I just got my first real job and I'm wondering how much I should start saving. Is there a good percentage to start at based on personal experiences? And is it better to save my money or invest in a company?

4 Answers 4


There is no absolute answer to this as it depends on your particular situation, but some tips:

  • Invest as much as you can for retirement. In your first job you may be on the low end of the pay scale, but you have something much more valuable...Time. Don't underestimate how much impact compounding can do to your retirement savings by putting the bulk of it in a decade sooner.

As to investing versus saving, you need to do some of both:

  • First accumulate 3-6 months of living expenses in a savings account and don't touch it unless you have a bona-fide emergency (like losing your job or major medical expenses)
  • Next, Contribute at least as much to your 401k as your company will match, any less and you are turning away free money.
  • Next, Pay down debt as quickly as possible on credit cards and depreciating assets (like cars).
  • Max out the 401k and/or other tax sheltered retirement accounts as much as possible. You may be at the low end of the pay scale now, but believe it or not you probably have more disposable income than you ever will later when kids/family get into the picture. Also you have TIME on your side and money invested over time is a very powerful tool to get rich. Do not wait until you "make enough" to save for retirement. Save whatever you can now.

Be careful about stockpiling too much in bank accounts. Inflation will eat that money up over time to the tune of 3-4%/year. You are young and have a longer investment horizon for retirement, take advantage of that and accept a little more risk while you can.

  • 1
    Nice comprehensive answer. I'd just add - in my opinion. I'd deposit to the 401(k) up to the match as a highest priority. Say a $15k emergency fund is the goal. In the 25% bracket, one would have been. Le to deposit $20k instead. And matched to a $40k total. I'd much rather have that $40k tied up than just $15k in the bank. Jun 12, 2014 at 11:56
  • Thanks for the answer, very helpful! I notice that you do not bring up investing money. Is this not a good strategy while I am younger? Is it a better practice to be more focused on saving a chunk of money for the future now instead of risking my money with investments? Jun 12, 2014 at 13:12
  • @user3730892 I think the general consensus is that until you have done the first key points (401k match, emergency fund, and debt elimination, retirement contributions), asking about investing is a moot point, since it's not that high up on the priority list.
    – Noah
    Jun 12, 2014 at 14:14
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    @user3730892 JohnFx suggested to invest money in his answer but to do it in a retirement account (401k).
    – Zoop
    Jun 12, 2014 at 14:51
  • 1
    @user3730892: Money in a 401k can be (and usually is) invested.
    – BrenBarn
    Jun 12, 2014 at 18:10

Save enough to build an emergency cushion of 4-6 months total expenses. After that, invest everything you can in areas where you are well researched and have carefully formed your own opinion on the subject.

Those who save do not reach financial freedom, those who learn to invest and make their money work for them do.

Invest in learning how to invest.


Since you seem to be interested in investing in individual stocks, this answer will address that. As for the general question of investing, the answer that @johnfx gave is just about as good as it gets.

Investing in individual stocks is extremely risky and takes a LOT of work to do right. On top of the fairly obvious need to research a stock before you buy, there is the matter of keeping up with the stocks to know when you need to sell as well as myriad other facets of investing. Paid professionals spend all day, every day, doing this and they have a hard time beating an index fund. Unless you take the time to educate yourself and are willing to continually put in a good bit of effort, I would advise you to stay away from individual stocks and rely on mutual funds.


Congrats on your first real job!

Save as much as your can while keeping yourself (relatively) comfortable.

As to where to put your hard earned money, first establish why you want to save the money in the first place. Money is a mean to acquire the things we want or need in your life or the lives of others.

Once your goals are set, then follow this order:

  1. Get Protected: Health and life insurance is good way to protect yourself and your love ones from financial hardship. Ensures that you/your family will still have a good chance of reaching the goals you have set.
  2. Control/Reduce Debt: Control your debt, live within your means, and do your best to reduce debt. If you do acquire more debt, make sure it is an investment (eg. education) or for something that is productive.
  3. Establish an Emergency Fund: At least 3 months of cash. If you can do more, even better. Hey life happens, having cash that is easily accessible to attend to an emergency will make your life a lot easlier.
  4. Invest: Once you have all the things that prevents your investment from being wiped out, then you can start having your money work for you. As to where to put your money... that is an a topic on its own. The short answer, just make sure it can grow faster than inflation, has tax advantages, and not too risky.

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