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I'm a 19 year old student and I have a part-time job as a programmer. I make 20 euros an hour and I work about 10-15 hours a week, depending on school responsibilities. I earn 800 euros a month, sometimes more.

My monthly expenses are about 500 euros. If I deduct another 150 a month for unexpected expenses such as a broken washer, I'm left with 150 euros to spend on whatever.

I'm aware that 150 euros a month for unexpected events is not a lot but I have enough money saved up so that I won't run into any trouble if I have multiple unexpected expenses. So I thought I would continue to slowly add more money to the unexpected expenses pile.

What would be the best way to use my left over money? Should I invest the money or should I just save it on my bank account?

If the answer is invest, since I've never done this before, could you please recommend a book or an article that I could use to inform myself on how to invest?

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  1. Pay off any debts you own. Interest on debts will likely be higher than any money you can make investing.

  2. Ensure that you have an emergency fund to cover 6 months of normal living-- imagine that you lose your job. Can you afford food, rent, utilities, day-to-day expenses for 6 months? Take this money and put it in something very safe like a high interest savings account or money market fund where you should be able to earn 2% interest per year.

  3. Read up on investing. I would recommend JL Collin's stock series. This is an essential step because if you don't know how to think about your invested money you run the risk of panicking when the market dips and pulling your money at the absolute worst time.

  4. Invest in index funds (ideally US total stock market index funds or total world stock market index funds). These are the safest long-term investments that have been shown to regularly beat the majority of managed funds over the long-term. Read the articles to understand why this is the case. Choose a broker with a low management expense ratio like Vanguard.

  5. Make sure your investments are in a good account. I'm not sure what the tax laws are like in the netherlands but most countries will have a retirement savings type account or tax-free savings type account that lets you grow your money tax free. If your employer has some sort of retirement match plan MAX THIS OUT as it represents a 100% return on any money you put in.

  6. Live within your means and don't spend money that you don't have to.

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  • Thank you very much. I'll have a look at all the advice you gave. – Stef van Stipdonk Oct 28 '19 at 15:14
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    #6 is by a wide margin the most important. If you take it to heart now while your income is comparatively low, your whole financial life will be so staggeringly easy you'll wonder how anybody ever has money problems. – bvoyelr Oct 29 '19 at 14:58

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