I am 22 and I make about $1,000 a month before taxes (which means about $900 after taxes) with my one-year Americorps VISTA stipend and about $100/month from a side job. However my stipend didn’t count as income when I applied for SNAP, so I don’t know how Roth IRA will treat it. If my side job is my only “taxable income” then it is my understanding that my side job income of $100/month a.k.a $1200 is the maximum I can put into my Roth IRA this year. This might be the appropriate amount, but I don’t know. If my stipend counts since the most I can contribute is the $5,500/year maximum set by Roth IRA. This seems too high, but I would still want to figure out where between $0-$5,500 I would put in. My monthly expenses are around $550 by the way (saving a total of $350).
Start by saving the $100/mth. You’ll also want to start your emergency fund, with the goal of having at least $3,300 set aside (6 months of expenses) - so plan on saving at a minimum $50/mth towards this.
You like everyone should be systematically directing savings into a taxable investment account. When you prepare your tax return in the spring is when you determine whether and how much to swing into a tax free Roth IRA account because then you’ll know for certain what your 2016 income was. You have until April 15th 2017 to deposit for 2016. Go ahead and open a Roth IRA account right now but you don’t have to deposit anything in it yet, maybe a $100 to give it some balance. There is a 5 year from account opening, not deposit, waiting rule on withdrawing money from Roths so the sooner to start that clock the better. Good for you starting to save and invest! - The Savings Coach
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