Two years ago, I graduated with a degree in computer science and $25,000 of debt. I was overwhelmed, to say the least. I moved to Chicago hoping to take advantage of what the city had to offer while also maintaining a reasonable cost of living. The thought of living independently, bar-hopping with friends, and trying out eclectic cuisines excited me.
But it wasn't long until I realized that my social life was making a considerable dent in my bank account, and I started to worry. Whatever money I was left with after covering my living expenses was being put toward paying off my student loans, and I spent every week too nervous to look at any of my credit card statements or bills. I applied for several other credit cards, only to get rejected by them all. With each inquiry, I saw a drop in my credit score and could not understand why.
Spreadsheets tracking my net worth filled up my Google Drive, each bar graph showing the same result: no financial growth. I was stuck at a negative net worth, even if I was moving in the right direction with paying off my student loans. That's when I realized that I needed to shift my money strategy.
After learning about the FIRE (financial independence, retire early) movement, it inspired me to really get my money in order. I started diving into personal finance courses, subscribing to financial newsletters, and investing some of my own money in hopes of creating generational wealth.
I am so proud to say that today, I have paid off $20,000, while simultaneously investing for my future. I am now on the path to maxing out my retirement accounts. I have grown my net worth by $60,000 over the last two years, thanks to a combination of investing and an additional stream of income.
Now, using a budget I love, I am able to comfortably cover all my expenses while still trying new experiences and exploring my city the way I dreamed. Here are the biggest lessons that I have learned throughout my personal finance journey.
My first step was to figure out how much I really owed. When I logged into my Navient federal student loans account, I was mortified to see the high balance of my loans, each with a 3% to 4% interest rate.
My first six months postgraduation consisted of aggressively paying off my student loans rather than creating a financial plan. But then I started thinking about my money in terms of long-term growth, and also began investing more intentionally.
I learned about the difference between Roth IRAs and 401(k)s, and increased my contributions to align with my financial goals, including working toward retiring at 40. I also took the time to understand my asset allocation for each portfolio instead of randomly picking and choosing individual stocks. Within a year, I was able to max out my Roth IRA and half of my 401(k).
Figuring out how to balance paying off my debt while investing for my future has been a mental challenge at times. But I've run the numbers and I know that maintaining both of these goals will help build wealth for me in the long run.
Video by Mariam Abdallah
To me, one of the main advantages of working a more traditional 9-to-5 job are the employee benefits. I really enjoy working as a technology consultant and my company benefits include 401(k) matching, fitness discounts, and a health savings account.
If you are working at a 9-to-5 job, I would advise you to reach out to your company's HR department to fully understand the benefits that are available to you, and how to make the most of them. Based on the company match, I've been able to add about $5,000 each year to my 401(k).
My best advice is if you can, contribute enough to get your employer match. These benefits have been a key way that I have been able to grow my net worth.
Video by Tala Hadavi
Opportunities are endless when it comes to monetizing your current skills, even if it's an extra $50 to $100 a month. If you are looking for a source of additional income, remember that these opportunities do not have to be time consuming or require a lot of money to get started.
I started small with side income, including online tutoring and user testing. After watching a documentary on minimalism, I started selling my unwanted clothes on Facebook Marketplace and eBay.
Over time, I have grown into the field of reselling and expanded my inventory with secondhand finds from other thrift stores and online marketplaces. Over the last six months, I have been able to earn $1,200 from my efforts, and my goal is to double that income over the next year.
The best part of my side hustle is the flexibility. I can set my hours, and I am able to put the profits towards new clothes, or investing in the stock market.
My best advice for anyone looking to start a side hustle or create a new source of income is take the time to sit down, introspect, and find an activity you love to do in your free time, and finally make a plan for how you could potentially monetize it. There are many options out there for every kind of talent or skill.
Video by Courtney Stith
The word "budget" can seem intimidating at first. But I have learned that taking the time to analyze your purchases is key to getting your finances on track.
Categorizing my transactions at a high level provided me with an insight into my day-to-day spending, and helped me track my expenses and make mindful choices. I started off with a simple spreadsheet with high-level categories ranging from housing and living expenses to savings and investments. I assigned each dollar of my income to a category by incorporating the zero-based budget model.
Over the next couple of months, my categories became more specific to my monthly spending, with living expenses broken down into food, groceries, and travel. This allowed me to get a more in-depth understanding of my spending habits.
The more I budgeted, the more I realized that balance was the key. While it was OK to occasionally indulge and spend money on experiences that were really important to me, budgeting was an indispensable tool to meet my financial goals, prepare for any future emergencies, and pay off debt.
Video by Mariam Abdallah
Once you get into the groove with budgeting, the most crucial step is figuring out how to use it to enhance your plan to meet your financial goals. When I created a budget that was intentional, and aligned with my values, I felt like it was easier for me to stick with it.
If you're trying to figure out when's the best time to splurge versus to save, I've found that the simplest way to answer that question is to create a hierarchy of spending categories.
Personally, I value my experiences in the city more than anything. Exploring new neighborhoods and going to art museums and comedy shows is what I look forward to every weekend. With that in my mind, I shape my budget around making sure I am able to do those things I really enjoy.
A deeper analysis showed me spending on restaurants and travel spending were high lifestyle priorities. But it also revealed to me that I didn't need an apartment with a ton of amenities to make me truly happy. A year ago, my roommate and I downsized our apartment and I ended up saving $200 in rent per month. That extra money goes to my savings account and has helped me reach my financial goals quicker.
Today, my mindset is more about what I can financially accomplish now and in the future, rather than stressing over the debt from my past. I know this shift will help me build a strong foundation for years to come.
Anmol Das is the CEO and founder of moneymolz, a personal finance platform dedicated to helping young adults manage their money in the hopes of reaching financial freedom. Anmol's Instagram explains concepts ranging from managing money in a high cost of living area, to investing in tax-advantaged accounts. Anmol believes that anyone can become a millionaire — it's all about making the right financial decisions based on your current lifestyle and future goals.
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