10k for first time. Apologies I’m new and I’m sure this gets asked a lot.z

[daveofthenewcity]

Im a 32 yo actor, just landed my first consistent gig and all of a sudden I have 10k in my account for the first time in my life.

Ive been living paycheck to paycheck for a decade and I have no clue what to do next.

Should I invest it? Should I wait until after the election? Im realizing how freaking financially illiterate i really am and im freaking out a little bit.

My expenses:
2k/ month rent and utlities
≈500/month food and bev budget
$100/month car insurance (2012 beater i own)

My credit is 650.

What (if anything) should i do with this money to avoid ever going back to a ramen noodle diet?!

 

[naturewalk]

@daveofthenewcity

Ive been living paycheck to paycheck for a decade and I have no clue what to do next.

The first step is to stop living paycheck to paycheck. Don't invest the money. Keep it as your emergency fund. Ideally, your emergency fund should be about 6 months of expenses, so you're most of the way there.

 

[jamesalexturner1]

@naturewalk And Keep the emergency fund in a high yield savings account. 2% of $10k is a lot of ramen.

 

[naturewalk]

@jamesalexturner1 Where are you getting 2%?

 

[jamesalexturner1]

@naturewalk No where right now. Last year I was 2.2 I think?

It’ll be back.

 

[ladyapostolic]

@naturewalk Credit Unions. My checking get 3.3% on up to $20k if I use it 15 times per month.

 

[graemeevans]

@daveofthenewcity The conservative approach would be to put all of it in a high yield savings account to have on hand as an emergency fund. If the you income ever gets too low, or you have higher expenses that expected, you can use this money to cover you instead of going into debt.

Most people recommend 3-6 months of expenses in an emergency fund, which is why putting all of it in there is more conservative ($10k seems to be about 4 months of expenses).

You could also be more aggressive, only put $7,500 in a HYSA as your emergency fund, and open up a Roth IRA or brokerage account and invest the other $2,500. this would be strictly for retirement or long term savings, so you shouldn't be fretting too much over a short term makert dip, although you could dollar cost average (a whole different subject) to make you feel better there.

 

[rgod]

@daveofthenewcity Set up a savings account. Have 3to6 months worth of income in it. Recommend it be a high yield savings account (most banks give you a stupidly low apy. Recommend redneck bank, ally, or yotta (this is the one I use you can you my code if you want to help out all up to you:RIGOBERTO5). I the remainder I would invest into a Roth IRA may take a few days to set one up. My personal preference is M1 finance if you want any advice setting it up feel free to ask. I wouldn’t worry too much about timing the market (pre or post election) long term it won’t matter too much. I’d be happy to provide any addition answers to questions if you have any.

 

[motherhen25515]

@daveofthenewcity A good book to start with is Dave Ramsey's "Total Money Makeover." It tends to be divisive because some people have a cult mentality around it, but it still has some solid advice for getting out of any debt you may have. His investing advice though isn't great though. You can read my review here if you want.

Other than that yeah, work on the basics. Put 3-6 months of total expenses back plus an emergency fund. After that, it's generally a good idea to make a budget to keep track of spending.

If after that you wanna invest, you'll need to consider how you want to invest. Most people recommend setting up a retirement account like a Roth IRA.

But the best way to learn about finance is to read, read, read. Everyone's going to have a different opinion and you'll have to figure out what works best for you and the lifestyle you want.

 

[momullins]

@daveofthenewcity Congrats on getting to 10K after living paycheck-to-paycheck, that's huge!! I agree with everyone else, get that six to eight month emergency fund(I personally keep 12 months, because I'm single and have no other source of income, but that's probably more than I meed). After that, dollar cost average into some broad market ETFs.