New entrepreneur who grew up poor receives internet's advice on what to do with $18000/month income

For some kids, frugality was the only way to get through life until opportunity decided to knock on their door, paving the way to success. Such people find it hard to manage the money that comes their way as adults after years of growing up in a destitute family. However, financial management can be learned and this worker on Reddit is up for it. u/Comfortable_Cake_443, a budding entrepreneur who grew up poor, sought the internet's help on how to manage the sudden rush of money after his business turned out to be a success. Many offered priceless financial wisdom that is the need of the hour.

"Never made this much money before... Need advice," the individual began their post. Speaking about their past, the entrepreneur explained that they grew up poor based on American standards. They went through school days by utilizing free school lunches and food stamps. "My parents worked low-income jobs and we never talked about money or credit. I have worked to get out of that bad financial situation my whole life," they explained. They didn't grow to a greater financial height as soon as they started working. At the most, they made $54000 per year in their job. 

But things started to look up and they are now witnessing a substantially higher cash flow than they've ever seen before. "I started a side gig a few years ago and it is starting to turn into a business. Within the past year, my income went from $54,000 to $200,000 and I don't know what to do with the money. I don't want to waste it," they shared. They added that their debt-to-income (DTI) ratio was just 12% and that their only debt was a car loan. "So, with an $18,000 a month income, where do I put this money so it can grow?" they asked social media users. When people were curious about their drastic growth in life, the entrepreneur said in a comment, "I like tech. So, I studied coding, built a small tech business, and it's growing." They added that it took 10 years of studying, 20-hour workdays and lack of sleep to get where they were.

"Never assume you will always earn as much as you do now. There are things out of our control - you might earn way less in the future or nothing. You can easily put 10K a month in an S&P 500 low-cost index fund and grow that into one million in eight years. If you're frugal you can live with that for the rest of your life or do some part-time jobs if you need to work," suggested u/Huge_Line4009. "It may have been said, but save for taxes. You'll probably owe $50k in taxes if you don't have any good write-offs. Maybe more depending on the state. When you're a business owner it's easy to forget $200k means $150,000 before expenses," u/troyjonesmb.

"First and foremost, take advantage of all pre and post-tax benefits. Max out 401k contributions ($23,000). Max out your Roth IRA. Now look at your net monthly income after expenses. Take 1/3 of the excess and put it into a high-yield savings, aiming for a $40-$50k balance. Take another 1/3 and put it into an individual brokerage account into S&P index fund. Lastly, put that last 1/3 into a fund for you to spend however you want like, vacation, car or luxury goods. Once you hit your $40-50k goal in your HYS, you can pivot that 1/3 into the brokerage account. Take a deep breath and enjoy your net worth growing," said u/Beatrix_BB_Kiddo. "Put it into real estate - buy a house- the expense builds wealth but the pressure is high- you won’t spend it badly," added u/Think_Leadership91.