those surpluses all help towards that 70% savings target.

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Why wouldnt you max your tax advantaged space first? Unless saving for shorter term goals?

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Additionally, it's best to use your credit/charge card to consolidate all recurring, budgeted monthly expenses, and not to augment your income. Supplementing income with debt is a trap from poor budgeting. Consolidating recurring expenses on a single card gives you centralized spend analytics, maximum rewards advantages, and simplifies spend with 2 bills - rent and 💳.

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D1 is right. If you're not saving for a home (or have some other large short term expense coming up), you should be maximizing pre-tax savings. Since I had my 6 month emergency fund in place, my strategy has been max 401k at 18,000 and max HSA for another 3,400 in pre tax savings. Then max out Roth IRA at 5,500. After that, if there's money left, add money to a brokerage account.

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I currently put aside 100 into the market but it seems low. What's a good % of my paycheck to invest every month outside an IRA?

What D1 said, max tax advantaged stuff first. For starters, think of that as investment into the market - so it's on top of the $100 you're setting aside now, as well

Do you lose your HSA from year to year?

No HSA stays with you. FSA is use it or lose it. HSA is only available if you have a HDHP.

With HDHP it's useful to save cash to cover deductible so you don't have to use your HSA, which is shielded from both income and cap gains tax. Your lower premiums will of course increase your cash flow and help you meet savings targets. As for cash targets vs investments, cash to cover 6-9 months expenses plus your HDHP deductible is a good start. Once your portfolio gets large enough however, cash savings as a percentage of your portfolio makes more sense - 10-20% is a good rule of thumb.

Google the 50 30 20 budget rule if you need some fundamental budgeting advice. It's a good way to breakdown your spending into three high level categories and adjust just the three levers as needed.

Gotcha. Thank you everyone!

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