College student financial advise

[Bradyw]

I'm a 23 year old full time college student, with relatively low cost of living (cheapish rent, no family, no car payments, etc) and have a decent savings started up. As of now, my college education is free due to use of a GI Bill, but won't be free starting in the Fall of 2019 (I have about 2.5-3 more years left of college, was going part time but now going full time). I work full time year round, and due to my lower cost of living and lack of college tuition costs, I have approx $20k saved. What should I be looking into to continue saving money and start a strong financial foundation after I've completed college?

[disneysteve]

Welcome.

How much do you earn?
Will you continue to work full time now that you are going to school full time?
How much are your monthly expenses?
How much will college cost you starting in the fall?

[bjl584]

A good place to start would be to take advantage of a company sponsored retirement program, like a 401K if available. You can also start a ROTH IRA as long as you are working.

As for the 20K, I might want to sit on it for now and keep building it up. Once you graduate you may want to buy a house, a car, maybe relocate. Having a nice cash pile will make all of those things a lot easier.

[Nutria]

I work full time year round, and due to my lower cost of living and lack of college tuition costs, I have approx $20k saved. What should I be looking into to continue saving money and start a strong financial foundation after I've completed college?

This question seem to imply that you don't think you'll be able to do in the future to save what you've done in the past to save that $20K. (BTW, .)

If so, then why not?

[Bradyw]

@disneysteve

My income is about $2500/mo, my expenses are around $1200/mo. I will continue to work the same amount of hours as I work now during school. Tuition will be approx. $3000-3500/yr starting in the fall of 2019.

[Bradyw]

@bjl584

Unfortunately my company I work for does not offer a 401k. I have had several people reccomend the ROTH IRA, so I will have to look into that. Yes I have been trying to save as much as possible to cover school costs after my GI bill runs out/start savings for after college.

[Bradyw]

@nutria

I won't be able to save as much due to needing to pay for college instead of taking advantage of the GI Bill. I am fairly frugal with my money (don't eat out often, don't travel often, no car payments, my hobbies are cheap if not free, etc), however paying for tuition will take a large dent out of my savings.

[Nutria]

I won't be able to save as much due to needing to pay for college instead of taking advantage of the GI Bill. I am fairly frugal with my money (don't eat out often, don't travel often, no car payments, my hobbies are cheap if not free, etc), however paying for tuition will take a large dent out of my savings.

You're living below your means, which is great. Thumbs up.

But your expenses will increase, so "math" says that your monthly savings will drop, or possibly disappear and have to dip into your savings.

The only way to save as much as before is to increase your income, but that might not be possible.

Or am I misunderstanding something?

[Bradyw]

You're living below your means, which is great. Thumbs up.

But your expenses will increase, so "math" says that your monthly savings will drop, or possibly disappear and have to dip into your savings.

The only way to save as much as before is to increase your income, but that might not be possible.

Or am I misunderstanding something?

Thanks! So breaking my tuition down into a monthly fee for ease of this conversation, after the GI Bill runs out, will be approx. $400-450/month. I'm currently taking in approx. $1200 of profit per month (without paying for tuition). So assuming my monthly expenses stay about the same once my GI Bill runs out (which they should) I will be taking in approx. $700 of profit a month. So yes, my savings per month will decrease, but I should still be in the green each month. I'm just looking for advice on what to do with my savings/left over money as far as IRAs/mutual funds/etc.

[Nutria]

I'm just looking for advice on what to do with my savings/left over money as far as IRAs/mutual funds/etc.

Ah, ok.

Instead of telling you what to do, we must ask more questions:

1. Where is that money now (checking account, stocks, online savings, etc)?
2. Are you allocating money for Known Future Expenses (the tires will eventually wear out, the car will eventually break, you'll eventually get sick and have to pay up to the deductible, etc)?
3. Are you saving for a new car?
4. Vacation?
5. Do you have an Emergency Fund?

[Bradyw]

@nutria

Ah, ok.

Instead of telling you what to do, we must ask more questions:

1. Where is that money now (checking account, stocks, online savings, etc)?
2. Are you allocating money for Known Future Expenses (the tires will eventually wear out, the car will eventually break, you'll eventually get sick and have to pay up to the deductible, etc)?
3. Are you saving for a new car?
4. Vacation?
5. Do you have an Emergency Fund?

1. The money is all in my bank account, about half in savings half in checking
2. The only allocations for such events are what I have in my savings account, not sure how much I should allocate/where to keep it.
3. not saving for a new car. I have two vehicles I drive on a weekly basis.
4. If I we're to go on vacation, it would be a cheap plane ride/drive over to my parents house in the next state over.
5. The only emergency fund I have is my savings account.

[Nutria]

1. The money is all in my bank account, about half in savings half in checking
2. The only allocations for such events are what I have in my savings account, not sure how much I should allocate/where to keep it.
3. not saving for a new car. I have two vehicles I drive on a weekly basis.
4. If I we're to go on vacation, it would be a cheap plane ride/drive over to my parents house in the next state over.
5. The only emergency fund I have is my savings account.

The first thing I'd do is move your savings (both the "savings" and "checking") into an online savings account, which pays much higher interest than the local bank, and is just as safe. My preferred bank for such money is Ally, but Capital One 360 and some other banks are just as popular.

Then, think of what that money can be spent on. Typical categories are:

• vacation,
• auto repair,
• doctor/hospital insurance deductibles,
• non-monthly insurance premiums,
• a few months living expenses if you lose your job.

put enough "aside" (either in a spreadsheet column, or in a separate savings account) for each category.

Then -- if you still have money left -- put some in a Roth IRA for your retirement. Since you're young, having all of it in a fund (at a place like Fidelity or Vanguard) like the S&P500 is perfectly reasonable.

[Bradyw]

The first thing I'd do is move your savings (both the "savings" and "checking") into an online savings account, which pays much higher interest than the local bank, and is just as safe. My preferred bank for such money is Ally, but Capital One 360 and some other banks are just as popular.

Then, think of what that money can be spent on. Typical categories are:

• vacation,
• auto repair,
• doctor/hospital insurance deductibles,
• non-monthly insurance premiums,
• a few months living expenses if you lose your job.

put enough "aside" (either in a spreadsheet column, or in a separate savings account) for each category.

Then -- if you still have money left -- put some in a Roth IRA for your retirement. Since you're young, having all of it in a fund (at a place like Fidelity or Vanguard) like the S&P500 is perfectly reasonable.

Thank you for the advice, I will look into the online savings account as well as the Roth IRA.

[snafu]

Good on you! Super impressed with your money management and effort of working your way through university. I suggest starting with identifying your personal Risk Analysis. The stock market is eerily high on a very old drive so you need to be aware 'what goes up also comes down.'

Your income is low, tax is not an issue, I suggest you explore opening an account with Vanguard or other low cost firm to DCA [Dollar Cost Average] into their low cost Index Account. They will automatically withdraw an agreed, set amount each month. You will buy more shares on a weak day, less shares on a up day. You can stop the plan if your circumstances change but it easily becomes a good habit, hardly noticeable, like your phone bill. The point is to capture the benefit of compounding over the l-o-n-g term, like 35 years. Better yet, as your circumstances change, you can tweak your holdings to include other investment factors like retirement plan that captures a future employer's contribution and/or ROTH.

[Nutria]

The stock market is eerily high on a very old drive so you need to be aware 'what goes up also comes down.'

The problem is that people have been saying this for at least three years, some even longer than that.