New job, new lifestyle, new to saving!

[riveras]

Hi everyone! I'm new to saving and only really thought about it when I had to consider my company's 401k plan. Any advice you guys could offer would be appreciated!

I graduated last Dec and got a job in Mar in a new city. I'm taking home around $2800/month after recently signing up for my company's 401k, which doesn't match but does profit sharing instead. I'm putting 15% into this, but am starting to wonder if I should continue with it. I understand I should open up a Roth IRA and plan to do that. Is there a limit as to how much you can contribute to it at one time? If I decide to just accumulate the $5k limit in my account, could I just throw the $5k at the Roth IRA at once?

I'd also like to start getting into investing. Are any books or resources that you guys can recommend? My dad told me to start looking into DRIP funds, but I don't know the first thing about them.

Apart from trying to get a good handle on saving and retirement planning, I suppose the other reason for my post is that I'm sort of looking for a new car soon. I couldn't survive a day in the city that I moved to without some sort of reliable mode of transportation and I'm starting to lose faith in my 18 year old Toyota. It still runs great and is well maintained, but the age and mileage on it just has me worried. I just don't want it to die one day for whatever reason and leave me with either a hefty repair cost or an unplanned and impulsive car purchase. I would be looking for something used, gas efficient, and reliable.

How should I budget myself to be in a financially sound position? Thanks in advance of any of your responses!

[bjl584]

You should definitely start a Roth IRA. The limit for you is $5000 per year.

My first priority would be to save up cash for both emergencies and for a replacement car. I'd do this before I got involved in investing.

There is an argument to be made for not contributing too much into a 401K that doesn't offer a match. 15% is a lot for just starting out in life. Maybe drop it to 10%, but that is something that you will have to decide once you have a few months of living on your budget.

For your Roth, assuming you start one, the options are endless. You can do a target fund if you like. That would take a lot of the thinking and research out of the equation for you.

[woodie96]

Since you graduated 6 months ago and have been employed for two months, I would focus my energy on saving up an emergency fund as BJL stated.
I wouldnt worry about the car as of yet. I would save, save, save for a newer car for the future. Like you stated, it runs great and is well maintained. Those two factors along with it being a Toyota, lead me to believe that you have a few more years left in the car.
Part of my 401K at work is directed at Target Funds....I'm 48 now, and have a Target 2025 fund. It is very consistent over the other funds that I selected individually for one reason or another.
JMHO