23 y/o looking to set myself up for success

You spend $1,140 in fixed expenses (plus whatever your CC payment is... maybe $60, so a total of $1,200).

You earn about $2,500 take home per month. So you should have $1,300 left per month for entertainment/fun.

To set yourself up for success, do the following few things:

  1. Make an emergency fund of 3-6 months of living expenses (so for you, I'd say get that savings from $3,000 up to $5-7,000).

  2. Pay off that credit card ASAP and don't carry a balance ever again. The interest you pay on those will kill you financially (even if it just looks like a few bucks in interest per month).

  3. Create a budget, especially for the extra $1,300 you have a month for spending/saving. Make sure you stick to it once you have a good idea of how much you feel is reasonable. You don't have to just make numbers up today and stick to them. Just track your spending over the next 2-3 months and see if it feels right that you are spending $500/month on entertainment, or if you should cut back to $300/month (for example). STICK TO THAT NUMBER.

  4. Make savings/investments automatic. Does your employer have a 401k? Do they match your contributions? If so, use that first. Then learn what a Roth IRA is, open one (with Vanguard is fine), and max it out. It will cost you $458/month to max out. You'll be glad you did.

  5. Avoid stupid stuff. No need to buy everyone rounds of shots. No need to buy a $20,000 car. If you want to take a well-earned vacation, that is perfectly find. Just save up for it, then treat yourself. But no stupid splurges (unless they are part of that monthly entertainment fund we discussed earlier).

Stick to those and the rest is cream cheese.

Let me know if you have questions.

/r/personalfinance Thread