Help starting saving

[snshijuptr]

Congrats on the job and on not planning to blow your first paycheck.

A Roth IRA is a nifty retirement account perfect for young adults. You can contribute up to $5000 a year to the account. You set one up at a brokerage firm like Fidelity, Vanguard, ING's ShareBuilder, etc. The money goes in after you pay taxes on it (so from your take home pay) but after it grows for 30+ years, you can take out any growth tax free (major savings). As someone who recently opened a Roth IRA and is looking to open another (for my husband), here is my advice:

1) Put away $3000 in a regular old savings account
2) Go to Vanguard to open a Roth IRA (I use Fidelity, but I will open my next Roth with Vanguard. They have much lower fees on their mutual funds).
3) Put your money in an Index Mutual Fund or a Target Retirement/Age Based Fund.
4) Setup automatic contributions. Since $5000 is not evenly divisible by 12, I do $417 for 2 months and then $416 for the third month. You could also do an even amount for all months but one, or whatever.

This should all happen though AFTER you setup a basic emergency fund. The e-fund should cover 3 months of expenses (rent, bills, food, a little flexible money) in case something comes up (emergency flight, laid off, emergency move, etc). The easiest thing to do is to decide how much of your paycheck you DON'T need and have that transferred to savings after every pay period.

If you work hard and keep seeking career advancement without inflating your standard of living, saving will get easier and easier.

[Sir Casm]

Thanks every one for your advice I have got a good idea now on how to go ahead from here. But i will keep posting my questions on this forum as i find it very helpful.

Everyone keeps telling me to save for my retirement; shouldn’t I save for my wedding first?

[disneysteve]

Originally Posted by Sir Casm

Everyone keeps telling me to save for my retirement; shouldn’t I save for my wedding first?

Nope. Saving for retirement is a NEED. Saving for a wedding is a WANT. Needs always come first.

[Sir Casm]

I have few questions about saving for retirement but this is not the right thread to discuses that so i have started a new thread for it.

To saveor not to save (for retirement)

Again thanks all for ur suggestions and advice.