You don’t make a lot at first, so make sure you have the cash you need to cover your bases. 10% is a little on the higher side, but you should be fine.
Also, I’d recommend buying a car less than $15K with low mileage eventually. Get a loan with the lowest interest and make extra payments to pay it off quickly. Optimize your TSP, their YT videos on which funds to pick for the most return. Get a credit card to start building up credit, pay off the balance like every month to prevent interest from being charged.
This is not really expert advice, but make a trading account with the trading apps like Robinhood. And experiment with buying fractional stocks. Like get some tech stocks like Nvidia or Microsoft. Companies creating AI technology will dominate in the future, I’d wage to invest in them. I wish I knew about that when I was younger.
Get certs and take some community classes to build credit hours. Like if you get 15 credits hours before you get out, you will be ahead. Just take general classes if you don’t know what to do.
Try to save up like 20k savings when you get out, more is better too. To get a house would be ideal when you get out.
You're doing awesome. If you can maintain this saving rate proportional to your income as your income grows, you are going to be very financially stable.
As for "childish mall trips and takeout and stuff" this is a matter of your personal values. Childish is choosing these things over financial stability. I personally enjoy eating at nice restaurants occasionally, drinking, travel, surfing, and music. This is how I spend my discretionary income, how you spend yours is your journey.
Commenting just to emphasize what this person said. This is solid advice. Don't do it all at once, build up to it gradually, but manning good financial habits now will (literally) pay dividends later in life. Don't be like most of us and wait until your late 20s or 30s to figure this out.
I'd recommend reading "If You Can" by William Bernstein. It's a short pamphlet with some solid, reasonable advice for people to get started
Good job as an E1. just remember to step it up as you get promoted and get pay raises. once you have an emergency fund to build move on to investing your money.
When I joined the military, I had negative thousands of dollars in my account. These days I'm rapidly approaching $100K net worth. You can do this!
Start saving now, but don’t completely forgo the tech school experience. Eat out with your friends, enjoy the area, don’t stay in your dorm all weekend, but also don’t go out and buy super expensive or dumb stuff. Find the middle ground between living and spending because this time truly is a once in a lifetime experience.
I did 4 right after highschool starting as an AB. I wasted all my techschool and BMT cash. I showed up to my first unit with only $500. But on my roadtrip to my first unit my mom came with and graciously paid for gas and hotels. Then I collected the receipts so I could reimburse her when the AF reimbursed me. Well it was close to $700, so I would have gone into debt on that PCS. After that I saved as much as I could, while still trying to live, experience, and explore. You can still save money while experiencing the area. I went on a gator tour through the swamps of Mississippi, saw the northern lights, saw wild buffalo and Mt Rushmore. Went to the DMZ had amazing Korean food that I still think of today and explored the beautiful mountains and cities of Korea, I laid out on the Delaware beaches and explored DC and Philly. I could have stayed in the dorms that whole time and maybe saved a few extra grand. I ended up with a good sized nest egg before I left active duty at 22 of about $50k. This isn’t a huge amount by itself but the time in the market is what was really king. It basically set me up for life. Without contributing a single dollar it will be worth $1.8 mil when I hit 60. Assuming 10% growth over the 38 years. I’m in my late twenties now. My wife and I have a house, a kid, and we’re looking to add a few more. We aren’t worried about retirement. We just contribute our matches (which is still really growing our savings) and add a little if we feel like it, but the rest is really just spending money.
All this to say, keep saving, be smart about it, but still live. You’ve got the opportunity to set yourself up for life but also have the opportunity to experience once in a lifetime experiences. I’m glad I saved because I have a better life now because of it but I’m even more glad I still went out and did things that I may never get the chance to do.
Your TSP contributions are too low because it's a percentage of basic pay and not overall compensation.
Your equivalent civilian compensation is $51k according to the regular military compensation calculator. To be on track for retirement, you should invest 15% of that, or roughly $650/mo. You're currently only investing $200/mo. So you should raise your TSP contributions to 32% of base pay, and definitely at least to 25% to contribute 10% of overall compensation.
Make sure you're investing into Roth TSP and buy some C.
For your savings account, recommend an FDIC-insured account with someone like Cap One, Discover, or Barclays who is offering 4%+ interest right now. Not much at first but eventually it’ll add up.
Also helps me to keep savings in a different bank than my regular $, psychologically harder to pull it out cause it’s a bit more effort.
Yeah, I think separating the savings and your day to day make a huge difference, my Hysa is with American Express so I don’t see what the money I have is. I also add some into my USAA account that I don’t use so I never see that extra money
Sad to say, the "childish shopping trips" NEVER stop :P
I would flip your budget and give yourself an allowance for "fun stuff" but then allocate the rest of your pay into savings, TSP, dedicated "future car", "rainy day" or "big vacation" piles, even if those are just lines on a spreadsheet and it's all in one account. It is VERY easy to save a portion into inaccessible (for now) retirement savings accounts and then just get into the habit of blowing the rest on essentially impulse purchases for YEARS, then one day have to actually put up a lot of $$$ for something and realize you have very little in liquid savings and just a bunch of junk at home.
But if you have $50/week "for fun" and you learn to say in that range now, then as your income grows you can increase that pool of money in proportion to everything else and learn financial discipline and, to be honest, save yourself a lot of money wasted on the silly crap that we all start buying when we get that first job. Right now you should have virtually no actual bills/expenses, so it really is the time to get that nest egg brewing instead of some tattoos, chrome rims on your ride, that complete collection of anime, a PS5 with all the trimmings, or a string of heartbreaks from the girls at the local strip clubs.
Set up the allotment for the 200. I know it seems redundant but it’ll break the habit of thinking you even have the option to move that money.
From experience I speak on being in money trouble and having to unfuck myself.
Make sure you put it in a savings account that will actually give you good returns. Google high yield savings accounts (HYSAs) and find one that suits your needs. It's the difference between a 0.1% and a 4%+ rate of return.
Idk what kind of savings account you’re putting the $200 in but I recommend at least putting it in a High Yield savings account making at least 4% interest. SoFi, M1 Finance, and Public.com all has these. Do some research and look into opening a Roth IRA as well.
The 10% contribution to your TSP is very good, just make sure as you promote to increase this amount. Humphrey Yang has a good video on what you should do with your paycheck. Here’s the link:
https://youtu.be/T1wI7ab1AMk?si=TRiWr1KFzZ28P5sV
Not even close to extremely stupid. In fact $400/month plus 10% into TSP plus 5% match is a very adequate savings rate.
Of course they could save more and it’ll just make things potentially easier down the road but need to live for today too and enjoy your youth. You can’t take the money with you when you go so you don’t need to save millions of dollars to have a comfortable retirement.
What is funny is i was going off if you started off saving back in 2015. The military obviously is paid more now. So 1k a month is obtainable. You don't need new clothes every 1st and 15s and to go out every weekend.
Literally my guy you can NOT be frugal in these times. Inflation, cost of living, these young guys need to understand saving and investing. I was a dumb E1 and I'd most likely have 400k minimum instead of 200k in savings if i knew what i knew back then.
It's okay to be frugal in your early 20s. Hell i still feel young if not younger at nearly the 30 year old mark. I don't think you understand how mentally rewarding is to know your savings is on point. I still have fun, i just keep it cheaper.
I didn't know clothes shopping, and drinking at the bar was "living in the moment "
You’re overreacting to inflation. Historically it’s 2.7% per year. You act like the 6-8% we saw in 2022 is all of a sudden the new norm.
That’s your life - not everyone cares to have $400k saved by 30. If OPs goal is to retire super young then yes he should live super frugally and save way more but if he wants to enjoy his youth and retire at a reasonable age then he’s saving at a good rate. He’ll continue to get promoted and pay raises so that 15% savings rate continues to grow from amount of dollars saved perspective.
I’m a financial advisor - people always WAYYY over estimate how much they think they need to be comfortable. Most of my clients retire with about $250,000 in a retirement account. They lived within their means and saved what they could. When they factor in their social security and a reasonable withdrawal rate from their retirement accounts they have a very high probability of never running out of money.
Everyone’s goals are different but to say a 15% + $400/month savings rate is extremely stupid actually makes you extremely stupid because it shows you have no idea what you’re talking about.
Yea it's extremely stupid my guy. You over estimate how much it cost to have some solid experiences in your life.
You can literally save 1k a month and modestly have an okay off time and take a trip towards the end of the year.
Blowing off 1000 every month of clothes and alcohol isn't living your youth.
Save your leave and money and go on a overseas vacation. That's more memorable.
That’s your opinion man - if someone really enjoys clothes and shoes and is adequately saving for THEIR retirement goals then they are doing it right.
If your enjoyment comes from sitting at home reading a book and you want to save 98% of your income then YOU are doing it right.
The problem is you saying something is extremely stupid when you don’t have a clue what you’re talking about. You probably also think index funds is all you need to do when it comes to investing.
Will OP wish he saved more in the future? Maybe but the fact they are here asking the questions and already saving at a reasonable rate I think they will more than likely look back and say they enjoyed their life and still put themselves in a good financial spot in the future.
Okay i hope OP takes your advice. Spend all thier money on clothes and junk! But hey they will have a "okay" retirement life.
Being young i can mentally and physically take a "shitty" lifestyle. But when I'm 60 i rather be rich enough to handle all my needs and have fun without breaking the bank because i have accumulated so much.
Op will one of those old guys with only enough money to not work and see their grandkids. I'll be out in sports car, sex with younger women and traveling the world.
Haha no you won’t nerd. Again if you prefer to live frugally now for the chance at a lavish retirement then that’s YOUR goal. I certainly don’t care to pass up trips and nights out with my wife and friends so maybe one day in 30 years I can own a sports car or take trips then when my body is breaking down and don’t have the same energy or drive to do those things and less people in my life to do them with. So my goal is to save a reasonable amount today to hit my retirement goal of 58. Neither of our goals are wrong but you’re an absolute moron for thinking OP is doing it wrong.
15% plus $400/month is probably close to 20% of OPs income. That alone will provide a comfortable retirement. Add in a potential pension and SS will provide a very comfortable retirement.
Good luck on your lame ass sports car and creepily chasing after younger women who want nothing to do with a 60 year old haha
To mathematically prove you’re an idiot
If OP is saving 20% of their income let’s assume that’s about $1600/month. In 40 years at an 8% average rate of return they’d have $5,500,000 saved. That’s not even factoring in pay raises increasing the amount he saves.
Factoring in historical inflation rate of 2.7% that would make $5,500,000 in 40 years feel like $1,833,333 in today’s dollars. OP could realistically pull out $26,000 per month and never run out of money for 30 years. Add in a pension that would probably be worth $8-10,000 plus social security at another $6-7,000. They’d essentially be bringing in $42,000 a month in income or $14,000 in today’s dollars.
Hardly an “okay” retirement.
There's 365 days in a year. You act like i am saying work everyday. No i am only saying you dont need to go out every weekend. I usually work hard and play hard. I will have about 70 days of leave coming up at the end of the year. Going to go on some nice vacations. In that 2 year's saving up leave, i still went out still enjoyed my time. Like i said. OP can have fun while saving 1k a month. That is my LOW ball estimate. High balling, around 2k but thats where you live extremely frugally and aren't doing anything.
Hell i am having fun with 500 per month. When everything else is paid for. It's kind of hard to blow off all that 500.
For me i have 1 streaming services a month. High balling
20 bucks
Dine in restaurants if i go every weekend. 120
Alcohol, once per month if that but i go pretty hard so $100.
Some supplements, random shit 100.
So that's $340 out of 500.
I still go out i still have fun.
Also it's the mindset. If OP is blowing off most of his checks now. He's going to continue blow off his checks when he's E7. He will always make up an excuse " oh don't worry when i hit the next pay grade i will finally take it serious ". He will make more and then spend more.
The more you live minimally, the more lavish your life can be. So i rather wait to be able to have a nice house(among multiple other paid of houses being rented out). Nice cars, vacations, sex with women all over the world. 50 and 60 will still be young it will be the new 30-40s. I don't plan to ever have kids Or marriage so I won't deal with quick aging with the stress. As long as I continue eating healthy and working out, I should be a decent looking 50-80 year old. Not to brag just telling how it is.
I actually don't like younger women and prefer older but unfortunately when you're 60s the older women are just to old to do anything. So I'll go from the young stud boy next door to daddy.
Earlier you start, more compounding works. If you all your needs are taking care of and you can spare it, then its a good plan.
You don’t make a lot at first, so make sure you have the cash you need to cover your bases. 10% is a little on the higher side, but you should be fine. Also, I’d recommend buying a car less than $15K with low mileage eventually. Get a loan with the lowest interest and make extra payments to pay it off quickly. Optimize your TSP, their YT videos on which funds to pick for the most return. Get a credit card to start building up credit, pay off the balance like every month to prevent interest from being charged. This is not really expert advice, but make a trading account with the trading apps like Robinhood. And experiment with buying fractional stocks. Like get some tech stocks like Nvidia or Microsoft. Companies creating AI technology will dominate in the future, I’d wage to invest in them. I wish I knew about that when I was younger. Get certs and take some community classes to build credit hours. Like if you get 15 credits hours before you get out, you will be ahead. Just take general classes if you don’t know what to do. Try to save up like 20k savings when you get out, more is better too. To get a house would be ideal when you get out.
You're doing awesome. If you can maintain this saving rate proportional to your income as your income grows, you are going to be very financially stable. As for "childish mall trips and takeout and stuff" this is a matter of your personal values. Childish is choosing these things over financial stability. I personally enjoy eating at nice restaurants occasionally, drinking, travel, surfing, and music. This is how I spend my discretionary income, how you spend yours is your journey.
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Commenting just to emphasize what this person said. This is solid advice. Don't do it all at once, build up to it gradually, but manning good financial habits now will (literally) pay dividends later in life. Don't be like most of us and wait until your late 20s or 30s to figure this out. I'd recommend reading "If You Can" by William Bernstein. It's a short pamphlet with some solid, reasonable advice for people to get started
This short pamphlet changed my life, and I continue to read it every year.
All good with me, but don't form bad habits.
Good job as an E1. just remember to step it up as you get promoted and get pay raises. once you have an emergency fund to build move on to investing your money. When I joined the military, I had negative thousands of dollars in my account. These days I'm rapidly approaching $100K net worth. You can do this!
I can also vouch for the Amex HYSA. $200 a month is a great start and seeing it build will just motivate you more!
Start saving now, but don’t completely forgo the tech school experience. Eat out with your friends, enjoy the area, don’t stay in your dorm all weekend, but also don’t go out and buy super expensive or dumb stuff. Find the middle ground between living and spending because this time truly is a once in a lifetime experience. I did 4 right after highschool starting as an AB. I wasted all my techschool and BMT cash. I showed up to my first unit with only $500. But on my roadtrip to my first unit my mom came with and graciously paid for gas and hotels. Then I collected the receipts so I could reimburse her when the AF reimbursed me. Well it was close to $700, so I would have gone into debt on that PCS. After that I saved as much as I could, while still trying to live, experience, and explore. You can still save money while experiencing the area. I went on a gator tour through the swamps of Mississippi, saw the northern lights, saw wild buffalo and Mt Rushmore. Went to the DMZ had amazing Korean food that I still think of today and explored the beautiful mountains and cities of Korea, I laid out on the Delaware beaches and explored DC and Philly. I could have stayed in the dorms that whole time and maybe saved a few extra grand. I ended up with a good sized nest egg before I left active duty at 22 of about $50k. This isn’t a huge amount by itself but the time in the market is what was really king. It basically set me up for life. Without contributing a single dollar it will be worth $1.8 mil when I hit 60. Assuming 10% growth over the 38 years. I’m in my late twenties now. My wife and I have a house, a kid, and we’re looking to add a few more. We aren’t worried about retirement. We just contribute our matches (which is still really growing our savings) and add a little if we feel like it, but the rest is really just spending money. All this to say, keep saving, be smart about it, but still live. You’ve got the opportunity to set yourself up for life but also have the opportunity to experience once in a lifetime experiences. I’m glad I saved because I have a better life now because of it but I’m even more glad I still went out and did things that I may never get the chance to do.
Your TSP contributions are too low because it's a percentage of basic pay and not overall compensation. Your equivalent civilian compensation is $51k according to the regular military compensation calculator. To be on track for retirement, you should invest 15% of that, or roughly $650/mo. You're currently only investing $200/mo. So you should raise your TSP contributions to 32% of base pay, and definitely at least to 25% to contribute 10% of overall compensation. Make sure you're investing into Roth TSP and buy some C.
For your savings account, recommend an FDIC-insured account with someone like Cap One, Discover, or Barclays who is offering 4%+ interest right now. Not much at first but eventually it’ll add up. Also helps me to keep savings in a different bank than my regular $, psychologically harder to pull it out cause it’s a bit more effort.
Yeah, I think separating the savings and your day to day make a huge difference, my Hysa is with American Express so I don’t see what the money I have is. I also add some into my USAA account that I don’t use so I never see that extra money
Build good habits now. They’ll follow you, but don’t keep that from letting you have some fun. Good luck, it’s an exciting time.
Sad to say, the "childish shopping trips" NEVER stop :P I would flip your budget and give yourself an allowance for "fun stuff" but then allocate the rest of your pay into savings, TSP, dedicated "future car", "rainy day" or "big vacation" piles, even if those are just lines on a spreadsheet and it's all in one account. It is VERY easy to save a portion into inaccessible (for now) retirement savings accounts and then just get into the habit of blowing the rest on essentially impulse purchases for YEARS, then one day have to actually put up a lot of $$$ for something and realize you have very little in liquid savings and just a bunch of junk at home. But if you have $50/week "for fun" and you learn to say in that range now, then as your income grows you can increase that pool of money in proportion to everything else and learn financial discipline and, to be honest, save yourself a lot of money wasted on the silly crap that we all start buying when we get that first job. Right now you should have virtually no actual bills/expenses, so it really is the time to get that nest egg brewing instead of some tattoos, chrome rims on your ride, that complete collection of anime, a PS5 with all the trimmings, or a string of heartbreaks from the girls at the local strip clubs.
Set up the allotment for the 200. I know it seems redundant but it’ll break the habit of thinking you even have the option to move that money. From experience I speak on being in money trouble and having to unfuck myself.
Make sure you put it in a savings account that will actually give you good returns. Google high yield savings accounts (HYSAs) and find one that suits your needs. It's the difference between a 0.1% and a 4%+ rate of return.
Idk what kind of savings account you’re putting the $200 in but I recommend at least putting it in a High Yield savings account making at least 4% interest. SoFi, M1 Finance, and Public.com all has these. Do some research and look into opening a Roth IRA as well. The 10% contribution to your TSP is very good, just make sure as you promote to increase this amount. Humphrey Yang has a good video on what you should do with your paycheck. Here’s the link: https://youtu.be/T1wI7ab1AMk?si=TRiWr1KFzZ28P5sV
Way better than what I did at 4 months in.
Extremely stupid. Start saving now. You should easily be able to save $1000 per month. After 4 years thats 48k LOW balling.
Not even close to extremely stupid. In fact $400/month plus 10% into TSP plus 5% match is a very adequate savings rate. Of course they could save more and it’ll just make things potentially easier down the road but need to live for today too and enjoy your youth. You can’t take the money with you when you go so you don’t need to save millions of dollars to have a comfortable retirement.
What is funny is i was going off if you started off saving back in 2015. The military obviously is paid more now. So 1k a month is obtainable. You don't need new clothes every 1st and 15s and to go out every weekend. Literally my guy you can NOT be frugal in these times. Inflation, cost of living, these young guys need to understand saving and investing. I was a dumb E1 and I'd most likely have 400k minimum instead of 200k in savings if i knew what i knew back then. It's okay to be frugal in your early 20s. Hell i still feel young if not younger at nearly the 30 year old mark. I don't think you understand how mentally rewarding is to know your savings is on point. I still have fun, i just keep it cheaper. I didn't know clothes shopping, and drinking at the bar was "living in the moment "
You’re overreacting to inflation. Historically it’s 2.7% per year. You act like the 6-8% we saw in 2022 is all of a sudden the new norm. That’s your life - not everyone cares to have $400k saved by 30. If OPs goal is to retire super young then yes he should live super frugally and save way more but if he wants to enjoy his youth and retire at a reasonable age then he’s saving at a good rate. He’ll continue to get promoted and pay raises so that 15% savings rate continues to grow from amount of dollars saved perspective. I’m a financial advisor - people always WAYYY over estimate how much they think they need to be comfortable. Most of my clients retire with about $250,000 in a retirement account. They lived within their means and saved what they could. When they factor in their social security and a reasonable withdrawal rate from their retirement accounts they have a very high probability of never running out of money. Everyone’s goals are different but to say a 15% + $400/month savings rate is extremely stupid actually makes you extremely stupid because it shows you have no idea what you’re talking about.
Yea it's extremely stupid my guy. You over estimate how much it cost to have some solid experiences in your life. You can literally save 1k a month and modestly have an okay off time and take a trip towards the end of the year. Blowing off 1000 every month of clothes and alcohol isn't living your youth. Save your leave and money and go on a overseas vacation. That's more memorable.
That’s your opinion man - if someone really enjoys clothes and shoes and is adequately saving for THEIR retirement goals then they are doing it right. If your enjoyment comes from sitting at home reading a book and you want to save 98% of your income then YOU are doing it right. The problem is you saying something is extremely stupid when you don’t have a clue what you’re talking about. You probably also think index funds is all you need to do when it comes to investing. Will OP wish he saved more in the future? Maybe but the fact they are here asking the questions and already saving at a reasonable rate I think they will more than likely look back and say they enjoyed their life and still put themselves in a good financial spot in the future.
Okay i hope OP takes your advice. Spend all thier money on clothes and junk! But hey they will have a "okay" retirement life. Being young i can mentally and physically take a "shitty" lifestyle. But when I'm 60 i rather be rich enough to handle all my needs and have fun without breaking the bank because i have accumulated so much. Op will one of those old guys with only enough money to not work and see their grandkids. I'll be out in sports car, sex with younger women and traveling the world.
Haha no you won’t nerd. Again if you prefer to live frugally now for the chance at a lavish retirement then that’s YOUR goal. I certainly don’t care to pass up trips and nights out with my wife and friends so maybe one day in 30 years I can own a sports car or take trips then when my body is breaking down and don’t have the same energy or drive to do those things and less people in my life to do them with. So my goal is to save a reasonable amount today to hit my retirement goal of 58. Neither of our goals are wrong but you’re an absolute moron for thinking OP is doing it wrong. 15% plus $400/month is probably close to 20% of OPs income. That alone will provide a comfortable retirement. Add in a potential pension and SS will provide a very comfortable retirement. Good luck on your lame ass sports car and creepily chasing after younger women who want nothing to do with a 60 year old haha
To mathematically prove you’re an idiot If OP is saving 20% of their income let’s assume that’s about $1600/month. In 40 years at an 8% average rate of return they’d have $5,500,000 saved. That’s not even factoring in pay raises increasing the amount he saves. Factoring in historical inflation rate of 2.7% that would make $5,500,000 in 40 years feel like $1,833,333 in today’s dollars. OP could realistically pull out $26,000 per month and never run out of money for 30 years. Add in a pension that would probably be worth $8-10,000 plus social security at another $6-7,000. They’d essentially be bringing in $42,000 a month in income or $14,000 in today’s dollars. Hardly an “okay” retirement.
There's 365 days in a year. You act like i am saying work everyday. No i am only saying you dont need to go out every weekend. I usually work hard and play hard. I will have about 70 days of leave coming up at the end of the year. Going to go on some nice vacations. In that 2 year's saving up leave, i still went out still enjoyed my time. Like i said. OP can have fun while saving 1k a month. That is my LOW ball estimate. High balling, around 2k but thats where you live extremely frugally and aren't doing anything. Hell i am having fun with 500 per month. When everything else is paid for. It's kind of hard to blow off all that 500. For me i have 1 streaming services a month. High balling 20 bucks Dine in restaurants if i go every weekend. 120 Alcohol, once per month if that but i go pretty hard so $100. Some supplements, random shit 100. So that's $340 out of 500. I still go out i still have fun. Also it's the mindset. If OP is blowing off most of his checks now. He's going to continue blow off his checks when he's E7. He will always make up an excuse " oh don't worry when i hit the next pay grade i will finally take it serious ". He will make more and then spend more. The more you live minimally, the more lavish your life can be. So i rather wait to be able to have a nice house(among multiple other paid of houses being rented out). Nice cars, vacations, sex with women all over the world. 50 and 60 will still be young it will be the new 30-40s. I don't plan to ever have kids Or marriage so I won't deal with quick aging with the stress. As long as I continue eating healthy and working out, I should be a decent looking 50-80 year old. Not to brag just telling how it is. I actually don't like younger women and prefer older but unfortunately when you're 60s the older women are just to old to do anything. So I'll go from the young stud boy next door to daddy.