Where to start with financial planning?

[Anonymous]

I got divorced 5 years ago and haven’t properly managed my money since then. I know I have way too much in a checking account, but I can’t go back and redo the last 5 years!

Where do I start in figuring out what the best allocation is between emergency $, investments, retirement, college savings, etc?

Low cost would be ideal, obviously…

Thank you.

[Anonymous]

First step is to move your emergency fund to a HYSA. You want at least 6 months of monthly bills saved there, maybe a bit more if you are single and have kids.

The next step would be to ensure you are putting as much as possible into retirement. Hit the annual limits for your 401(k) and Roth IRA.

If you still have money left after that, put $4k (at least) for each kid into a 529. It does depend on their ages and how much money you have etc if you want to do more than that.

Last, any chunk leftover, put into a brokerage account with Fidelity (or similar).

[Anonymous]

Anonymous wrote:First step is to move your emergency fund to a HYSA. You want at least 6 months of monthly bills saved there, maybe a bit more if you are single and have kids.

The next step would be to ensure you are putting as much as possible into retirement. Hit the annual limits for your 401(k) and Roth IRA.

If you still have money left after that, put $4k (at least) for each kid into a 529. It does depend on their ages and how much money you have etc if you want to do more than that.

Last, any chunk leftover, put into a brokerage account with Fidelity (or similar).

Thank you! Am doing it all…except for the last bit…

[Anonymous]

Anonymous wrote:

Anonymous wrote:First step is to move your emergency fund to a HYSA. You want at least 6 months of monthly bills saved there, maybe a bit more if you are single and have kids.

The next step would be to ensure you are putting as much as possible into retirement. Hit the annual limits for your 401(k) and Roth IRA.

If you still have money left after that, put $4k (at least) for each kid into a 529. It does depend on their ages and how much money you have etc if you want to do more than that.

Last, any chunk leftover, put into a brokerage account with Fidelity (or similar).

Thank you! Am doing it all…except for the last bit…

If it's scarry to put it in a brokerage account, you could dollar cost average over the next year or two. I did that once with a lump to ease my anxiety.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:First step is to move your emergency fund to a HYSA. You want at least 6 months of monthly bills saved there, maybe a bit more if you are single and have kids.

The next step would be to ensure you are putting as much as possible into retirement. Hit the annual limits for your 401(k) and Roth IRA.

If you still have money left after that, put $4k (at least) for each kid into a 529. It does depend on their ages and how much money you have etc if you want to do more than that.

Last, any chunk leftover, put into a brokerage account with Fidelity (or similar).

Thank you! Am doing it all…except for the last bit…

If it's scarry to put it in a brokerage account, you could dollar cost average over the next year or two. I did that once with a lump to ease my anxiety.

That's a great idea...what is the most aggressive investment that I make without getting stocks (fed employee here)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:First step is to move your emergency fund to a HYSA. You want at least 6 months of monthly bills saved there, maybe a bit more if you are single and have kids.

The next step would be to ensure you are putting as much as possible into retirement. Hit the annual limits for your 401(k) and Roth IRA.

If you still have money left after that, put $4k (at least) for each kid into a 529. It does depend on their ages and how much money you have etc if you want to do more than that.

Last, any chunk leftover, put into a brokerage account with Fidelity (or similar).

Thank you! Am doing it all…except for the last bit…

If it's scarry to put it in a brokerage account, you could dollar cost average over the next year or two. I did that once with a lump to ease my anxiety.

That's a great idea...what is the most aggressive investment that I make without getting stocks (fed employee here)

I don't know what this means.

[Anonymous]

You definitely should put some of your savings in a brokerage account. Honestly, it also psychologically puts it more out of reach to spend especially if it is for long term goals. I would put it into a low cost S&P500 ETF like VOO. Think of it as long-term non retirement savings and you'll see it grow well...long term average of 10% growth, with doubling just over every 7 yrs.

[Anonymous]

You could post your info/questions at bogleheads and you'll get good advice there too (it helps if you poke around the site first)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:First step is to move your emergency fund to a HYSA. You want at least 6 months of monthly bills saved there, maybe a bit more if you are single and have kids.

The next step would be to ensure you are putting as much as possible into retirement. Hit the annual limits for your 401(k) and Roth IRA.

If you still have money left after that, put $4k (at least) for each kid into a 529. It does depend on their ages and how much money you have etc if you want to do more than that.

Last, any chunk leftover, put into a brokerage account with Fidelity (or similar).

Thank you! Am doing it all…except for the last bit…

If it's scarry to put it in a brokerage account, you could dollar cost average over the next year or two. I did that once with a lump to ease my anxiety.

That's a great idea...what is the most aggressive investment that I make without getting stocks (fed employee here)

You could do a REIT VGXLX, but they aren't tax-efficient for a brokerage account and usually belong in retirement accounts. I do VTI and VTSAX as they are broad but tax-efficient index funds. Pretty boring, but they've done well over the years.

[Anonymous]

Anonymous wrote: That's a great idea...what is the most aggressive investment that I make without getting stocks (fed employee here)

Probably CDs with a rate of return of 4-5%. Or a high-yield savings account - probably similar or slightly less.

Do you not want to invest in stocks at all? Just be aware that a rate of return of 4-5% barely beats inflation. If your emergency fund is in a high yield savings account, then any additional savings you have should be invested where they will get a higher rate of return.

[Anonymous]

OP here, thanks all! I really appreciate the advice, and bogleheads looks like a good place to dig for some more info.

To clarify—I’d love to invest in stocks but as a federal employee, the ethics rules don’t allow for it. I think ETFs are ok.

[Anonymous]

Personal finance is personal. I stayed away from 401k, 529, and Hysa. Learned to invest on my own and double my money once a year.
You have to know that those accounts are like handcuffs, but they may be perfect for you. You may even suggest your kids get them one day while I pay mine to stay away.
Nobody would be a Fed if they couldn't buy stocks. Just read the rules.

[Anonymous]

Anonymous wrote:OP here, thanks all! I really appreciate the advice, and bogleheads looks like a good place to dig for some more info.

To clarify—I’d love to invest in stocks but as a federal employee, the ethics rules don’t allow for it. I think ETFs are ok.

My agency has strict investment rules because of what it does, but we can own broad based mutual funds or ETFs like those based on S and P 500.

[Anonymous]

Anonymous wrote:OP here, thanks all! I really appreciate the advice, and bogleheads looks like a good place to dig for some more info.

To clarify—I’d love to invest in stocks but as a federal employee, the ethics rules don’t allow for it. I think ETFs are ok.

Which agency? You just need to complete your annual disclosure form.

[Anonymous]

Anonymous wrote:OP here, thanks all! I really appreciate the advice, and bogleheads looks like a good place to dig for some more info.

To clarify—I’d love to invest in stocks but as a federal employee, the ethics rules don’t allow for it. I think ETFs are ok.

You can still own a mutual fund, OP. You just can't buy individual stocks (which you shouldn't be doing anyway). I very much hope your children's 529s are invested in stocks (through a mutual fund).