everything i learned about personal finance

and where i learned it from

obligatory disclaimer because i am not a professional and this is not financial advice

0: jargon + legal shit

acronyms n shit

• “FIRE”: Financial Independence, Retire Early
• Definition
• I see some issues with this movement but it’s a decent starting place and aligns (for the most part) with my goals
• HYSA: High Yield Savings Account
• Don’t let Bank of America brainwash you into accepting a 0.1% interest rate. My interest rate is something stupid like 4% with Ally (referral link here!). although that changes with government rates
• To be clear, a HYSA is just a regular ass savings account. It just pays better interest
• Stocks vs bonds
• In general, stocks are higher risk + higher reward. Bonds are about as low-risk as you can get, so they don’t have as high of a return as stocks. If you’re investing for the long term, you’re probably more comfortable with higher risk… but more on that later

Legalese

• “Everyone has a will. If you didn’t write it yourself, the state wrote it for you.”
• (Same goes for prenups just sayin. Rules vary ENORMOUSLY by state.)
• My favorite source for women’s financial literacy: the Money with Katie show. Here’s an episode on how marriage changes your financial rights: link�
• My family tree is wonky, so the state’s ready-made will doesn’t fit for me
• DRW provides free “Apiary Life” consultant time for employees — I used it to get my will, power of attorney, HIPAA authorization, and Advance medical directive all set up.
• They can also help with marriage, divorce, inheritance, etc
• I used TrustAndWill.com and it auto-generated the legal docs for me
• (cost like $100 but now im set for life… slash death i guess lol)
• It was very easy and we have notaries at work that can notarize documents for you (check the loop here)�
• I also made sure to set a beneficiary for my checking/savings accounts, life insurance, brokerage account, roth IRA, and 401(k).
• A beneficiary is just who gets it if you die lol

tax season

I am not a tax expert, but there are great, free tools out there to help you file your taxes!

• FreeTaxUSA.com
• Free to file federally, $15 to file state taxes

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You’ll need forms for any income you earned (from your employer, interest on savings accounts, gains on any stocks you sold, etc). They’re generally easy to find online in whatever accounts you have

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1: the basics

first things first

• I started out by using the “FIRE flowchart” (Link)
• This starts with the extreme basics and works up toward savings, investing, and more
• if you don’t know where to start, start here!!!
• tldr; (1) handle necessities like rent/groceries/healthcare, (2) save an emergency fund, (3) eliminate/consolidate debt, (4) start investing. In that order.
• i won’t presume to tell you how to spend your money, but some rules of thumb are:
• Try not to spend more than 30% of your income on rent
• The 50-30-20 rule: 50% of your money toward needs, 30% toward wants, 20% toward savings
• Just looking / having an idea of where your money goes is helpful in itself

savings

I keep about 6-8 months worth of expenses in my checking/savings (HYSA). So if I’m ever laid off/fired/grievously injured, I have a 6-8 month cushion. Again, high-yield, so this makes decent interest.

I keep about 1/3 of it in checking, to pay rent/credit cards (more on credit cards later), and the remaining 2/3 in the HYSA, earning interest!

credit & credit cards

• I previously put together some info for some other folks, summarizing my recommendations for getting started with credit
• In short, don’t use a credit card if you don’t think you can be responsible with it!
• It can be a great way to build credit, but if used irresponsibly, can be a great way to rack up insane debt with insane interest. and majorly f*ck your credit score.
• Here is my guide to all things credit & credit cards: link

2: investing

i have savings… now what?

Now, we invest! But why? And how?

• “Investing” just means buying stuff (stocks, bonds, real estate – aka “assets”) for the purposes of growing your money.
• You buy stuff, it increases in value, and then later (think retirement) you can sell it and use the money
• why invest?
• think about inflation: every year, things get more expensive, and (if you’re not investing) your savings stay the same.
• inflation is around 3%... the s&p 500 averages returns around 10%! so, if you’re investing, your money will grow faster than how much stuff costs
• how?
• there’s lots of ways! but if you have a 401(k), you’re already doing it… next slide plz

demystifying the 401(k), roth IRA, and brokerage

Wtf is a 401(k)

• A 401(k) is a retirement account! It’s a place to put your money until you retire, and then you can take the money out and live on it.
• A 401(k) is NOT just a bank account. It’s an investment account, where you buy stocks/bonds/etc, and then the money grows <3
• I will show you what stocks/bonds/etc I have (aka, my “allocation”) in a couple slides
• Through my employer, my 401(k) contributions are set up to automatically buy the stocks and bonds I want, so I don’t even have to think about it
• What does it mean to be a “retirement account”?
• Lots of amazing things!
• Many employers offer a “match” where they contribute some money to your 401(k) if you do. This is free money and you should absolutely match to the max if you can afford to!
• Contributions are pre-tax, meaning, every dollar you put in to your 401(k) reduces how much you’ll owe in income tax <3
• This type of account is tax-deferred, so you don’t have to pay taxes on any money you made from selling stocks that have grown in value (aka “realized gains”) until you withdraw at retirement
• BUT…
• there’s penalties for taking money out of your 401(k) too early (10% penalty before 59 ½ years old)
• there is an annual limit on how much you can put in, around $23k (changes yearly)

demystifying the 401(k), roth IRA, and brokerage

Wtf is a roth IRA

• An IRA is another kind of retirement account
• Same deal -- penalties for early withdrawal, annual contribution limit (around $7k), you have to put the money into stocks/bonds.
• There is an income limit! If you make more than a certain amount (something like $130k?), you don’t get to put money into a roth ira. Soz </3
• It is also tax-deferred
• But it is ROTH. what does Roth mean
• Roth means post-tax. So, the government takes some taxes out of your paycheck, you get the rest, and you can decide whether you want to put that money into your IRA
• Since this is post-tax, I don’t know of any employers contributing to your IRA, and you usually have to set up these accounts on your own. Mine is in Fidelity! And again I will show you my allocation shortly

demystifying the 401(k), roth IRA, and brokerage

Wtf is a brokerage account

• Just a straight up investing account.
• Have you ever used Robinhood? That’s a brokerage account.
• You put money in, you buy stocks/bonds with it.
• This account is not tax deferred, so if you sell stuff, you’ll have to pay taxes on any gains. So, expect to fill out an extra form on your taxes when you sell things.
• And again, I use Fidelity, and I will show you my allocation <3

re-mystifying those things lol

• this is a tldr; style presentation — just the need-to-know if you are staring down the barrel of getting your finances in order
• You can get very in the weeds with each of those things
• Backdoor IRA’s… roth 401(k)s… taxable vs tax-free withdrawals…
• good Money With Katie episode on roth vs. traditional 401(k): link
• For that, I say: talk to someone with a degree in this lol.

2.a) my 401(k) allocation

• I have my contributions set up so that a large portion of my salary goes to my 401(k) until it maxes out, around Julyish. There’s different philosophies about this (my stepdad doesn’t do this, see speaker notes)
• One of the dudes in my new hire class has this uncle that works as a wealth manager for mega rich dudes, here’s the allocation he recommended →

2.b) my roth ira allocation

• my entire allocation is QQQ/SPY. I don’t recommend that for an overall allocation since it’s all stocks (high risk/high reward), but for just one part of my investing strategy, it’s simple :)

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2.c) my personal brokerage

• Just a straight up investing account. I use Fidelity because that’s what my parents use. There’s other options, but the UI is easy enough and their mobile app is good.
• My largest holdings →

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• But how do I keep track of my overall allocation if I have my 401(k) in Empower through DRW, and my brokerage through Fidelity?
• Ooh la la, next slide PLZ

God of all things finance, Personal Capital (the app)

You just connect your accounts and it summarizes them all for you, for FREE!

Including:

• Loans
• Credit cards
• checking/savings
• Investment accounts

You can break down your spending by any time period, and see what categories you spend the most in

It also looks at your investments and calculates what you should do to change your strategy

God of all things finance, Personal Capital

A budget tool and investment analysis all in one <3

Use my link and get $20 lolz https://empowerreferral.link/s06257

I highly recommend. Lots of cool charts and ways to organize your data. Ability to break down your spending by custom time ranges. What’s not to love.

habits

• Again, I keep 6-8 months’ expenses in my HYSA
• As I get paychecks and save, if I have more than 6-8 months worth of expenses in my HYSA, I invest the extra money (i.e, move it into my brokerage and buy stocks or bonds).
• I usually invest in whatever category Personal Capital says I’m underweight in.
• “Rebalancing” is important. TLDR some holdings grow faster than others (think stocks vs. bonds), so to keep the same allocation you’ll have to keep putting money into certain things more than others
• Other than that, I try not to worry too much and remember that � “Time in the market > timing the market”

3: thinking long-term…

another thing personal capital is good at: retirement modeling

Input assumptions

• Saving per year while working
• Spending per year during retirement
• Retirement age
• Market performance
• Social security estimate
• Age when you … uhh… kick the bucket

And it tells you the likelihood you don’t run out of money before you die

when do i start being more conservative with my investments?

• The real answer is: talk to a financial advisor
• BUT, a rule of thumb is the “100 minus your age rule”
• “The 100 Minus Your Age Rule is a simple formula intended to help investors determine the asset allocation of their portfolios. To use it, subtract your age from 100. The result is the percentage of your portfolio to allocate to stocks, with the remainder going into lower-risk investments, like bonds or cash equivalents.�For example, at age 50, subtracting 50 from 100 suggests a 50% allocation to stocks and 50% to bonds or other safer investments. As the person reaches 70, subtracting 70 from 100 results in 30%, meaning their portfolio should have 30% invested in stocks and 70% in bonds or similar assets.”

mind you…

• I don’t have kids
• If I want buy a house/condo, that will throw a wrench in my savings for a while cuz i’ll need a down payment
• And if you want to retire earlier/later, your allocations can and SHOULD look different!
• The closer you are to retirement, the less volatility you will want — think more bonds and fewer stocks. Again, not a professional, this is not financial advice. But buy fewer stocks :)
• So, the plan might change. And that is fine, the point is, there’s a plan!

4: charity

charity is part of a healthy financial life <3 let’s give back!

Here is my charity spreadsheet: Link

• I try to get a good mix of the issues that are important to me at the global, national, and international level
• I use CharityNavigator to choose organizations that are trustworthy, rank them, and donate through DRW’s PercentPledge platform to get matching donations and no credit card fees for the organizations I give to

I also volunteer my time! your expertise and time are worth more than you might think. some things I do:

• WomensMoneyMatters, 1:1 mentoring with women learning about personal finance
• Women in Computing mentorship at my alma mater
• Code2College mentorship, with high schoolers around the country
• Various one-off events with PercentPledge (they partner with DRW)

conclusion: some money cliches that i like

money cliches

Some rando at Lollapalooza once told me, “Spend your salary, save your bonus”. He worked at Hudson River Trading, so.

“Lifestyle creep” — if you’ve never heard of it, it’s real. My spending increased about 50% from college to on-the-job. (But I’m able to know that because of Personal Capital, so… W? ½ W?)

The 1% charitable giving rule: my grandfather recommends starting by donating 1% of your income to charity. I tend to make donations around times when organizations have donation matching, like Giving Tuesday, to maximize my impact. Full disclosure I don’t think 1% is enough for people making a lot of money

soapbox

Ultimately, I think the FIRE movement fails in that it focuses on drastically reducing spending until some abstract time when you have “enough” saved. For lots of people, that day never actually comes, and you go through life avoiding any actual enjoyment of your hard-earned cash.

Some things don’t have a price. Living near friends and family, having work-life balance to spend time with them, is worth… a significant amount of money to me. Being generous with my salary and giving to charitable causes is worth it to me. (That said I am lucky enough to be in a position to do so!)

TLDR; with the right tools and planning, my relationship with money changed drastically even before I entered this money-minded field. Once you have your basics in place, it’s way easier to focus on the long-term and set yourself up for success

q&a

questions I have gotten when presenting these slides in the past

Rent vs buy?

• “How rent vs. buy shifted in 2023” (Money With Katie)

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wtf are ETF’s, mutual funds, index funds????

• For the purposes of investing, these are just groups of stocks. So you can buy the Fidelity 500 index fund and get the benefit of investing in many stocks at once without having to do the research yourself. That is what I do :)
• The downside is, if you hate elon musk and don’t want to buy Tesla stocks, too bad, they’re in the ETF.

questions I have gotten when presenting these slides in the past

i’ve heard of a 529… what is it?

• A 529 plan is a type of investment account aimed at education
• They are “institutionally sponsored”, which means that your investment choices will be limited
• It’s special because, as long as you use the money for education-related expenses, you can withdraw the money tax-free!
• You can use the money for tuition, fees, room and board, books, computers, software… etc!
• You can also use the money for student loan payments
• There are two kinds of 529 plans: a college savings plan (more common) and a prepaid tuition plan
• See more here

what if I don’t end up using all the money in my 529?

• If the 529 account is 15 or more years old, you can move up to $35k of unspent funds into a Roth IRA account