My Personal Finance Journey, So Far
· 7 MIN READ
Motivation
Personal finance is a daunting topic. It’s not a subject that was taught in school — it’s one that you need to learn on your own! I’m hoping that I can talk about my journey working and learning to save.
Today, I’m looking back and writing about my experiences: each job I had, my financial status at the time, and all things I did to become more financially aware. I’m not nearly done — I’m still learning new things every single day.
Job Journey
From the start of middle school, my father gave me an allowance of $20 / week. This was enough for all expenses as a 12-year old: after-school snacks and drinks during basketball.
At around 13-14, the minimum age required for working papers, I started working… and funny enough, my first job was at an ice cream / gelato stand for an Italian restaurant. I made about $5/hr cash with tips on top. I no longer received allowance, since I was able to survive off of my current wage & tips.
My second job was a summer job, as a teaching assistant for a daycare taking care of pre-k students. This job required me to have direct deposit, so voila! I now had my own bank account. That summer, I made over $1000 and was the first time I had ever broken a 4-digit net worth! I remember the feeling I had when I looked at the ATM screen. It was a jolt. Eagerness. Determination. Hunger. I wanted to work harder to make that amount grow. After the summer period had ended, I was fortunately offered a position to continue during the semester. I took it and continued this position until the 11th grade.
Towards the end of my 11th grade, I started my first corporate job at ConEdison as an Engineering Intern. The TLDR is ConEdison had a union strike that summer, so the interns (aka me and about 10 other high schoolers) had to do the work of 30 people. This meant that we worked 6-7 days a week, 12 hours a day. As a high schooler, this was a daunting but rewarding experience. I was making $11/hr, with $16.50/hr overtime. Each week, I worked ~70-85 hours. At the end of that summer, my net worth had just hit 5-digits for the first time.
After that crazy summer, I was offered the co-op position, which is just a fancy way of saying you can work during the school year. As I transitioned into college, I continued to stay with ConEdison (a mistake I talk about often). Eventually, after college, I joined ConEdison full time. Having my first full time exempt position, I was offered employee benefits, such as medical/dental, 401(k) retirement funds, and employee stock purchase options. This was my first exposure to these common benefits, so I was naturally overwhelmed. Let’s go over a few of them that I think are notable.
Employee Benefits
401(k)
401(k) is an employee-sponsored retirement account. Employees and companies, optionally, contribute to these funds. Many companies will have a match, where the company matches your contribution up to a certain threshold.
With regards to investing into a traditional (pre-tax) or ROTH (post-tax) 401k, I’ve always leaned towards ROTH. I’m inclined to do this with the assumption that the taxes I’ll pay today will be less in comparison to the taxes I pay in the future, assuming that my income will be in a higher tax bracket.
when you’re transitioning employers, you also have the ability to roll your account out into another 401k account or into an Individual Retirement Account (IRA). I personally prefer moving it out into an IRA, since that account gives you more options into what you can invest in.
Employee Stock Purchase
ConEdison is a publicly traded company, so they offered a 11% discount on each stock. If you don’t know, ConEdison is a blue-chip stock, and is pretty stable. At an 11% discount, there’s a good chance the stock is going to stay flat. I was happy to take the risk on this since it meant breaking even on this would mean the stock had to drop by 11%.
Health Savings Account
I didn’t invest into an HSA at the time. In hindsight, I certainly should have. HSAs are Health Savings Accounts, and they offer tremendous health expense and tax benefits. What I’ve come to realize is that not every company will offer an HSA, so if you have one available and have extra liquidity, I definitely recommend looking into it. HSAs are a way of covering out-of-pocket medical expenses for those who have a high deductible health insurance plan. Unlike an FSA, the HSA’s unspent money will roll over into the next year. HSAs also carry a triple tax benefit: tax-free contributions, grows tax-free, tax-free qualified withdrawals.
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I was making about 65-70k/yr. I didn’t have that much to invest. I ended up setting my 401(k) to the minimum to meet the match. I did have a ROTH option, so I chose that. I contributed whatever I had leftover into the stock purchase program since there was the 11% discount. Luckily, by the time I left ConEdison, I had already made a profit of about 20% because the stock also went up!
Moving Out & Housing Expenses
In 2019, I moved out with my girlfriend (my current wife) and some friends. At the time, I was making about $80k. On the topic of housing expenses, I firmly believe that you should avoid overspending on your housing. A rule of thumb is that housing expenses should never exceed 28% of income. Many follow the same rule, but they calculate it out of their gross income. I tend to do this with post-tax income. There’s a big difference here.
Let’s say you had a 80k salary.
28% of $80k gross is $22,400/yr or $1866/mo
If you calculate about 35% tax…
65% of 80k is $52k, and 28% of $52k is $22,400/yr or $1213/mo
In New York City, it’s very tough to find a rent this cheap… unless you’re living with roommate(s). Living with my girlfriend and friends brought my monthly rent payment down to about $600! That is insane! Albeit in a flexed apartment, we lived in the heart of downtown Manhattan!
Generating Income
Software Engineering (Full-time job)
I’ve always believed in the philosophy of doing many things at once. My full time job as a Software Engineer is a large piece of the puzzle. Albeit a challenging and ever-changing role, I enjoy the aspect of continuous learning and obtaining transferable skills.
Businesses / Side Hustles
Below are a list of few opportunities / businesses that I took along the way:
- Event Planning: ATP NYC, Whisper NYC
- Food & Beverage businesses: Taiyaki NYC, The Dough Club, Konveny
- Photography: a hobby I rarely profited on, in comparison to the mounds of money I spent on equipment =(
- Technology: building websites / applications for clients. My full-time job is where I can learn, while my side-hustles are where I can apply those learnings.
Investment Accounts
- Stocks: I recommend ETFs or investing in individual stocks you believe in. I don’t recommend day-trading though!
- High-yield savings accounts: for parking your cash and letting it grow more than a regular savings account.
- Individual Retirement Accounts: Similar to 401k but not employee-sponsored!
Real Estate
In the recent years, real estate investing has become one of my passions. There are tons of benefits to owning real estate. A few of them are:
- Learning how the real estate purchase process works
- Tax benefits to help offset your income elsewhere
- Properties will continue to appreciate over the long run
- Learning to be a landlord
Closing
I really enjoy talking about career, personal finance, investing, and all things related to growth. I’m always looking to find like-minded individuals and people who are interested in learning! I hope you found this article to be valuable.