Rivka asks: I’m 25 and switching jobs. My old company didn’t match 401(k) contributions, so I put 6% of my salary into a Roth IRA. My new company, however, matches 100% on the first 3% of my salary that I contribute to their 401(k) and 50% of the next 2%. Should I contribute 5% to my 401(k) and then a little more to the Roth IRA? Or should I just let me IRA sit for the time being and not contribute? What about a savings account? (I currently contribute $300 a month to a high yield savings account.)
Congrats on the new job and the great saving habits thus far! It sounds to me like you already have a solid saving plan figured out.
I would recommend doing exactly what you suggest—contribute 5% of your salary to your company’s 401(k) plan to take full advantage of their matching funds. Next, take any additional funds and put them into a Roth IRA (up to the $5,000/year maximum in 2009).
As for how much you sock away into a savings account, it depends on your existing savings and your goals for that money. The first step is to have a few months’ expenses saved in an Send it to me and I’ll do my best to answer it in a week or two here!
Earn and save more with our free course:
Join over 15,537 other young professionals. Get our best money hacks to get out of debt by 30, increase your income this year and invest for financial freedom.
100% free! I will NOT spam you and I will NOT share your email.