Unlocking the Secrets to Financial Success: How AI Legalese Decoder Can Help You Manage an $80K Salary at 24
- May 11, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Financial Perspective in the DFW Area
I reside in the DFW area, known for its booming job market and diverse opportunities. Recently graduating from college, I have secured a job with a starting salary of $80k, and the promise of a $5k annual increase up to a cap of $110k if I do not receive a promotion.
## Current Financial Situation
At present, I am childless and single, residing with my parents. Fortunately, my parents own their home outright, with my only financial responsibilities being utilities and property taxes. In fact, the only bill I cover is the internet, resulting in minimal financial strain and peace of mind.
## Financial Goals and Aspirations
As a recent college graduate, my primary objective is to purchase my own home or initiate my own business venture within the next five years. However, being young and relatively inexperienced in financial matters, I am seeking sound advice to guide me on this journey.
## How AI Legalese Decoder can Assist
AI Legalese Decoder can play a crucial role in analyzing and simplifying any legal jargon or financial documents that may come your way as you navigate through the process of purchasing a home or starting a business. With the help of AI technology, you can ensure that you fully understand any legal or financial implications, enabling you to make well-informed decisions for your future.
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At this age, income, and expected salary later in your career, I would do the following:
Max 401k (Roth 401k is better than traditional in your case)
Max Roth IRA (you can do this in one lump sum during tax season each year)
Max HSA (if applicable)
Keep 1,000$ in checkings and 3,000$ or so in a high-yield savings account (increase this if your expenses increase – should be a few months worth of expenses)
Invest anything left over in a brokerage account.
All of your invested money (401k, Roth IRA, HSA, brokerage account) should be in low-cost diversified index funds like VT, VTI, or VOO. Your 401k and HSA will likely have limited options but should have some sort of S&P fund or retirement target date fund which is perfectly good.
Make sure you put all your purchases on a credit card with rewards (and no annual fee) and put it on auto-pay statement balance. You build credit for a house/business loan down the line and get free cash back.
And don’t forget to spend some money on fun while you’re young! New clothes, dates, a hobby, maybe a new computer. Just don’t buy a car you don’t need.
I’m in a very similar situation to you (graduated a couple of years ago and started at 80k) and did the math – even if you stay in the same job and get only modest raises forever, you can retire comfortably at 55-60. With more realistic salary projections or a successful business, you will be able to sustain an expensive lifestyle.
Ok. You are in an extremely good situation and are only a couple of decisions away from being a multi millionaire. Here is what you need to do. First, it is imperative that you spend some serious study time learning the basics. In a financial sense you have tremendous power but no idea what you are doing. That can be fixed by going to the library and checking out a beginner’s book on personal finance. This topic is extremely easy but it requires a couple hours of serious study. Not reading like you read a novel but sitting down at a desk or table with one and paper, reading and making notes, writing down questions, then looking up answers to those questions. Here are the basics. You invest in low cost stock index funds at a major company like Fidelity or Vanguard or Schwab. Not individual stocks, index funds. You buy and you don’t sell. No mater what happens or what you think or how fearful you get, you just leave it invested. For at least 30 years. 35 is better. At some point there will be a big drop in the market. Do nothing and don’t sell. At some point a guy will tell you that stock X is the next big thing. Ignore that and stick to the plan. You will need to fully fund retirement accounts. These are 401k (if offers by your job), Roth IRA (you set this up on your own), and Health Savings account (can be set up by your employer or set up independently by you.) You can use all of these simultaneously, and you should. The HSA also gets invested in stock index funds and NOT used to pay for health costs. You can read about why or make a specific post in that and I will explain it in detail. Time is critical, so start taking care of this stuff right away. Waiting a year or two would cost you big time.
Keep living with parents and you can save a lot in housing expenses. We have this weird culture thing in the US that it’s wrong to live with parents but perceptions are changing among Gen Z often out of necessity.
Make a budget. Set some money aside for entertainment and travel but don’t go to extremes with saving or spending.
Besides maxing out your Roth IRA and contributing to your 401k. I would open a taxable brokerage account at Fidelity to start your house down payment fund. If you save 20% of your income per year in your house down payment fund, you could have around $80k in 5 years. I would put your house down payment fund in something relatively safe like SGOV (ETF for T-bills). You don’t want your house down payment fund in stocks if you plan to buy in 5 years. The stock market can drop 50% in a 3 year stretch (see 2001-2003, 1971-1973). You probably don’t need much of an emergency fund with minimal expenses and no dependents. Your house down payment fund can double as your emergency fund.
For your Roth IRA, invest in VOO. It’s hard to beat the S&P 500 long term. For your 401k, if offered through employer, invest in 100% stocks. Consider a Roth 401k and HSA if available. Find the index fund that has the lowest expense ratio. You don’t need bonds at your age in your 401k or Roth IRA.
You want to boost your credit score. Get some credit cards and put everything on your cards and pay in full each month. If you buy a car, buy a reasonable car, take out a loan and make on-time payments for 2-3 years. That will boost your credit score even if you have to pay some interest. Having a high credit score save you thousands in interest when buying a home or help if applying for a loan if starting a business. Consider getting at least one of the utilities in your name and offer to pay for it. Your parents might appreciate this too. If you sign up for Experian boost, paying utilities on time might also improve your credit score.
Regardless of what type of business you want, you probably need seed money and a good credit score.
I’m going to disagree with the first reply in part because they basically said throw all your money in the market.
No, do NOT do that, because you said you want to buy a house and/or start a business with in 5 years. Always do an HSA and max it out, if that’s available to you. And certainly do the 401k/Roth 401k and potentially the Roth IRA, but every dime after that, put in a HYSA until you’ve met your goal for what you want for a down payment on a home, and/or business start-up. You do not want your home down payment sitting in the market.
You’re in an awesome spot starting off. I wish I made the then equivalent of $80k when I was your age. Get to it!! 🤘
Check out the book “I Will Teach You to Be Rich” by Ramit Sethi. It’s largely the same as what people are telling you here but in a book format that’s easy to digest. I wish I’d read it before I started my first full time job.
Just curious, what is the job. Why is it called at $110K?
Live like you dont make 80k until you have a good savings/401. Split it, give 1/2 to a firm like Fidelity and let them handle it, and put the rest in savings and an emergency fund, and dont touch it.
Dont give up on everything fun, life is too short, but dont spend it just because you have it.
At 24. Let your employer take money RRSP or 401k matching, and most allow you to give over matchlable limit, which is not a bad approach as your employers accounting department might account for the tax after the deduction which further leaves money available to invest.
Check and see if your state has tax auction homes that were foreclosed on because you could be able to bid on those homes with no mortgage just taxes you pay and u might could fix it a little you will save money because u don’t need a credit score or mortgage
straight desert run bedroom existence dull coordinated dependent icky worthless
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Don’t go and buy some stupid car or truck until you can buy it in cash twice.
Dont do anything before getting some release first lmao!
Start a side hustle flipping nike shoes
Live off 15k invest into stocks and saving for a house
I was making 110k by 22 and it was a bit daunting at first. First thing I did was buy a house (I had a 20% down payment saved), this helped me manage money in a way that made “sense” – mortgage, utilities, insurance. This helped me so that I would have paid my last payment on a house I bought for 330k this year at 30. Due to some other circumstances I bought it earlier but this was my plan that was working on my salary alone.
The thing I wish I did better early on was budget for the basics groceries- I didn’t at all, while I don’t eat a ton I definitely could have done better at checking prices and buying only what I need (at 30 now a deep freezer is a life saver). I paid off all my student loans by 23 , using the interest free period let me use the money from loans to gain credit more quickly, I paid down a large debt. A year after school. I started then using the same amount for those payments I would have had to made and placed those payments into GICs and a HISA for an emergency fund and safe investments. I budget each year for a vacation abroad, and for family gifts now. I don’t drive a fancy car anymore either.
My first car was a top end Audi S5, now I have opted for a less expensive used 2021 small Ford SUV, it’s more safe and paid off as well so I do not have to worry about collision insurance on my car. What changed my mind was someone who made much much more than me saying something along the lines of “if you are a car guy, treat yourself to a car, if you aren’t a car guy you are treating everyone else to a car” – I’m not a car guy I don’t need a car that has people saying- nice car, just one for point A to point B.
About 10k a year I use as “fun money” this includes gifts, travel, etc only clothes I consider essential and will pay more for are work clothes, dressing well (not expensive per say but in professional clothes that fit) is important, taking good care of them has them lasting for years, buying the basics helps me to use them for years only getting one or two “statement” trendy pieces a year.
With all my mortgage I doubled the payments each month and added on the end the full amount allowed, as well as at renewals to increase payment to principle. If I had not had some minor oversight my house easily would have been paid off in full earlier at that salary.
Typically the best way to start is with sending a portion to me to ease your mind then Reddit will help with the rest. 🤭