Money Management Guides?

[Yaargh]

So I just got a job offer, and I'm super excited about it, but I"m super concerned about how much I should save and spend as well. One of the things I'm super confused about is 401(k).

My employer provides it, but I'm so clueless on these things that they just go in one ear and out the other when I read about it online. So does anyone have a really good guide or really good advice about money management?

I've also heard that it's wise to invest in stocks instead of trying accrue interest through a savings account in a bank. Anyone else hear of this?

I don't make that much, so I'm really trying to make the most out of what I have here. :frustrate

[AshleyJordan]

He's a little cheesy, but I've found David Bach's Finish Rich series to be accessible and, for me, very useful. He's obsessed with 401(K)s and all things investment-related. I'm sure that any questions you have on those, and how to diversify said funds, he covers.

[wordsmith]

Ahem...The Quarterlifer's Companion has these sorts of resources and guides.

Find it here (http://www.quarterlifecrisis.com/QLCompanion/index.shtml) :huge:

[Yaargh]

Nicecakes! :)

[SpaceMonkey]

I've also heard that it's wise to invest in stocks instead of trying accrue interest through a savings account in a bank. Anyone else hear of this?

I don't make that much, so I'm really trying to make the most out of what I have here. :frustrate

Priority 1: You should have an emergency fund of 3-6 months worth of expenses in an easy to access, liquid form, such as a local brick-and-mortar bank, or an online high-interest bank account (ING Direct, Emigrant Direct, etc.) linked to your checking account.

Stocks (or mutual funds, really, is what you should be looking at) are for retirement savings, saving for a house, etc. When you sign up for your employer's 401(k) retirement plan, you'll need to choose what assets you want your money to go into. Ideally, you should choose a mutual fund that invests in both stocks and bonds in a ratio that suits your age and risk tolerance (stocks are riskier than bonds). In general, if you are younger, you can tolerate more risk.

[wordsmith]

Priority 1: You should have an emergency fund of 3-6 months worth of expenses in an easy to access, liquid form, such as a local brick-and-mortar bank, or an online high-interest bank account (ING Direct, Emigrant Direct, etc.) linked to your checking account.

This is great, but I seriously don't know a single person who is making under 25k for whom this is doable. Seriously, I struggle to maintain a fraction of that in easy to access form.

[SpaceMonkey]

This is great, but I seriously don't know a single person who is making under 25k for whom this is doable. Seriously, I struggle to maintain a fraction of that in easy to access form.

I left out the all-important "adjust to circumstance" asterix. :razz: Obviously, something is better than nothing, though.

[wordsmith]

Yeah, I def. save what I can, but that big a safety net? Just not realistic, currently. Wish it was, but it's not.

[AshleyJordan]

Unfortunately, I burned through my emergency fund when a real emergency did hit. Until I'm able to rebuild it, I'm just crossing my fingers and hoping that I don't have to resort to the "plastic safety net."

[jrwilheim]

First off...emergency funds. As a previous poster suggested, your first priority, financially, is establishing an emergency fund with enough money to tide you over for 3-6 months. This should be kept in a bank (brick and mortar or online) or money market account. You want this money to be liquid, in case there IS an emergency.

Regarding your 401(k): Always contribute at least enough to get whatever match your company provides, if they provide any. Start small, maybe 1-2% of your income, and grow it over time. Some 401(k) plans now automatically increase your investment by 1% of your salary each year that you work there. Many also automatically enroll you in the plan unless you specifically opt out.

Regarding stocks: once you have an emergency fund in place, start investing in mutual funds, not individual stocks. Individual stocks are far too risky for small investors since the prices of individual stocks fluctuate wildly and you can't get enough diversification. When picking a fund, don't chase last year's hot performers. For your first fund, stay with a domestic fund (whether large cap, mid-cap, or small cap); avoid something exotic (i.e., a fund only dealing in small companies in Indonesia or Brazil).

[wordsmith]

Unfortunately, I burned through my emergency fund when a real emergency did hit. Until I'm able to rebuild it, I'm just crossing my fingers and hoping that I don't have to resort to the "plastic safety net."

That's just the thing. When you have a smaller income, you find yourself being hit with emergencies your regular income won't cover more often. So it's hard to maintain a large safety cushion.

[analogman]

Priority 1: You should have an emergency fund of 3-6 months worth of expenses in an easy to access, liquid form, such as a local brick-and-mortar bank, or an online high-interest bank account (ING Direct, Emigrant Direct, etc.) linked to your checking account.

Stocks (or mutual funds, really, is what you should be looking at) are for retirement savings, saving for a house, etc. When you sign up for your employer's 401(k) retirement plan, you'll need to choose what assets you want your money to go into. Ideally, you should choose a mutual fund that invests in both stocks and bonds in a ratio that suits your age and risk tolerance (stocks are riskier than bonds). In general, if you are younger, you can tolerate more risk.

I agree except for the saving for a house part. Unless a house is 5+ years out, do not put the money in the stock market. Put money in a high yield savings account or equivalent (in terms of stability and risk, the higher the return the better).

[vivo]

As I've done b4 on here I will recomment the diehards website. here is a list of books from beginner's level to I guess intermediate, maybe advanced.

from the diehards site:

Who are the Vanguard Diehards?

The term may refer to all of those who participate in the forum. Or perhaps it refers to those of us who are strongly influenced by the investment philosophy of Vanguard founder John C. Bogle. This philosophy is fully elucidated in Mr. Bogle's speeches and books and the fiscal principles adhered to by the company he founded, but can be summed up quite easily:

* Keep it simple.
* Costs matter.
* Stay the course.


http://www.diehards.org/readbooks.htm

http://www.vanguard.com/bogle_site/bogle_bio.html
In 2004, TIME magazine named Mr. Bogle as one of the world’s 100 most powerful and influential people, and Institutional Investor presented him with its Lifetime Achievement Award. In 1999, Fortune designated him as one of the investment industry’s four “Giants of the 20 th Century.” In the same year, he received the Woodrow Wilson Award from Princeton University for “distinguished achievement in the Nation’s service.” In 1997, he was named one of the “Financial Leaders of the 20 th Century” in Leadership in Financial Services (Macmillan Press Ltd., 1997). In 1998, Mr. Bogle was presented the Award for Professional Excellence from the Association for Investment Management and Research, and in 1999 he was inducted into the Hall of Fame of the Fixed Income Analysts Society, Inc.

[vivo]

http://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0471730335

[Fashionista]

This is great, but I seriously don't know a single person who is making under 25k for whom this is doable. Seriously, I struggle to maintain a fraction of that in easy to access form.
I make 25k and i am having the hardest time saving.

[WorkInProgress]

I like to read articles on MSN Money. Some are more applicable than others, but overall, it seems to be a decent resource.

Or, alternatively, see if you can't find a financial planner to help you get your affairs in order. I would be lost without mine.

[MollyMe]

fool.com
bankrate.com

They have good information.

stocks vs savings account: match the risk with the time. Stocks have a higher risk but will give you greater returns over the long run. It is good for retirement investments and other long term (over 5 years) investments. Savings account have lower risk but have lower returns. Good for your emergency savings; savings for anything less than 5 years.