We have had a number of threads about money management and savings. I adapted this list from a discussion I had with my 15 year old daughter. Here is what I suggest as a plan, in order:
1. Track your income and spending for 60 days. Track every penny of income, and every single expense. There are online spreadsheets like Mint.com. Or, you can use your own spreadsheet. Whatever, just do it. Once you have a good 60 day track, start cutting things that are not useful or just flat out wasteful. Then make a budget and stick to it. You will have probably 10% of your income once you start seeing what you spend and what you don't really need to spend.
2. Save up at least $1,000 and put that aside in an emergency fund. BF and I have a whole year in our emergency fund. But, we keep some of it in a savings account that we label "emergency fund." The rest is in Certificates of Deposit. (None of these funds really yield much income, but that's not the point. We just need access to cash.
3. Take advantage of any employer offered retirement matching funds. Nowhere will you earn more with no risk than the employer match. Be smart, invest at least enough to get the full employer match. If you are self-employed, you can do something similar with a SEP 401K
4. Pay off all high interest debt. I say anything over 5% interest is high interest. Pay it off as quickly as possible. There are two strategies: avalanche or snowball. Either one works, avalanche will cost you less. But, snowball has positives too.
5. Invest in yourself. Educate yourself. Buy books, take a class to improve your skills, take a class to add new skill[s]. Learn something to help you make more money.
6. Invest in a Roth IRA.
7. Invest in taxable accounts/investments. I used to like individual stocks, but I just don't have the time to follow too many businesses. Now, I just invest in index funds. The returns are very close to the market and the costs are very low. Also, index funds routinely beat the best hedge fund managers.
HTH
Z



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