How a Development Coordinator in Boston Does Money
Lucy (not her real name) is a 23-year-old development coordinator in Boston.
So, Lucy, how much are you making?
I make $16.63/hr, which works out to just under $34,600/yr. But I get a fair amount of overtime, so it ends up being more than that — I’ve only been at this pay rate for about three weeks, so I’m not sure what my yearly income will end up being.
What was your previous pay rate?
I was making $16/hr from when I got hired in August, and I knew I was going to get a raise at the beginning of April, but I didn’t know how much. Obviously it did not end up being a lot! So it’s good, I guess, that I wasn’t budgeting based on that. But before this job, I was making even less at a couple of cobbled-together gigs: $4K a year as an unpaid intern, then $60/day as a substitute teacher, plus $12/hr at my museum weekend side hustle. My income for 2016 was about $22K.
So you might increase your income by $15K this year, including your overtime?
Yes, just about that! Of course, my expenses have also increased, since when I was working those cobbled-together jobs, I lived with my parents (and did not pay rent), and I moved out once I started my current job. So I’ve gone from almost zero expenses (student loans and transit only) to many more typical adult expenses: rent, utilities, groceries, etc.
I was going to ask what you were going to do with the extra money! Have you made a budget with your new expenses?
I have! It’s very exciting, I have it all in a spreadsheet. My budget is $800 for rent (I have two roommates), $100 for utilities (this was higher in the winter but will go down a bit for the summer, so I’m averaging), $100 for cat-related expenses (also an average, her food is pretty cheap even though I get the grain-free kind, but should she have to go to the vet it will be more than that), $20 for charity (I have recurring donations to the SPLC and Earthjustice), $230 for miscellaneous spending (restaurants, clothes, etc.) I have a 403(b) and my employer matches 6 percent, which I put in, so that’s about $300/month going to retirement. My T pass is autodeducted pre-tax, $84.50, so I don’t even think about that. And I pull $200/month from checking into savings automatically as well.
Excellent! I am impressed. How do you feel about this budget? Are you ready to take it on?
OH GEEZ I FORGOT GROCERIES. $200/month for groceries.
Yes, my budget makes me feel more confident, like I know what I’m doing. But, in a larger sense, I also feel like I don’t have any financial goals. I am not saving enough right now to ever be able to, like, buy a condo, or retire on time. I assume my income will increase as I move up in my career, but since I don’t really know where I’m going job-wise in the future, I don’t know whether I’ll be earning $50K or $100K when I’m 40. And I would say my budget also makes me feel a bit guilty, because I don’t make a ton of money, and I live in one of the most expensive cities in America, and I know that the only reason I’m able to do this is because of all the help I’ve gotten (and am still getting, via free health insurance, thanks Obama) from my parents. Because if I had a $400 student loan payment on top of my other expenses, that healthy saving rate would not be happening, and it’s thanks to the fact that my parents paid about 90 percent of my private-college tuition that my current life is possible.
Yep. I totally feel you on all of that. If you save $200 a month and have no emergencies or reasons to use it, you’ll have $2,400 by the end of the year. Which is a lot, but also… not.
I know! I actually save more than that most months, since I budget based on income-without-overtime and I always get some overtime, so I subtract actual-income from actual-expenses and then pull that into savings as well. I had planned to fund a Roth IRA at the beginning of this year, because I had a bunch of extra cash, but before I could do that my old cat got very sick and needed $4,000 worth of emergency vet care and then died. So that’s where that Roth IRA money went. And I am so grateful that I was able to take care of him to the best of my ability! But kind of bummed that years of savings ended up just floating away.
I’m sorry to hear about your cat.
Oh, thanks, that’s kind. I have a new cat now; fingers crossed she doesn’t get sick! I am looking into pet insurance but I don’t know whether the consensus on that is that it’s Worth It or not.
I think we have a few posts on that on The Billfold. Plus our commenters will no doubt jump in.
Oh, good point, I will look that up!
The Cost of My Cat Beating Up My Dog
As it turned out, it was not exactly a fair fight
thebillfold.com
I will do the math on your savings, though: if you’re putting 6 percent towards retirement (not including your match) and roughly 7 percent towards monthly savings, you’re saving 13 percent of your income total. Plus you get the employer match.
You’re really close to that recommended 15 percent savings that my new favorite financial book recommends.
You are, in theory, saving “enough.” But I get that it doesn’t feel like it.
Well, that makes me feel good, but 15 percent of $35K is still not a lot, in my mind? I really have this feeling that I am going to need to increase my income if I ever want to have my own apartment (LOL Boston real estate), or even retire at like 70ish. But I am also still pretty young, so I am fairly confident I will be able to increase my income with time.
Agreed. I did want to ask about the part where you mentioned that you didn’t know whether you’d be earning $50K or $100K by the time you were 40. Have you thought about your career trajectory and how it might intersect with your earnings trajectory? Is there a $50K path and a $100K path?
Well, I am pretty sure I don’t want to stay in fundraising long-term, since I don’t want to end up actually asking people for money (right now I just thank them for giving it to us, and do database stuff). So I have to figure out whether I want to switch roles but stay in the nonprofit world (maybe work for a university or something), or jump over to Corporate America. I know most people in Corporate America don’t actually make six figures, so I sort of just tossed the $100K out there. But I would definitely make more money that way, even if the difference isn’t as stark as I’m conceptualizing it. So my career path is definitely tied to my earnings.
That makes sense. Corporate vs. non-profit are two very different paths.
Yup! Thankfully it’s a while till I’d start thinking about changing jobs anyway, since I’ve been in this one less than a year.
So I get to put off that decision, but the clock is ticking a bit since when I turn 26 I will lose my parents’ health insurance. I want to be in my next job by then, making enough money to be able to afford healthcare.
I’ll raise my water bottle to that goal!
Fitbit bump!
So what do you think you do really well, financially, and what do you wish you could do better?
I wish I could stick better to the budget I set! Right now I am still under my total spending goals, but I bought spring clothes this month and also went out to dinner a few times, and I’m about $75 over in the “miscellaneous” category. I am thinking about separating that out even more so that I can see what’s going to really frivolous stuff as opposed to, like, vitamins, but I worry that will make me feel too constricted, since my needs change month-to-month. What I think I do well is being aware of what’s happening; I track everything in my spreadsheet and in Quicken, and I check my paycheck amounts and always make sure I pay off my credit card every month, so I’m not losing money through silly mistakes.
Also I paid off my student loans while still living at home, which I know isn’t possible for everyone, but I worked 6–7 days a week for a year to make that happen, and I’m proud of myself for making that a goal.
Congratulations! How big were those loans?
I only had like $11K at graduation. I had some financial aid from the school, then my parents paid the vast majority, I contributed a bit from work-study, and then took out a small loan each year. So a very manageable size, and I was able to pay them off because I could live at home for that year and just throw every penny I made at them.
Seriously: CONGRATULATIONS.
Thank you! I was very happy to see them gone; debt made me nervous!
So here’s what I think: at the beginning you said that you didn’t have any financial goals and that you were worried that you weren’t saving enough, but it’s clear that you have been able to both set and achieve financial goals AND that you are focusing on saving a large percentage of your income compared to your salary.
I think you’re doing really well.
Well that is nice to hear! BUT I still maintain that I am only doing so well because I got dealt sort of a lucky hand to begin with. So it’s sort of educational to see how having parental help can make a huge difference financially to Millennials (TM), even if it’s not to the extent of parents paying our rent or whatnot. So I think I have done my best with the resources I’ve had, but those were also good resources to begin with. Like in the game Civilization when you spawn around a bunch of iron. I can make ALL THE SWORDSMEN, and I had to work to do that, but I needed the iron in the first place.
Ok that’s a weird metaphor that I’m not sure helps, haha.
Oh, I bet we have a lot of Civ fans on Team Billfold.
With that in mind, last question: what advice do you have for Billfold readers?
Start working (or start your kids working) as soon as possible! I started my first job literally the day I turned 14 (she said in an old-man voice), and it really taught me how to manage paychecks and navigate a work environment. Plus it gave me a huge savings cushion — I just stuck money in my bank account every paycheck (every once in a while I would cash one check and get $20 or so if I was going to do something with my friends), and today that money I saved over the years of high-school and college jobs is my emergency fund.
Wait you already have an emergency fund? 😀
Yup! Only $5K, but that would get me through a few months for sure!
OH WOW. Seriously, you are doing well. I Fitbit salute you.
