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:
What would you do with more money in your bank account? Join over 15,537 other young professionals receiving our best money hacks to get out of debt by 30, increase your income (starting this year) and invest for financial freedom.
100% free! I will NOT spam you and I will NOT share your email.