I'm 23 and was given $50k. What should I do?
Here are some possibilities: avoid buying a car for as long as you can; if forced to own one, buy a used dependable car like a Toyota Corolla- 4 cyl  and don't abuse it.  open a Roth IRA, depositing max possible, the plan on doing so until you've investing the remaining balance. A Roth IRA, while not tax deductible now (you're in a low tax bracket now) will provide for tax-free distributions when you are both older and not in a low bracket. of course, invest in low cost equity funds.   Come back for more ideas once the dust settles, you've got money left over and some of the above accomplished. You've got one asset many of us don't have: time. First, I would point you to this question:  Oversimplify it for me: the correct order of investing With the $50k that you have inherited, you have enough money to pay off all your debt ($40k), purchase a functional used car ($5k), and get a great start on an emergency fund with the rest.  There are many who would tell you to wait as long as possible to pay off your student loans and invest the money instead. However, I would pay off the loans right away if I were you. Even if it is low interest right now, it is still a debt that needs to be paid back. Pay it off, and you won't have this debt hanging over your head anymore.  Your grandmother has given you an incredible gift. This money can make you completely debt free and put you on a path for success. However, if you aren't careful, you could end up back in debt quickly. Learn how to make a budget, and commit to never spending money that you don't have again. "I'll add 2 observations regarding current answers.  Jack nailed it - a 401(k) match beats all. But choose the right flavor account.  You are currently in the 15% bracket (i.e. your marginal tax rate, the rate paid on the last taxed $100, and next taxed $100.) You should focus on Roth. Roth 401(k) (and if any company match, that goes into a traditional pretax 401(k). But if they permit conversions to the Roth side, do it) You have a long time before retirement to earn your way into the next tax bracket, 25%. As your income rises, use the deductible IRA/ 401(k) to take out money pretax that would otherwise be taxed at 25%.  One day, you'll be so far into the 25% bracket, you'll benefit by 100%   traditional. But why waste the opportunity to deposit to Roth money   that's taxed at just 15%? To clarify the above, this is the single rate table for 2015:  For this discussion, I am talking taxable income, the line on the tax return designating this number. If that line is $37,450 or less, you are in the 15% bracket and I recommend Roth. Say it's $40,000. In hindsight on should put $2,550 in a pretax account (Traditional 401(k) or IRA) to bring it down to the $37,450. In other words, try to keep the 15% bracket full, but not push into 25%.  Last, after enough raises, say you at $60,000 taxable. That, to me is ""far into the 25% bracket."" $20,000 or 1/3 of income into the 401(k) and IRA and you're still in the 25% bracket. One can plan to a point, and then use the IRA flavors to get it dead on in April of the following year.  To Ben's point regarding paying off the Student Loan faster - A $33K income for a single person, about to have the new expense of rent, is not a huge income. I'll concede that there's a sleep factor, the long tern benefit of being debt free, and won't argue the long term market return vs the rate on the loan. But here we have the probability that OP is not investing at all. It may take $2000/yr to his 401(k) capture the match (my 401 had a dollar for dollar match up to first 6% of income). This $45K, after killing the card, may be his only source for the extra money to replace what he deposits to his 401(k). And also serve as his emergency fund along the way." If your employer is matching 50 cents on the dollar then your 401(k) is a better place to put your money than paying off credit cards This.  Assuming you can also get the credit cards paid off reasonably soon too (say, by next year).  Otherwise, you have to look at how long before you can withdraw that money, to see if the compounded credit card debt isn't growing faster than your retirement.  But a guaranteed 50% gain, your first year is a pretty hard deal to beat. And if you currently have no savings, unless all of your surplus income has been reducing your debt, you're living beyond your means. You should be earning more than you're (going to be) spending, when you start paying rent/car bills.  If you don't know what this is going to be, you need to be budgeting.   Get this under control, by any means necessary.  New job/career?  Change priorities/expectations?  Cut expenses?  Live to your budget?  Whatever it takes. I don't think you should be in any investment that includes bonds until you're 40, and maybe not even then - equities and cash-equivalents all the way (cash is for emergency funds, and for waiting for buying opportunities).  Otherwise Michael has some good ideas. I would caveat that I think you should not buy any investments in one chunk, but dollar average it over some period of time, in case the market is unnaturally high right when you decide to invest. You should also gauge possible returns and potential tax liabilities. Debt is good to get rid of, unless it is good debt (very low interest rates - ie: lower than you could borrow the money for).  Good debt should still get paid off - who knows how long your job could last for - but maybe not dump all of your $50K on it. Roth is amazing.  You should be maxing that contribution out every year. To add to @michael's solid answer, I would suggest sitting down and analyzing what your priorities are about paying off the student loan debt versus investing that money immediately. (Regardless, the first thing you should do is, as michael suggested, pay off the credit card debt) Since it looks like you will be having some new expenses coming up soon (rent, possibly a new car), as part of that prioritization you should calculate what your rent (and associated bills) will cost you on a monthly basis (including saving a bit each month!) and see if you can afford to pay everything without incurring new debt. I'd recommend trying to come up with several scenarios to see how cheaply you can live (roommates, maybe you can figure out a way to go without a car, etc).  If, for whatever reason, you find you can't afford everything, then I would suggest taking a portion of your inheritance to at least pay off enough of your student loans so that you can afford all of your costs per month, and then save or invest the rest. (You can invest all you like, but if you don't live within your means, it won't do you any good.) Finally -- be aware that you may have other factors that come into play that may override financial considerations. I found myself in a situation similar to yours, and in my case, I chose to pay off my debts, not because it necessarily made the best financial sense, but that because of those other considerations, paying off that debt meant I had a significant level of stress removed from my life, and a lot more peace of mind. The best option for maximizing your money long-term is to contribute to the 401(k) offered by your employer. If you park your inheritance in a savings account you can draw on it to augment your income while you max out your contributions to the 401(k). You will get whatever the employer matches right off the bat and your gains are tax deferred. In essence you will be putting your inheritance into the 401(k) and forcing your employer to match at whatever rate they do. So if your employer matches at 50 cents on the dollar you will turn your 50 thousand into 75 thousand. First of all, I am sorry for your loss. At this time, worrying about money is probably the least of your concerns. It might be tempting to try to pay off all your debts at once, and while that would be satisfying, it would be a poor investment of your inheritance. When you have debt, you have to think about how much that debt is costing you to keep open. Since you have 0%APR on your student loan, it does not make sense to pay any more than the minimum payments. You may want to look into getting a personal loan to pay off your other personal debts. The interest rates for a loan will probably be much less than what you are paying currently. This will allow you to put a payment plan together that is affordable. You can also use your inheritance as collateral for the loan. Getting a loan will most likely give you a better credit rating as well. You may also be tempted to get a brand new sports car, but that would also not be a good idea at all. You should shop for a vehicle based on your current income, and not your savings. I believe you can get the same rates for an auto loan for a car up to 3 years old as a brand new car. It would be worth your while to shop for a quality used car from a reputable dealer. If it is a certified used car, you can usually carry the rest of the new car warranty. The biggest return on investment you have now is your employer sponsored 401(k) account. Find out how long it takes for you to become fully vested. Being vested means that you can leave your job and keep all of your employer contributions. If possible, max out, or at least contribute as much as you can afford to that fund to get employee matching. You should also stick with your job until you become fully vested. The money you have in retirement accounts does you no good when you are young. There is a significant penalty for early withdrawal, and that age is currently 59 1/2. Doing the math, it would be around 2052 when you would be able to have access to that money. You should hold onto a certain amount of your money and keep it in a higher interest rate savings account, or a money market account. You say that your living situation will change in the next year as well. Take full advantage of living as cheaply as you can. Don't make any unnecessary purchases, try to brown bag it to lunch instead of eating out, etc. Save as much as you can and put it into a savings account. You can use that money to put a down payment on a house, or for the security and first month's rent. Try not to spend any money from your savings, and try to support yourself as best as you can from your income. Make a budget for yourself and figure out how much you can spend every month. Don't factor in your savings into it. Your savings should be treated as an emergency fund. Since you have just completed school, and this is your first big job out of college, your income will most likely improve with time. It might make sense to job hop a few times to find the right position. You are much more likely to get a higher salary by changing jobs and employers than you are staying in the same one for your entire career. This generally is true, even if you are promoted at the by the same employer. If you do leave your current job, you would lose what your employer contributed if you are not vested. Even if that happened, you would still keep the portion that you contributed. I'd be tempted to pay off the 35k in student loans immediately, but if you have to owe money, it's hard to beat zero percent. So I don't think I would pay it all off. Maybe cut it in half to make it a more comfortable payment. Currently, you are looking at $6K a year to pay them off, which is about 20% of your income. Cut that in half and you will sleep better! Definitely pay off the medical and credit cards. You're probably paying 20% on that. Clean it up. If you need a car, buy yourself a car. You have no savings, so I would put the rest in some kind of money market savings account. You are at an age where many people go through frequent changes. Maybe you get your own place, and you'll need to furnish it. Maybe you go back to school. Maybe you get married or have kids. Maybe you take a year off and backpack through Europe or Asia. You have a nice little windfall that puts you in a nice position to enjoy being young, so I would not lock it up into a 401k or other long term situation. Wow, hard to believe not a single answer mentioned investing in one of the best asset classes for tax purposes...real estate.  Now, I'm not advising you to rush out and buy an investment property.  But rather than just dumping your money into mutual funds...over which you have almost 0 control...buy some books on real estate investing.  There are plenty of areas to get into, rehabs, single family housing rentals, multifamily, apartments, mobile home parks...and even some of those can have their own specialties.  Learn now! And yes, you do have some control over real estate...you control where you buy, so you pick your local market...you can always force appreciation by rehabbing...if you rent, you approve your renters.  Compared to a mutual fund run by someone you'll never meet, buying stocks in companies you've likely never even heard of...you have far more control. No matter what area of investing you decide to go into, there is a learning curve...or you will pay a penalty.  Go slow, but move forward. Also, all the advice on using your employer's matching (if available) for 401k should be the easiest first step.  How do you turn down free money?  Besides, the bottom line on your paycheck may not change as much as you think it might...and when weighed against what you get in return...well worth the time to get it setup and active. Here's what I'd do: Pay off the cards and medical. Deposit 35k in the best interest bearing accounts you can find (maybe some sort of ladder).  Link your student loans payments to this account. This frees up $486 a month in income, and generates a small amount of interest at the same time. Now, set up some sort of retirement account.  Put $400 a month in it. This leaves you with $86 a month to use as you please. You still have $10 000 cash, out of which you could buy an inexpensive used car, and bank some as emergency funds. "I would advise against ""wasting"" this rare opportunity on mundane things, like by paying off debts or buying toys - You can always pay those from your wages. Plus, you'll inevitably accumulate new debts over time, so debt repayment is an ongoing concern. This large pile of cash allows you to do things you can't ordinarily do, so use the opportunity to invest. Buy a house, then rent it out. Rent an apartment for yourself. The house rent will pay most (maybe all) of the mortgage, plus the mortgage interest is tax-deductible, so you get a lower tax bill. And houses appreciate over time, so that's an added bonus. When you get married, and start a family, you'll have a house ready for you, partially paid off with other people's money." I would be realistic and recognize that however you invest this money, it is unlikely to be a life-changing sum. It is not going to provide an income which significantly affects your monthly budget, nor is it going to grow to some large amount which will allow you to live rent-free or similar. Therefore my advice is quite different to every other answer so far. If I was you, I would: I reckon this might get you through half the money. Take the other $25,000 and go travelling. Plan a trip to Europe, South America, Asia or Australia. Ask your job for 3 or 6 months off, and quit it they won't give it you. Find a few places which you would really like to visit, and schedule around them a lot of time to go where you want. Book your flights in advance, or book one way, and put aside enough money for the return when you know where you'll be coming back from. Stay in hostels, a tent or cheap AirBnB. Make sure you have a chance to meet other people, especially other people who are travelling around. Figure out in advance how much it will cost you a day to live basically, and budget for a few beers/restaurants/cinema/concert tickets/drugs/whatever you do to have fun.  It's really easy nowadays to go all sorts of places, and be very spontaneous about what you want to do next. You will find that everywhere in the world is different, all people have something unusual about them, and everywhere is interesting. You will meet some great people and probably become both more independent and better at making friends with strangers. Your friends in other countries could stay friends for life. The first time you see Rome, the Great Barrier Reef, the Panama canal or the Tokyo fish market will be with you forever. You have plenty of years to fill up your 401K. You won't have the energy, fearlessness and openmindedness of a 23 year old forever. Go for it.
IMO almost any sensible decision is better than parking money in a retirement account, when you are young. Some better choices: 1) Invest in yourself, your skills, your education. Grad school is one option within that. 2) Start a small business, build a customer base. 3) Travel, adventure, see the world. Meet and talk to lots of different people. Note that all my advice revolves around investing in YOURSELF, growing your skills and/or your experiences. This is worth FAR more to you than a few percent a year. Take big risks when you are young. You will need maybe $1m+ (valued at today's money) to retire comfortably. How will you get there? Most people can only achieve that by taking bigger risks, and investing in themselves. You can put them in a 5 years CD and getting a maximum of %2.5 APY if you're lucky. If you put 15k now, in 5 years you'll have $1.971. If it sounds good then take a look at the current inflation rate (i'm in usa)... If you want to think about retirement then you should open a Roth IRA. But you won't be able to touch the money without penalties (10% of earnings) before you get 59 1/2 years old. Another option would be to open a regular investment account with an online discounted broker. Which one? Well, this should be a totally separate question... If you decide to invest (Roth IRA or regular account) and you're young and inexperienced then go for a balanced mutual fund. Still do a lot of research to determine your portfolio allocation or which fund is best suited for you. Betterment (i never used it) is a no brainer investment broker.  Please don't leave them in a generic checking or low interest savings account because you'll save nothing (see inflation again)... I'd suggest waiting until a bit after you are married. To Eagle1's point, even $23,000 is not a huge sum of money.  You didn't make any mention of a desire to buy a home, but if that becomes part of the plan, I'd want every cent of liquidity I can get. I wrote Student Loans and Your First Mortgage to explain why your buying power for the house is lowered by paying that loan. In your case, $5000 is 20% of $25000. For a good 20% down purchase, I'd want those funds available. You also don't mention retirement accounts. Depending on the home purchase timing, I'd start to think about putting aside at least the $5500 per year IRA/Roth IRA maximum. You probably have a UMTA/UGMA account. While the money in that account belongs to you, as long as you're a minor (which is until the age of 18, in California) - you cannot directly access it. Instead, your parent(s) or guardian(s) or any other trustee manages that account for you, with your best interests in mind. While you may want to spend that money or give it away to your boyfriend or whoever else, it is very likely not in your best interest to do that. That is why your dad refuses. He has a legal responsibility, which is called fiduciary duty, to ensure the money is spent in a way that is best for you. If the fiduciary just lets you spend the money away - you could later, when you're no longer a minor, sue that person for the breach of trust. When you're older and a bit more mature you'll be able to make your own decisions and do whatever you want with that money. But as long as your parents have the responsibility to act in your best interests, it is likely that your boyfriend will stay in Pennsylvania for a while. Why not just hold that cash until you graduate from college? Why? Because it's a safety net - make sure you don't have any sudden expenses (medical, school bills, car bills, etc). Then after school you're going to need some cash for job moving, relocation, clothes, downpayment on apartment, utilities, etc. If all that cash is tied up into a 401 or IRA then you can't touch it and if something happens you'll be tempted to take a loan out. Ack!  You'll have plenty of time since you're just starting to save for retirement. Keep this cash as a beginning emergency fund and hang on cause as soon as you get out of school things really move fast. :) My god man, where do you live that is too expensive to live on your own and  7K isn't enough for emergency cash? Anyway, with your age and income I would be more worried about a long-term sustainable lifestyle. In other words, a job that nets you more than $26K/year. Someday you may want to have a wife and kids and that income sure as hell wont pay for their college.   That was life advice, now for financial: I've always been a believer that if someone is not a savvy investor, their priorities before investments should be paying off debt. If you had a lot of capital or knew your way around investment vehicles and applicable returns then I would be telling you something different. But in your case, pay off that car first giving yourself more money to invest in the long-run. Setting aside for the moment the very relevant issue of whether you need the full amount quickly, I'll just tackle comparing which option gives you to maximum amount of money (in terms of real dollars). The trick is, unless you think inflation will suddenly reverse itself or stop entirely (not likely), $50K today is worth a LOT more than $50K in 20 years. If you don't believe me, consider that just 30 years ago the average price for a mid-level new car was around $3k. When you grandfather says he got a burger for a nickel, he isn't talking about 2010 dollars.  So, how do you account for this? Well, the way financial people and project managers do it to estimate how much to pay today for $1 at some point in the future is through a net present value (NPV) calculation. You can find a calculator here. In your question, you gave some numbers for the payout, but not the lump sum prize amount. Going solely on what you have provided, I calculate that you should take the lump sum if it is greater than $766,189.96 which is the net present value of 20 years of $50K Payments assuming 3% annual inflation, which is fairly a fairly reasonable number given history. However, if you think the out-of-control Gov't spending is going to send inflation through the roof (possible, but not a given), then you almost certainly would want the lump sum. I suppose in that scenario you might want the lump sum anyway because if the Govt starts filching on their obligations, doing it to a small number of lottery winners might be politically more popular than cutting other programs that affect a large number of voters. I am sorry for your loss, this person blessed you greatly.   For now I would put it in a savings account.  I'd use a high yield account like EverBank or Personal Savings from Amex.  There are others it is pretty easy to do your own research.  Expect to earn around 2200 if you keep it there a year.   As you grieve, I'd ask myself what this person would want me to do with the money.  I'd arrive at a plan that involved me investing some, giving some, and spending some.  I have a feeling, knowing that you have done pretty well for yourself financially, that this person would want you to spend some money on yourself.  It is important to honor their memory. Giving is an important part of building wealth, and so is investing.  Perhaps you can give/purchase a bench or part of a walkway at one of your favorite locations like a zoo.  This will help you remember this person fondly.  For the investing part, I would recommend contacting a company like Fidelity or Vanguard.  The can guide you into mutual funds that suit your needs and will help you understand the workings of them.  As far as Fidelity, they will tend to guide you toward their company funds, but they are no load.  Once you learn how to use the website, it is pretty easy to pick your own funds.   And always, you can come back here with more questions. Congratulations! You're making enough money to invest. There are two easy places to start: I recommend against savings accounts because they will quite safely lose your money: the inflation rate is usually higher than the interest rate on a savings account. You may have twice as much money after 50 years, but if everything costs four times as much, then you've lost buying power. If, in the course of learning about investing, you'd like to try buying individual stocks, do it only with money you wouldn't mind losing. Index funds will go down slightly if one of the companies in that index fails entirely, but the stock of a failed company is worthless. If it turns out that you do want to help pay the tax bill (after answering all the questions above), I say cash out those funds. You are apparently very young with a long work life ahead (lucky you). Step aside from the actual money part of it for a moment. What does your Mom want? What do you really want to do about this? Is it from love that you want to help but are afraid it's a bad financial decision? Or is it from a feeling of duty and you deep down don't really want to spend your savings on Mom's tax bill. - If you really do want to help and you have the wherewithall to do so, then do it. Otherwise don't. You can recover financially. - I myself have had my retirement savings go to nearly zero 3 times. The first time I recovered pretty easily. The second time, not so easily. I'm just starting on the recovery path for the 3rd time at age 58 and I highly doubt I ever will recover this time. I didn't cash out on purpose but the stock market was not friendly. - My main point is to figure out truly what you want. Thanks for your service.   I would avoid personal investment opportunities at this point.  Reason being that you can't personally oversee them if you are deployed overseas.  This would rule out rentals and small businesses.  Revisit those possibilities if you get married or leave the service.   If you have a definite time when you would like to purchase a car, you could buy a six or twelve month CD with the funds that you need for that.  That will slightly bump up your returns without taking much risk.  If you don't really need to buy the car, you could invest that money in stocks.  Then if the stock market tanks, you wait until it recovers (note that that can be five to ten years) or until you build up your savings again.  That increases your reward at a significant increase in your risk.  The risk being that you might not be able to buy a car for several more years.   Build an emergency fund.  I would recommend six months of income.  Reason being that your current circumstances are likely to change in an emergency.  If you leave the service, your expenses increase a lot.  If nothing else, the army stops providing room for you.  That takes your expenses from trivial to a third of your income.  So basing your emergency fund on expenses is likely to leave you short of what you need if your emergency leaves you out of the service.   Army pay seems like a lot because room (and board when deployed) are provided.  Without that, it's actually not that much.  It's your low expenses that make you feel flush, not your income.  If you made the same pay in civilian life, you'd likely feel rather poor.   $30,000 sounds like a lot of money, but it really isn't.  The median household income is a little over $50,000, so the median emergency fund should be something like $25,000 on the income standard.  On the expenses standard, the emergency fund should be at least $15,000.  The $15,000 remainder would buy a cheap new car or a good used car.  The $5000 remainder from the income standard would give you a decent used car.   I wouldn't recommend taking out a loan because you don't want to get stuck paying a loan on a car you can't drive because you deployed.  Note that if you are out of contact, in the hospital, or captured, you may not be able to respond if there is a problem with the car or the loan.  If you pay cash, you can leave the car with family and let them take care of things in case of a deployment.   If you invested in a Roth IRA in January of 2016, you could have invested in either 2015 or 2016.  If 2015, you can invest again for 2016.  If not, you can invest for 2017 in three months.  You may already know all that, but it seemed worth making explicit.   The Thrift Savings Plan (TSP) allows you to invest up to $18,000 a year.  If you're investing less than that, you could simply boost it to the limit.  You apparently have an extra $10,000 that you could contribute.  A 60% or 70% contribution is quite possible while in the army.  If you max out your retirement savings now, it will give you more options when you leave the service.  Or even if you just move out of base housing.   If your TSP is maxed out, I would suggest automatically investing a portion of your income in a regular taxable mutual fund account.  Most other investment opportunities require help to make work automatically.  You essentially have to turn the money over to some individual you trust.  Securities can be automated so that your investment grows automatically even when you are out of touch. You're extremely fortunate to have $50k in CDs, no debt, and $3800 disposable after food and rent. Congrats. Here's how I would approach it. If you see yourself getting into a home in the next couple of years, stay safe and liquid. CDs (depending on the duration) fit that description. Because you have disposable income and you're young, you should be contributing to a Roth IRA. This will build in value and compound over your lifetime, so that when you're in your 70s you'll actually have a retirement.  Financial planners love life insurance because that's how they make all their money. I have whole life insurance because its cash value will be part of my retirement. It may also cover my wife if I ever decide to get married. It may or may not make sense for you now depending on how soon you want to buy a home and home expensive they are in your zip code.  Higher risk, higher reward- you can count on that. Keep the funds in the United States and don't try to get into any slick financial moves.  If you have a school in town, see if you can take an Intro to Financial Planning class. It's extremely helpful for anyone with these kinds of questions. You need to find a fiduciary advisor pronto. Yes, you are getting a large amount of money, but you'll probably have to deal with higher than average health expenses and lower earning potential for years to come. You need to make sure the $1.2 million lasts you, and for that you need professional advice, not something you read on the Internet. Finding a knowledgeable advisor who has your interests at heart at a reasonable rate is the key here.  These articles are a good start on what to look for: http://www.investopedia.com/articles/financialcareers/08/fiduciary-planner.asp https://www.forbes.com/sites/janetnovack/2013/09/20/6-pointed-questions-to-ask-before-hiring-a-financial-advisor/#2e2b91c489fe http://www.investopedia.com/articles/professionaleducation/11/suitability-fiduciary-standards.asp You should also consider what your earning potential is. You rule out college but at 26, you can have a long productive career and earn way more money than the $1.2 million you are going to get. "At 50 years old, and a dozen years or so from retirement, I am close to 100% in equities in my retirement accounts.  Most financial planners would say this is way too risky, which sort of addresses your question.  I seek high return rather than protection of principal.  If I was you at 22, I would mainly look at high returns rather than protection of principal. The short answer is, that even if your investments drop by half, you have plenty of time to recover.  But onto the long answer. You sort of have to imagine yourself close to retirement age, and what that would look like.  If you are contributing at 22, I would say that it is likely that you end up with 3 million (in today's dollars).  Will you have low or high monthly  expenses?  Will you have other sources of income such as rental properties?   Let's say you rental income that comes close to covering your monthly expenses, but is short about 12K per year.  You have a couple of options: So in the end let's say you are ready to retire with about 60K in cash above your emergency fund.  You have the ability to live off that cash for 5 years.  You can replenish that fund from equity investments at opportune times.  Its also likely you equity investments will grow a lot more than your expenses and any emergencies.  There really is no need to have a significant amount out of equities.  In the case cited, real estate serves as your cash investment. Now one can fret and say ""how will I know I have all of that when I am ready to retire""?  The answer is simple: structure your life now so it looks that way in the future.  You are off to a good start.  Right now your job is to build your investments in your 401K (which you are doing) and get good at budgeting.  The rest will follow.  After that your next step is to buy your first home. Good work on looking to plan for your future." Why should the rich who buy more expensive homes be subisdized by those who pay less, or from those who rent? A person who buys a 500k home in a high property tax area wins twice. Once but having more tax breaks by being able to deduct more than your average working class person who buys a house at 250k and the second time when they get nicer schools, public services etc at other people's dime. SF home prices are a combination or speculation investment and poor government control. SF prices are at Tokyo levels when the population density is at 1/10. That is a failure of local government policy to build more homes, not from lack of tax breaks.  If your community wants to pay higher taxes for more local services, power to you and I encourage it, but you shouldn't be subsidized by those who dont. Imo, people shouldn't be punished for not owning property or living in a state where they think sales tax is better than income or property.