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Ask HN: Money management
18 points by grouma on May 10, 2012 | hide | past | favorite | 20 comments
Hey HN!

I am a recent university graduate that has accepted a full time position with a large software company. This position comes with a substantial amount of pay. Since I come from a fairly poor family I am unaware of the proper way to "invest" and save money wisely. Do you guys have any advice or can recommend any books that will help me be wise with my money?

Thanks in advance!



Read "I Will Teach You To Be Rich", Ramit Sethi. 500x better than the title would suggest.


There is no doubt in my mind that if I had followed the advice in this book, I'd be substantially better off then I am.

I read it when it first came out, and it's an amazing read. Short enough to could get through it in a day; funny enough to make you laugh; information density is great; and lots of supplemental material on his blog free of charge.

Check out http://iwillteachyoutoberich.com - he's got tons of material on there, and if you like his style, definitely buy the book.


The reviews on Amazon all seem to be stellar. I'll definitely look into this one. Thanks!


Use Mint (http://mint.com) to keep track of what you're earning and what you're spending. I started doing this recently and it's definitely helped me think about how I use my money, but your mileage may vary.


An oldie but goodie: Track every penny spent for one to three months. It will change your relationship to money.

I don't mean that to stand alone but I am sure others will suggest plenty of good books, etc.


I'm from Singapore so some of the points below may not apply to you but here's what I do in case it helps.

I bought an iOS app which I use to track my income and expenses. This doesn't help me save money except track how much I've spent on my credit cards so I don't overspend and will have enough money to pay back the banks at the end of every month and not incur any interest.

Credit cards are useful for getting discounts on things. I get a 5% discount when I shop for groceries at a particular store. When the annual fee comes, I call up the bank and ask for a waiver. They usually agree to waive it off.

I have 2 bank accounts. One which is where I use for spending on everyday needs and depositing my salary. The second one is for savings. I setup my first bank account to automatically transfer $500 every month to this savings account. This recurring transfer is also setup on the iOS app I mentioned earlier.

On google docs, I noted down what my regular expenses are, like transport, food, household bills. So I know how much extra I will have after those.

Don't be tricked by discounts that tell you how much you save if you buy that product. You save more money not buying it. It's different if the product is a daily neccessity or you think will be beneficial.

If I were you, I'd build up a substantial amount of savings first before investing. An amount that will allow me to go jobless for a few months.

Or allow me to do things that's beneficial to myself in the long run such as buying a camera to learn about photography. It's what they call "investing in yourself"


This all seems like sound advice. Thanks!


As others have said, track your budget so you know where your money is going.

Past that, start investing in your retirement. I strongly advise reading this thread over at SA: http://forums.somethingawful.com/showthread.php?threadid=289...

In summary:

1) Contribute to 401(k) up to employer match. Employer match = free money. There is not a single investment that has a greater return on investment than your employer match...even if the 401k has shitty fees and shitty funds.

2) Max out Roth IRA (or possibly traditional IRA if you are in a high tax bracket)

3) Max out 401(k) - optional step, depends highly on your 401k plan. If the plan is good, this is a great place to shelter tax-advantaged dollars. If your plan is bad (high fees, etc) you may be better off just using your money in step 4

4) Start a taxable savings account, brokerage account, or go out and blow some money at a strip club or something.

That's all retirement savings. You should also divert money towards long-term, non-tax-advantage funds. This is something that you want to put money in and gain more than 1% interest in a bank account, but may need to liquidate before you retire (purchasing a house, going on a trip, etc)

Edit: Also, if you ever have the desire to purchase individual stocks - stop and invest in an index fund. If you accept that you will never beat the market (which in all likelihood you won't, especially if you don't have time to research stocks), you should never purchase individual stocks as a means to make money.

Now, I purchase a few individual stocks on the side, but this is my equivalent to gambling or buying lottery tickets. All the money that is set aside for retirement or long-term investing is firmly placed inside of index funds.


For a further push into index funds (vs stock picking) look up the "efficient markets hypothesis" and relate it to portfolio theory. Our markets are very reasonably semi-strong; over any considerable time period, the chances of you beating the market as an individual on a risk-adjusted basis are essentially nil.

Look for funds' fees and tracking errors before choosing.


This is great, thank you.


Hello I have 10 years experience from stocks and stuff and I think you should read a book with the name: "Money masters of our time". The books explains different strategies used by people such as Warren Buffett and Peter Lynch and it gives you a broad picture of the different alternatives you may use. http://www.amazon.com/Money-Masters-Time-John-Train/dp/08873...

You may also want to hang out at http://www.trejdify.com/ which is like Hacker News but business only!


I would recommend Clark Howard's investment guide. The link is on the home page: http://www.clarkhoward.com/

He's been very successful on the radio for teaching people how to save money, and a lot of it's sound advise. I think he's even recommended to buy his books second hand before, so it's cheaper.


Take a look at YNAB, which is short for You Need a Budget. I'm the lead developer, so I am obviousky biased, but it's awesome. ;) http://YouNeedABudget.com


Also learn as much as you can about taxes. It makes a world of difference. Id definitely say its as important (if not more) as learning how to invest, but it's not as glamorous so people avoid learning about it.


In the true Hacker spirit, you want to automate your money management.

Ramit Sethi is the expert on this. The book is I Will Teach You To Be Rich. I will gladly credit Ramit with earning me tens of thousands of dollars.


The book "Your Money or Your Life" changed my relationship with money.


Check out http://www.wealthfront.com. You might like it!


I had the opportunity to invest my money with a young Nigerian fellow. He was the heir to a great sum of money and needed foreign investors to help liberate those funds. The more you invest,the more of his fortune you will receive. I have't received anything yet but when I crunched the numbers it seemed almost too good to be true. If you like, I can post his contact information.


Low load S&P 500 index fund like Vanguard's. Put it all in there if you can stand the risk, with about 3 months salary in the bank for emergencies. Don't buy a fancy house, car, vacation home, boat, timeshare, or whatever. Be frugal. Then retire early.


Use credit cards responsibly. Pay off the balance in full every cycle (set to autopay if you can). Earn cash back as well.




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