Started working - savings advice

[mike404]

Hi everyone!

I'm 24 years old and I've been working for almost two years, and although the first year I wasn't able to save pretty much anything... since June this year my salary has increased and I've been trying to save some money every month to a separate account.

Currently I'm making $1090 and I'm able to save between $400 and $500 a month.. I have a total of $3150 saved in this account, and my questions are if this amount of money is any good for someone of my age? Is it not enough? Should I be saving more? And how much do I need to have for some kind of emergency before being able and comfortable to spend any money on myself?

I'm asking this, because I'm in need of a new laptop, my current one is 5 years old and is in pretty bad shape, I was looking forward to buy a MacBook which is pretty good for what I do (programmer life :P), but I'm always struggling with the idea that I still don't have enough money saved to go spend $1200 in a MacBook.
I was able to resist the black Friday temptation!

[97guns]

your doing great, people your age have a hard time saving, you are in the routine and it will become addictive as you see the growth, you have the right mindset for success

[Petunia 100]

Hi everyone!

I'm 24 years old and I've been working for almost two years, and although the first year I wasn't able to save pretty much anything... since June this year my salary has increased and I've been trying to save some money every month to a separate account.

Currently I'm making $1090 and I'm able to save between $400 and $500 a month.. I have a total of $3150 saved in this account, and my questions are if this amount of money is any good for someone of my age? Is it not enough? Should I be saving more? And how much do I need to have for some kind of emergency before being able and comfortable to spend any money on myself?

I'm asking this, because I'm in need of a new laptop, my current one is 5 years old and is in pretty bad shape, I was looking forward to buy a MacBook which is pretty good for what I do (programmer life :P), but I'm always struggling with the idea that I still don't have enough money saved to go spend $1200 in a MacBook.
I was able to resist the black Friday temptation!

How much do you need for an emergency fund? Well, what are your monthly living expenses? You're "making $1090", is that per month? Is that take-home pay?

If you're living on $590 - $690 per month, then $3,150 is getting close to 6 months of expenses. Six months of expenses is generally considered adequate, but you have to take your own unique situation into account. Is your job secure? Is your living situation secure? Are there others relying on your income?

[disneysteve]

In addition to Petunia's post, I wonder if you actually "need" a MacBook. Would a $500 PC laptop suffice? I love Macs and Apple products but I realize that they are luxuries.

[asdf]

In addition to Petunia's post, I wonder if you actually "need" a MacBook. Would a $500 PC laptop suffice? I love Macs and Apple products but I realize that they are luxuries.

As a programmer myself, I am also skeptical that you "need" a MacBook for your work. I'm not sure what type of programming you do, but my work can be done completely independent of the OS used.

[mike404]

The $1090 is take home money, I want a MacBook because I'm learning objective-C which is the iPhone, iPad programming language, and I need Xcode (the software IDE) to make the apps, therefore I'm interested in a MacBook. Xcode is mac exclusive.

And although I can't ignore the fact that I'm going to need one sooner or later, I'm always able to postponing that expense :P

So, $450~$500 saved per month, when I reach let's say $6000? That seems to be a good emergency fund, no?

Thnaks!

[Augustine]

Yes you are off to a good start but you have to avoid the trap of saving your money just to spend it all.

Today it's a MacBook, tomorrow it will be something else... and the more you save, the greater will be temptation to buy things you do not necessarily need.

[TheKayla]

As a web developer myself, I can let everyone else know here he probably does need a macbook for the type of work he wants to do! And and updated one would certainly make it easier. Are you working for yourself? I ask because you mentioned that you need to buy a computer for work, as if your company doesn't provide. If so, look into the tax benefits for buying that as a work expense. Of course, save up for it ahead of time though, don't put anything on credit for something like a computer.

A good, solid, emergency fund is 6 months. I'm only working up to 3 months right now though because I freelance on the side and have other options, plus my job is stable anyway. It depends a lot of your situation. If you're only working for yourself, I'd build up a bigger emergency fund, especially if your income can be variable in any way. To start, calculate your average 6 months of spending, and save to that. Be sure you're saving for retirement and everything else too!

[mike404]

I'm working for a company, i'm fairly new to it (2 months), but enjoying it a lot.
Yes i do need a macbook, and i'll buy it, but for now i'll keep increasing my savings account until it reaches 6k, then i'll put that money aside (some sort of retirement account), and start saving for a new laptop.

That's the plan!

[TheKayla]

then i'll put that money aside (some sort of retirement account)

Be sure to keep the emergency savings liquid, and save for retirement separately. Just be sure to contribute to retirement at a young age as another form of savings and invest automatically in that. An e-fund should be it's own thing that you can access if you need it relatively instantly, unlike a retirement account.

[jIM_Ohio]

Hi everyone!

I'm 24 years old and I've been working for almost two years, and although the first year I wasn't able to save pretty much anything... since June this year my salary has increased and I've been trying to save some money every month to a separate account.

Currently I'm making $1090 and I'm able to save between $400 and $500 a month.. I have a total of $3150 saved in this account, and my questions are if this amount of money is any good for someone of my age? Is it not enough? Should I be saving more? And how much do I need to have for some kind of emergency before being able and comfortable to spend any money on myself?

I'm asking this, because I'm in need of a new laptop, my current one is 5 years old and is in pretty bad shape, I was looking forward to buy a MacBook which is pretty good for what I do (programmer life :P), but I'm always struggling with the idea that I still don't have enough money saved to go spend $1200 in a MacBook.
I was able to resist the black Friday temptation!

Don't compare your savings to anyone else, just make good decisions for YOU.

You are saving 50% of your income, and have about 6 months expenses in the bank.

I would consider adding $100/mo to your savings and $400/mo to your IRA.
Increase liquid savings (savings account) for a new car or a new house.
Increase IRAs for retirement.

Do BOTH, just decide how much to one and how much to another.

[snafu]

Congratulations on getting a job that your like and enjoy. As new to the workforce, a good starting point is to divy up income as 50% for Needs, 30% for Wants and 20% for savings which includes contributes to any employer sponsored retirement plan like 401K. It's smart to capture all free money match from employer for a retirement plan [check with HR for details]. If none is available, open a Roth account with a low cost supplier like Vanguard. [details available on-line].

Needs include your daily living costs like rent utilities, food, transportation, student loans and credit card.
Wants include your desired MacBook, entertainment, clothes & fun stuff
Savings include Emergency fund, Retirement, ROTH due to income tax advantage

I suggest creating a basic spread sheet cash flow plan so that you can easily take care of bills as they come due, polish your credit rating and fund items like the laptop you desire.

[mike404]

Thanks for all the advices
The sooner i start an IRA plan, the best chances i have to save enough money for my retired life.

Yes, i'll get that 50%-30%-20% math going with my salary from now on!

[dojo]

With how much (little) you earn, you are saving aggressively and it's great.

As for the computer, I'm a graphic/web designer (so I actually need some more 'power' under the hood) and I still can do my work nicely without an Apple product. I have a 17.3 inches Lenovo, had a big HP laptop etc. Just look for some good specs and you can get a very decent laptop for 500-800 bucks. No need to pay 3-4 times on a MacBook, especially since it would deplete almost all your savings (last time I checked, one that was similar to my machine cost over 2.5k. I wouldn't pay this much for a laptop if it came with a kidney

[TheKayla]

With how much (little) you earn, you are saving aggressively and it's great.

As for the computer, I'm a graphic/web designer (so I actually need some more 'power' under the hood) and I still can do my work nicely without an Apple product. I have a 17.3 inches Lenovo, had a big HP laptop etc. Just look for some good specs and you can get a very decent laptop for 500-800 bucks. No need to pay 3-4 times on a MacBook, especially since it would deplete almost all your savings (last time I checked, one that was similar to my machine cost over 2.5k. I wouldn't pay this much for a laptop if it came with a kidney

He says he's building iOS apps though, while I would agree with you in any other situation, it is literally impossible for him to code on a PC for the type of work he does -- not harder -- impossible. The software is not available and testing would not be possible on PC. He should not get the most fancy Mac, but he does certainly need a Mac.