Alexandria Ocasio-Cortez, a 29-year-old Democrat who will represent the 14th Congressional District of New York, is the youngest woman ever elected to Congress and until recently worked in food service. She currently has less than $7,000 in savings, according to her communications director.
Her finances became a talking point after she mentioned to The New York Times that she's struggling to afford an apartment in Washington D.C., where the median rent, $2,700, is twice the national median. Her claims came under fire this week after some news outlets publicized a financial disclosure filed in April that showed she had as much as $15,000 in savings, and more in checking.
In the disclosure, which uses ranges rather than exact amounts, Ocasio-Cortez reported that she had:
- $15,000-$50,000 in a checking account
- $1,001-$15,000 in a savings account
- $1,001-$15,000 in a 401(k)
Her wages in 2017 came to about $26,600, according to the 2018 disclosure, and she's still paying off $15,000-$50,000 in student loan debt.
The 2018 race took its toll on her finances, Corbin Trent, director of communications for Ocasio-Cortez, tells CNBC Make It. "She's had to dip into her savings since that was filed. She's down to well below $7,000 now" in that account, and the amount in her 401(k) hasn't changed as she has not been contributing to it in recent months while she has been living off of her savings. Trent said he was unable to comment on her current checking account balance.
"Some of the money she has was obviously just saved while she was working, but some of it also came from when her parents sold the house. After her dad passed away, her mom gave her some of that money," Trent says.
Her father, who died in 2012, was a small business owner, and her mother, originally from Puerto Rico, cleaned houses, according to the Ocasio-Cortez campaign. The family sold its house in Yorktown in 2016 for $355,000.
Since quitting her job as a bartender in February, Ocasio-Cortez has taken just over $6,000 in salary from her campaign, according to campaign finance records.
The congresswoman-elect ran on a progressive platform that highlighted issues like affordable housing, the cost of college, a jobs guarantee program and Medicare for all.
Having only a few thousand dollars in savings is a reality for most millennials. Overall, between bank and retirement accounts, millennials (defined as those born between 1981 and 1998) have an average of $24,190 put away, according to MagnifyMoney, and the median millennial savings is just $2,430.
Still, while Ocasio-Cortez's situation is normal, it's not ideal, according to several financial planners who spoke with CNBC Make It.
First, everyone needs an emergency fund with at least three to six months of living expenses. Ocasio-Cortez's level of savings isn't bad but, based on her previous earnings, experts recommend she have between $8,750 and $30,000 put away for a crisis. "It gives a good buffer for unexpected costs, job loss, or any opportunities that may arise," says financial planner Alexander Koury.
Experts also recommend Ocasio-Cortez should have over $27,000 saved for retirement. That's based on the logic that by the time you hit age 30, you should have a year's worth of salary put away. To meet that goal, financial company Fidelity says you should plan to save roughly 15 percent of your annual income, between your contributions and what percentage, if any, your company matches.
Millennials who want to get on the right financial track should start by creating a monthly budget that balances paying debts like student loans with building an emergency fund and retirement savings, says financial planner Paul Fain. "Ideally, a 29-year-old would have at least a few thousand dollars in a cash reserve and the equivalent of a year's salary in a retirement investment account," Fain says.
"Alexandria Ocasio-Cortez might not have been able to save much money while she was campaigning," says financial planner David Haas. "I hope, now that she will be making $174,000 in the House, she will save more of her money. Washington is an expensive place to live, though."
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