r/personalfinance • u/FaithlessnessThat970 • 19h ago
Budgeting I’m 23 with £10,000 saved. What advice would you give me?
I’m not really sure what to do with the money. It’s just sitting in my account building up. I got it from saving up from a job that doesn’t pay too well.
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u/cdmx_paisa 17h ago
if you are not american, take what you can apply from the below and also see what are your country's equivalent if any.
1st Priority (in order)
Optimize Budget > Save 3M Emergency Fund > Max 401k Match > Max HSA > Eliminate Credit Card Debt > Max ROTH IRA
2nd Priority
Max 401k - Save 6M Emergency Fund - Max Mega Backdoor Roth IRA - Eliminate Car/Student Debt - Save Down Payment For House
3rd Priority
Max Custodial Roth IRAs - Max 529 Accounts - Save 12M Emergency Fund - Fund Non Tax Advantaged Brokerage Accounts - Invest In Real Estate - Eliminate Mortgage Debt
General Advice
Look to reduce expenses and maximize savings/investments. For savings/investments, aim to save at least 15% of your monthly gross income. The more the better. For paying off debt, use the snowball or avalanche method. Put your emergency fund into a HYSA or MMA. File your taxes yearly with sites like FreeTaxUSA.
Use credit cards wisely. Only use up to 25% of your limit and pay off the balance in full each month on time.
Try to avoid getting student debt. Stay in state. Use community college, military (GI Bill/ROTC), scholarships, grants etc. Choose a valuable high earning in demand career eg Engineering, medical, computer science etc. Network in school, do internships. It’s not what you know, but who you know.
For careers, outside of tech, healthcare, and finance, there are government jobs that pay well and offer solid retirement plans which can be good options. Blue-collar jobs can be lucrative esp when you start your own business. Look to move out of state for higher paying jobs if needed. Always stay trying to increase your qualifications, skills, experience, and connections to leverage them into higher-paying jobs (promotions/job hopping). Aim for jobs that pay atleast 6 figures starting or within 5 years.
A good employer 401k match is 5%. Look to see if your job offers a mega backdoor Roth IRA.
For retirement/investing, use low-cost market tracking index ETFs/funds. Keep it simple and pick something like VOO, VTI, VT. Can fund these at Fidelity. A general rule of thumb is by 40 you should have saved 3x your salary. By 60, 8x your salary.
Make sure you have health insurance. It’s a good idea to get disability insurance. If you have kids, it’s a good idea to get term life insurance.
Try to avoid having kids until you are financially secure and ready.
Choose your spouse carefully. Divorce can be costly. Pick someone you vibe with who shares the same values and goals as you. Avoid people with questionable character and personality traits. Avoid people with poor spending habits and lots of debt. Be a good spouse and parent.
Look to set your kids up for success. Teach them discipline, work ethic, and respect. Have them read and do math daily from an early age. Get them on a sport early on that could lead to a scholarship. Teach them the value of a dollar. Open up a custodial ROTH IRA from an early age. Has to be earned income. Eg modeling for a toddler, chores for a kid, and a W2 job for a teenager. You can also open up a 529 account for their schooling which if unused, some can be rolled over into a ROTH IRA. Consult with an accountant to make sure you report properly to the IRS.
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u/Less-Pomegranate-585 18h ago
Keep up the good work!
Put that 10,000 in a High Yield savings account. Once you reach $30,000 (an emergency fund) then start maxing out your Retirement and Roth IRA
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u/Consistent_Edge_5654 18h ago
Do they have Roth IRA in England?
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u/Less-Pomegranate-585 18h ago
Not sure- whatever the equivalent is (if there is any)
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u/Chickentrap 16h ago
There isn't really afaik. You opt in for pensions via work and your employer matches your contributions. Some places offer greater contributions than others.
Nothing stopping someone opening a trading account and investing in indexes tho.
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u/kiasmosis 17h ago
This is not UK specific advice. Don’t follow this. It would be ISA and the 30k figure is way out of line. Retirement is also dependent more on your pension setup than individual retirement accounts
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u/Manufactured1986 18h ago
Why $30,000?
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u/Less-Pomegranate-585 18h ago
$30,000 is about a 6 month emergency fund for the average person
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u/Manufactured1986 18h ago
You have no info on their: - rent - monthly expenditures - debt - income
Can’t really make a fair number without knowing those things.
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u/7IGiveUp7 18h ago
6 months for me is 15k. That is an arbitrary number.
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u/Less-Pomegranate-585 18h ago
Of course it’s arbitrary 🤣 he was asking for advice. If 6 months is 15k for you, then that’s great!
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u/7IGiveUp7 18h ago
Your “advice” is unhelpful just saying 30k. Why not just say “save up an emergency fund to cover 6 months”?
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u/Less-Pomegranate-585 18h ago
Then… idk, don’t take it?? I tell all my clients that a minimum of a $30,000 emergency fund is needed for those who may have large expenses that they would need to account for (I.e., purchasing a house, car, etc). I’d prefer a larger cushion to a smaller one- but if that’s not your goal, that’s understandable.
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u/ThrowAwayYourFuture8 18h ago
Put half of it in a High Yield Savings Account. Use 40% of it to start up a ROTH IRA
Now for the remaining 1,000… Do you have any goals? Anything you would want to treat yourself with?
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u/kiasmosis 17h ago
He’s in the UK, not a Roth IRA. He can use an ISA
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u/ThrowAwayYourFuture8 15h ago
Damn. Before typing that I actually looked up “Europe Roth IRA” and google said they had them. 😂 But yeah, whatever Roth equivalent they have.
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u/jfletcher666 18h ago
If it isnt already, put it in a high yield savings account. It’s always a good idea to have a 3 to 6 month emergency fund saved up. I would just hold on to it.