Sneha Janardhan: A Values-Based Approach to Budgeting
Most personal finance blogs only share stories of the people who have it all under control, save 50% of their income, and retire early. While that is impressive, most of us don’t live our lives like that. Some of us want a career and some of us just need our almond matcha latte every morning. However, we all still face the same woes when it comes to managing our personal finances. MoneyStories is a series of interviews with young professionals and recent graduates sharing their stories on how they have and are navigating their personal finances.
Today we have, Sneha Janardhan*, a young professional who works as a product manager for a startup.
Job Title: Product Manager at Startup
Salary Range: N/A
Location: San Francisco
Big Expenses/Debts: Home Mortgage
Monthly Expenses: Blog Subscriptions, GitHub, Spotify, Stratechery, iCloud, Amazon Prime
Kavya: Tell me a little bit about yourself. Where did you go to college and when did you graduate?
Sneha: I went to college at Carnegie Mellon, graduated in 2015. And then I moved back to California when I got a job as an engineer at a startup in San Francisco.
How would you describe your life like post-grad, how was the transition for you?
Honestly, a lot of parts of it were kind of similar to college in some ways. I kind of viewed moving to San Francisco, as a continuation of college in a weird way because many of the people I met through the hackathon circuit in college also moved to the Bay Area post-grad so we ended up becoming even closer.
I worked at a startup so we got free food and we were growing really rapidly. The late nights at work felt like jamming with my friends at a hackathon. I think the only major difference was that I was making a lot more money. As opposed to in college, where I was living off of my parents’ money and internship money. And the weather was better :)
Was how much you would be making something that you thought about when choosing your first job.
Not really. However, before I accepted my offer I negotiated partly because I felt like I should and since women don’t typically negotiate but it wasn’t money motivated.
For me choosing a job was more based on the ownership that I would have. I also wanted to work at a growing company so those were my main priorities.
Negotiating can be intimidating, how did you approach it?
I feel like I kind of stumbled on it a little bit. It’s usually a back and forth process and nobody (you and the recruiter) wants to say the number to start with but at the end of the day, they are eventually going to reveal it because it’s an employee-market. I never start off by giving them a number for what I want because I like to see what they are willing to do for me and then I go from there. If it’s lower than the other offers I have received, then I push back with the salary ranges of my other offers. If they do start off pretty high, then I won’t push it too much.
Was salary the only thing you negotiated? Or did you negotiate other parts of your compensation package as well?
I did, but I didn’t really understand equity that much and to be honest I still kind of don’t. I feel like having equity is important as a function of how much you believe in and work towards the company’s future, but people in tech constantly overestimate how successful their company will be and most startups do fail. I did negotiate equity but I didn’t really know much about what I was doing. I wasn’t comparing and contrasting it with other things. I asked for more but I was more focused on the salary side of things.
So jumping back a little bit, when was the first time you thought about personal finances from your own perspective?
Growing up, my parents never let me keep my money. If someone gifted me money, or if I earned it, they put it away for me. All of my spendings went through them. Conversely, they always involved me in any major financial decision they made. I don’t think I linked my spending and earning together until much later.
When was the first time that you linked those two things together? When did you start to manage your money?
There were some things that my parents gave me exposure to really early. They taught me about debit cards and credit cards in high school. I learned about buying a house and mortgages when I was in middle school. But when it came to my own money, I’d say the first experiences were in college. They gave me some money every month, and I got to keep control of my hackathon winnings/internship salaries and then I’d have to kind of take care of paying for college, paying for my expenses and things like that.
The summer before going to college was the first time the money I was making went into my own bank account instead of theirs. They helped me throughout college so it was only after I graduated that my money finally became mine and their money was theirs.
Once you graduated, how did you know where to start?
I had taken some business classes in college so I knew what a Roth IRA was. Some of my money went into my Roth IRA and I put some money into a 401k through my company. I put money into a savings account because I might as well earn some interest instead of it just sitting in my checking account.
Whatever was left, I could spend but I actually saved a lot of this because I didn’t have a lot of expenses. But, I also wasn’t keeping track of what I was doing with the money and so it was fortunate that I had enough money to use for my expenses and save what was leftover.
Everything I was doing, I just did because everyone else was doing, I didn’t have a concept for why I was putting my money where I put it.
About a year ago, I realized I missed some payments by accident and my credit score plummeted as a result. After that, I was like, what am I doing? That shouldn’t have happened because I had enough money to make those payments. Instead of letting things just happen, I realized I needed to know what I was doing with my money.
That’s when I created my own budget, I took my finances off of Mint and Personal Capital. These apps make you feel like you have everything under control because it’s automated but they actually automate out the most important parts of keeping track of your finances like financial discipline.
So what did you do next? How did you create your budget?
I made a spreadsheet, and then I wrote down at a high level how I had done the past five years since graduating and then I projected out what the next 10 years would look like. If I spent the same amount and made the same amount, what would my net worth be? I realized that it didn’t seem very high. It did grow but not as fast as I wanted.
This is super interesting and I want to dig into this a little bit. What did you take into consideration? Did you factor in things such as contributions to a 401k?
Yeah, so I wrote down how much cash I had, my investments, any other assets and then subtracted out my credit card debt and my mortgage. I also wrote down my salary projection and what it was in the years past. I then drew out a chart and I figured out the percentage of change from year over year. The chart showed me how many years it would take me to get to a certain amount of money.
My whole thesis when I made this spreadsheet was that there’s a certain amount of money that enables you to live your life independently of anyone else. As in you don’t need a job but you also have enough to live a well-off life and for people to pay attention to you or listen to you.
How did you come up with that number?
I thought about some of my friends’ parents who retired early and I did some research too. But the specific number I chose came from the requirements to be an angel investor. I think you have to make at least $200K in salary or have a net worth of $1 million. So I projected out how long it would take me to reach a multiple of that net worth based on everything I wrote down and it felt too long to me. So I started playing with some numbers to see what I could do to reach this goal sooner.
So I had this goal and I knew approximately how long it would take for me to get there with the rate I was going at right now. I thought about what numbers I could actually play with. You could improve your skillset but your salary might only increase on average by 5% every year. But what you can do is increase your money by making wise investments. If you are really good with stocks, that is one way to invest your money. You can flip houses or build an app for recurring revenue. Essentially I was looking into alternate streams of money. I thought about what would happen if I bought another house. I played around with numbers in each of these scenarios to see how much this would affect my top line.
Then, I looked into the bottom line. When I did this, I wasn’t super happy about how I was spending money. Not because I was overspending but because I had no discipline about how I was spending my money. I wanted the discipline because I thought it would be good for me. So then I created another tab in that spreadsheet and I laid out all of the different expenses I would have each month. I started playing around with percentages of how much I wanted to put into each category of expenses.
My exploration of this was also an exploration of my values at the same time. I went back and forth a bunch of times where I was like if this what I’m spending, what does this say about me as a person. I asked myself: Is that the kind of life I want to live? What kind of life do I want to live? How do I spend my money to get there?
So I revised my value system and I came up with these three main values. For example under the personal category, I wanted to live a financially, mentally, and physically independent and healthy lifestyle. So what do I do to enable that? So under this category, I have a food budget. Previously, a lot of this was going towards UberEats and for me personally, UberEats didn’t align with my value system. So I deliberately broke out a chunk of my budget for UberEats and said this category only gets this much money with the goal to bring that down to $0.
I also realized that learning was really important to me but I never had an explicit budget for learning. I used to spend money on learning whenever I wanted to but now I wanted to make a deliberate investment into my learning by making sure I spent at least a certain amount of money towards it.
I didn’t have an explicit travel budget before and now I do. It’s higher than other things because I wanted to encourage myself to travel.
I also have a relationship budget because it’s really important for me to meet people on a regular basis. If I’m meeting people I’m willing to spend more on that versus doing the same activity by myself.
I could play around with the person I wanted to be by controlling my budget.
So what does your budget look like? How much goes towards your expenses?
The full breakdown of my budget currently is:
Housing — 26%
Savings — 30%
Food/Exercise/Health — 4%
Relationship — Travel/Events/Clothes — 5%
Learning — 3%
Everything else goes to my 401K contributions, taxes, and miscellaneous expenses.
How long has it taken for you to get to a point where you feel like the process has worked for you?
I’ve been doing different forms of budgeting since January, but I made this spreadsheet in May and it’s what I have stuck to because it’s worked the best for me. I think it took 3 months of using the spreadsheet for me to feel happy and content with the process.
I also have a section where I put down notes on what I want to change in the future and my next steps. It’s definitely a work in progress. Not necessarily the percentages but in terms of what I want to spend my money on. I constantly ask myself if it resonates with my values or not. I am happy with the process but I still want to tinker with the end state.
How often do you check on your progress? What does this process look like?
I do this on a weekly basis. It is more of a retrospective and I try to keep it very positive. I’m not mad at myself if I do something that isn’t good, instead, I tell myself to be better going forward. When I am doing this retrospective, I spend a lot of time thinking about why I made decisions as opposed to thinking about the decision itself.
For example, take UberEats. In May, I decided I wanted to stop ordering through UberEats. It took me until mid-September to cut it out completely. The money showed me what I was doing, which was getting UberEats pretty often. I spent my energy on the things that were making me do that and fix that. I blocked UberEats on my laptop and on my phone. I now keep fruits in my room so that if I feel hungry or want a late-night snack, I reach for that instead. With each habit change, I saw the % of ordering on UberEats go down.
What has been the hardest part of the process?
To be honest, this process has been really inspiring to me. Before I would get really upset if I made a mistake when working towards a goal and then I would regress towards a worse version of myself since things weren’t picture perfect. In that regard, I had a huge shift in my mindset. I now see the entire process as an experiment. There isn’t an “I did poorly” or “I did well” but rather, this was an experiment that had slightly negative or positive effects.
Having that mindset shift is so important! You mentioned buying a home, was that something you planned for?
I think subconsciously I wanted to buy a house since I saw my parents buy their home when I was younger. When I graduated, I saved up a lot of money as I mentioned before. About a year and a half later, I looked at all the money I had saved up from that 1 ½ years of working and the money I had from high school, internships in college and winning hackathons. Unlike most people my age, I didn’t want to invest heavily in the stock market. (Was already investing in the stock market through Roth IRA and 401k contributions.) Real estate made more sense to me and I had enough for a down payment so I just went for it.
What was the process of buying a home for you like? How did you approach it?
A lot of it was just soaking up knowledge from my parents. I looked into Zillow and Redfin for housing prices in SF and to figure out the best time to buy. I knew what rent looked like in SF and knew what the return would look like since I planned to rent out rooms. I put together the numbers and checked to make sure it made sense and then I put down a down payment
Alright, final question — If you could tell your college self like one piece of advice what would it be?
You can live your life however you want, but you should be fully aware of how you’re living it. Think about your values and why you’re deciding to do certain things versus not.
A value-based approach (to managing my money) has helped me the most and it’s why I am so happy with the process I have right now.
At the end of the day, the specific numbers or strategies don’t really matter as much. I’m iterating up to a place where I know what my values are and I know my life reflects those values. I feel like I’m achieving that clarity and that feels really good.
Rapid Fire
What credit cards do you own and why did you pick those ones?
Capital One — I opened up a Capital One savings account in college because they had the highest savings percentage rate, so I also got the credit card.
Wells Fargo — my very first credit card but I got rid of it because I didn’t like having multiple credit cards.
I’m hoping to get the Chase Sapphire Reserve in the future, just waiting for a major expense so I can get the points!
What tools/apps/services do you use?
I used to use Mint and Personal Capital but once I made my spreadsheet I stopped using both of them. They didn’t work for me since they would categorize things incorrectly and I budget based on my values and tinker constantly.
*Name changed to protect identity.
Disclaimer: Views, thoughts, and opinions expressed in the text belong solely to the interviewee, not the author, and not necessarily to the author’s employer, organization, committee or other group or individual.
