Three People, Three Salaries: How They Spend and Save

Ever wished you could peek at the spending habits of someone with the same salary as you? We asked three brave writers to reveal just that—their salaries, budgeting strategies, and financial goals for the year.

Heather, Product Marketing Specialist

I’m a product marketing specialist for a company that produces flash based storage devices mainly for enterprise customers. Basically, I run the social media accounts and write a lot of content (product descriptions, catalogs, trade show booth banners, etc.). My salary is $36,000/year.

My education level is a B.A. in Global Economics from University of California, Santa Cruz. Fortunately, my parents started saving for my educational expenses from the time I was born and I also worked for two years as a community assistant, so I didn’t have to pay for housing or meal plans during that time. I have made an extreme effort not to incur any debt since I had the fortune of not having student loans.

I rent a three-bedroom, two-bath apartment with two housemates. The rent is split proportionally based on how much space each person has. I have the smallest bedroom and don’t have a private bathroom so I pay the least amount in rent ($725 of $2315). We evenly split deposit ($600 at both places) and all utilities ($200/month) which includes water, gas, electricity, trash, and cable/internet. I pay about $40/month for my cell phone bill.

While I don’t always spend the full amount in each category (like clothing), here’s a breakdown of my monthly budget:

• Rent: $725
• Utilities: $100
• Roth IRA: $100
• Groceries: $200
• Public transportation: $90
• Phone: $40
• Entertainment: $60
• Restaurants/bars: $100
• Laundry: $20

I use Mint to help me keep track of my budget. I check my bank and credit card balance about every other day so I don’t overspend. I have two credit cards and I pay off their balances in full every month, and I invest $100 to my Roth IRA every month (it’s automatically deducted from my checking account).P

My biggest money challenges are small purchases (mainly online shopping) adding up. In the past month, I actually unsubscribed from many online retailer email lists to avoid the temptation of sales and such! I’ve also taken to adding items I want to my Amazon wishlist instead of buying them outright, which gives me time to consider if I really want or need them. This has worked very well so far in decreasing my online shopping spending on unnecessary items.

Andrew, Financial Representative

I work for a large financial services company. Right now I’m licensed to sell insurance; next up are securities exams, and I’ll become a certified financial planner. I sort of fell into this—I was unemployed over the summer, had a recruiter reach out to me, and decided it was what I wanted to persue both now and long-term. I’m a 1099 employee now, so I sock money into a separate account to cover taxes. My take-home pay ends up being $3,000/month. After a year, this becomes a commission job, at which point I’ll be earning more.

I stayed local for college and commuted. I did my first two years at a community college, got good grades, and had a local school offer to pay half of my tuition (which I took them up on). I had student loans, but was able to pay them off earlier this year. My loans were low compared to some—about $11,000 total—and I had a job earlier this year making a lot more than my expenses. My advice? Pay more than the minimum.

I live at home (I moved back after losing my last job), and I write my parents a check for $1,000/month. We looked at listings for similar-sized apartments in the area and came up with that amount based on that and a percentage of the house’s utilities (including cable and internet). I also pay for my cell phone, which comes to about $85/month after a discount through work. Other expenses include dinner, drinks, and the occasional concert or sporting event with friends—that comes out to about $200/month.

I have nine credit cards that I’ve opened over the years to take advantage of the different 0% interest and balance transfer offers, but most of them sit locked away and I only use them once or twice a year to keep them open. There’s a bit of a hit to your credit score when you open a card, but as long as you keep your balances low or pay them off every month, it can actually improve your score over time. I actively use these three:

1. A card for personal expenses that earns two miles for every dollar I spend. Any expense I can put on a credit card goes here, with one exception…
2. An Amazon rewards card that earns three points for every dollar I spend on Amazon. When you buy as many things there as I do (about $120/month), it works out very well.
3. A business card for business expenses—supplies, client lunches, etc.

I follow (or at least try to) the 50/20/30 rule. 20% of what I bring in goes to savings (5% to my emergency fund, 5% to moving out money, 5% to retirement, and 5% to life insurance); 50% goes to essentials; and the remaining 30% is mine to do with as I please—right now, that’s putting as much into savings as possible. I use Moneydance, which I’m not entirely in love with, but it does the job. I’ve been playing around with Moneywell for awhile now, and at some point I’ll take time to move everything over there.

My greatest challenge when it comes to money is replenishing my emergency fund—it took a big hit when I was unemployed. My best advice for surviving unemployment: have 3-6 months’ expenses put aside. Also:

• Treat the job search like your full-time job. Wake up in the morning, hit the job boards and want ads, and put out as many applications as you can stomach.
• Figure out what you absolutely have to spend money on and don’t spend anything else. P
• Don’t be afraid to flip burgers or ring a cash register while you look for something full-time.P
• Above all, keep your head up and try not to lose your mind. Seriously.

Jaime, Project and Relationship Manager

A few years ago I switched over to a job that has become quite a blessing. It nearlydoubled my salary,($68,000/year) and gave me some financial wiggle room that I didn’t have before. My advice for getting the best salary: make them say the first word. Come into the conversation with an acceptable salary range in mind, but when they ask you what salary you want, respond with, “I’m sure we will be able to negotiate something that is within the range the company put aside for this position.” They may ask again, but stick to your guns. Never show your cards first!

My big budget items are probably familiar:

• Rent: $1,200 (I live alone)
• Student loans: $400
• Miscellaneous (clothes, books, etc.): Around $100
• Entertainment: Varies a lot (see below)

The first two have stayed pretty static. I’ve been very conscious of not growing my lifestyle standards as quickly or generously as my paycheck. But entertainment is probably the most troublesome of the bunch.

Here’s something that usually happens when you get a higher-paying job: you work more, which means you have less time and energy for everything else. This everything else includes cooking your own meals and making your lunch. Thus, the entertainment budget expands as you go to food trucks for lunch and restaurants for dinner more and more. Over the last few months I’ve spent on average $300-400 on non-grocery food and entertainment, and I’m not proud of that. It’s very easy to let this expense slip and become a monster.

Because of my mostly static expenses and larger income flow, I can do two things that I previously couldn’t: shrink debt and start investing. Once I finally had some of that thing, what’s it called? ah yes, “discretionary income,” I started to chip away at the debt that followed me (with ridiculous interest rates) for many years. I used what’s called a “debt snowball” approach. Using this debt snowball, I halved my consumer debt in two years, and brought down my monthly payments, which means more money left in my pocket. Here’s the gist of how it works:

1. Add as much as you reasonably can to the monthly payment of your smallest debt. Let’s say the payment is $50 a month, but you can add another $50, so you’d be paying a cool $100 a month.
2. Once that smallest debt has been paid off, use all of that money and add it to the second-smallest debt’s monthly payment, and so on. To follow the example above, those $100 bucks will be added to the payment of the second-smallest debt, so if that was $30 a month, you’d now be paying $130.

The second thing I did with this extra money was start investing. I talked to various people who know way more about this than I do, and they all told me to skip the savings account and go straight into stocks, and so I did. I set an investment plan for myself, figuring out how much I could put into investments on a monthly basis, and thought about these funds as if they were my savings.

In order to be successful in investing you need two things in large doses: curiosity and patience. Research the companies you want to invest in, and make sure they’re built for stability and steady growth. When you finally put your money into their coffers, wait. The benefit won’t come right now, tomorrow, or next week; consider your money as not-yours for at least five years. Investing money for the long-run is a more conservative strategy than you might think.

For 2014 I have a few goals. First, I want to finish the job of erasing my consumer debt. I’m halfway there, and I can smell the flowers! I also want to keep putting money into my stocks and resist the urge to go for short-run profits. I’m hopeful that by doing these two things I’ll grow to be a happy dude with a cane in a few decades.

Posted by Emma Miller

https://lifehacker.com/three-people-three-salaries-how-they-spend-and-save-1509314956