This story is part of CNBC Make It's Millennial Money series, which profiles people around the world and details how they earn, spend and save their money.
Wendy Gonzalez has big goals: The 24-year-old is saving for a home, has set her sight on business school and plans to grow and monetize her YouTube channel to help pay for the MBA.
She's well on her way to getting there, with over 1,000 YouTube subscribers and $25,000 earmarked specifically for a down payment.
"I've been saving since I was 15," Gonzalez tells CNBC Make It. That's when she got her first job, working at Cold Stone Creamery. "Being raised by immigrant parents, I was always told, you need to save every penny. And so I've always had that mentality — that you should strive to save for the future."
Gonzalez, who lives with her boyfriend, Chris, in Pasadena, California, about 11 miles northeast of downtown Los Angeles, knows better than anybody that the future is unpredictable: In August 2019, she was diagnosed with thyroid cancer. After a successful surgery in October, she's now cancer-free.
"I've realized that health is one of the biggest priorities that we should put first in our life," she says. She also experienced first-hand the importance of having an emergency fund. Her health insurance plan covered the entire cost of her surgery, but her savings account allowed her to feel financially secure during a trying time. "If I didn't have a good health plan, I did have enough savings that could have covered my surgery," and that feels good, she says.
"I've learned that, one: You should always take care of your health. And, when you're healthy, you should always strive to have some type of savings for a rainy day."
What she earns
Gonzalez makes $80,000 a year working as a logistics supervisor for an auto tech company. She started as a part-time employee while finishing her last year at UCLA.
"I feel that I live comfortably with $80,000 in LA, especially because I am splitting costs with my boyfriend, but there's always room for more growth and higher pay," she says. "My goal is to make roughly $95,000 a year."
Besides her 9-to-5 job, she earns an additional $500 to $700 a month as an online ESL teacher. Gonzalez wakes up at 3:30 a.m. to teach for two hours before heading into the office for her full-time gig. The extra money goes straight to savings. "I don't count that as part of my yearly salary," she says. "I just look at it as money to invest and save."
She also has a YouTube channel called Invested Millennial, which she uses to share her experience investing in the stock market: "I don't see a lot of women on YouTube talking about investing — a lot of them are focusing on budgeting and saving, which is amazing, but I think we need more women talking about the power of investing."
Gonzalez's YouTube channel, Invested Millennial, has just over 1,000 subscribers.
She doesn't currently make any money off of YouTube, but her goal is to monetize the channel and reach a larger audience. Eventually, she hopes to earn enough from YouTube to live comfortably while pursuing her MBA: "I would love to make YouTube videos and be a business student at the same time."
What she spends
Here's a look at how Gonzalez budgets her income. These numbers reflect her spending activity as of October 2019.
Gonzalez and her boyfriend live in a one-bedroom apartment in Pasadena. "It's definitely not in the L.A. area," she says. "You have to drive out here, but we love it. It's a very peaceful and quiet community."
They split the $1,795 rent down the middle and both pay $898 a month, which comes out of their joint account. Gonzalez and her boyfriend work at the same company and when they get paid twice a month, they automatically transfer $500 each to the joint account. That $2,000 per month is enough to cover rent, utilities and Wi-Fi.
After graduating from UCLA debt-free, thanks to a combination of financial aid, fellowships and scholarships, Gonzalez splurged on a BMW. "I felt like I deserved a nice car," she says.
Expenses add up, though: Between her monthly car payment ($720) and gas (roughly $90 per month), she spends about $810 on transportation.
Looking back, "I regret buying the BMW," she says. "It's a nice car, it drives amazing, it looks great, but I don't really need that type of car in my life — and now that I have bigger financial goals, the car is really setting me back."
She has about $33,000 left on the loan and wants to pay it off as quickly as possible so she can focus on saving for a home. That means making a higher monthly payment: "My plan is to pay roughly $1,000 to $1,200 a month and that money will come from my side hustle, any money I earn from YouTube and whatever money is left after I pay my other monthly expenses."
Gonzalez pays just $20 a month for health insurance through work, and her dental and vision plans are free. She and her boyfriend also split pet insurance for their dog and pay $20 each.
Her car insurance bundle is $327 a month, and it includes two life insurance policies (one for her and one for her mom).
Gonzalez and her boyfriend spend about $100 per person on groceries per month and another $50 on takeout.
That's low, admits Gonzalez, but the couple gets free food from their parents. "My mom lives very close to us and every weekend she'll bring us homemade food. That saves us about three days of eating our own groceries."
Plus, they're conscientious shoppers and stick to shopping mostly at Trader Joe's in an effort to save more money.
The only monthly subscription Gonzalez pays for is Netflix. She used to have others, like Spotify, Hulu and a meat delivery subscription called ButcherBox, but after establishing specific savings goals, she cut back.
She's a member of LA fitness, but her boyfriend covers the cost: "He was able to get a family plan, so he added me to his membership, and he pays for that."
- Utilities and Wi-Fi: $62 (splits with boyfriend)
- Dog food and toys: $50
- Credit card annual fee: $46 (pays $550/year for an American Express Platinum card)
- Phone plan: $42
- Beauty: $30
What she saves
Gonzalez socks away about $1,000 a month. Where she chooses to put it depends on the month: At the beginning of 2019, she focused on maxing out her Roth IRA and put all of her monthly savings in that account.
Once she reached the $6,000 maximum contribution limit, she started saving her $1,000 in two separate accounts: half went into a high-yield savings account and the other half went into a brokerage account. She plans to use the same strategy in 2020.
Her brokerage account, which she opened in December 2018 and uses to invest in individual stocks, has grown significantly in just one year: She initially invested $14,000 and it's now at about $21,000. She has around $25,000 in her high-yield savings account, which she plans to use for a down payment one day. This money could also be used for emergencies if one arises, she says.
Her employer offers a 401(k) plan and she'd like to eventually contribute to it, but for now, all of her retirement-specific savings go into her Roth IRA.
Planning for the future
Gonzalez knows that her future goals — getting an MBA and owning a home — are expensive. That's why she's starting to prepare now.
She's cut back on expenses like subscriptions and put traveling on hold to free up more cash to save. And after she pays off her BMW, she plans to put all the extra savings toward her home fund.
As for the cost of business school, she's confident she can whittle it down through scholarships. "One of the reasons why I'm not worried about the costs associated with business school is because I was able to finish a four-year degree at UCLA debt-free, and I was able to do that through scholarship opportunities and work-study programs. I feel like, as an MBA student, there's even more money to help you get your degree — you just have to look for the opportunities."
She would like to begin traveling more, too: "Prior to starting my hardcore investing and saving journey, I was able to travel all around the world. I'd been to Dubai, Brazil, Spain, Belgium, London. But now that I live with Chris and we want to save together and work toward our goals together, I haven't had a chance to travel. My goal is to definitely travel more, but to do it for free."
She uses a travel rewards card that costs $550 a year and is saving up her points for a 2020 European vacation. "Hopefully we'll get to do that for free or, if not free, at least for half the cost, with points," she says.
What the experts say
CNBC Make It asked Fred Egler, certified financial planner at Betterment, to comment on what Gonzalez is doing right with her money and where she could improve.
Her savings rate is impressive
Gonzalez is saving a good amount of money and on a regular basis, which is great, says Egler.
"It's tough to pinpoint how much a person should save just based on income and age because it really depends on your specific financial goals," he says. "She's saving about 15% right now. Being able to put away that amount of money on a regular basis is definitely impressive."
It's also smart that she has a side hustle and is thinking about how to monetize her YouTube channel.
"Having money coming in from various sources at the same time can do a couple things: It not only can make you more financially fit, but it can be more fulfilling from a life perspective, in that you've got things that you're interested in that you're actually earning an income on," Egler says.
It's OK to opt out of a 401(k) and save in a Roth IRA
Saving in a Roth IRA makes sense for the 24-year-old, says Egler: "Based on her income, she's eligible to do that and it's useful, especially if she feels like she's going to be in a higher tax bracket in retirement."
With a Roth IRA, you contribute after-tax money, so you can withdraw the contributions and earnings tax-free once you reach 59½. The reason this type of account is a particularly good option for Gonzalez, and anyone early in their career, is because younger workers are likely earning less today than they will in the future. That means you're in a lower tax bracket and paying less in taxes than you will later on.
If she's eventually able to put away more for retirement, saving in a 401(k) plan in addition to an IRA is a good option because the contribution limits are much higher ($19,500 for 2020).
While her employer doesn't offer a 401(k) match, if that ever changes, she should enroll in the plan and contribute at least enough to get the full match, notes Egler. After all, matching funds are essentially free money.
She should separate her emergency fund and home fund
Rather than lumping together her emergency money and down payment fund, Egler suggests she keep them in separate accounts: "You want to make sure you have that money set aside so that if something does come up — an unexpected health expense or you lose your income — you can actually use it for its intended purpose, which is an emergency."
Plus, if you're planning on being a homeowner, "expenses inevitably come up," he says. "You definitely want to have an emergency fund established separately because you might need to tap into that anyway."
It's smart to have separate accounts for all of your individual savings goals, he adds. Egler recommends people aim to save anywhere from three to six months of living expenses. For Gonzalez, that would mean having $8,000 to $16,000 set aside just for emergencies.
She should be more specific with her homebuying goal
It's impressive that Gonzalez is so young and already focused on saving for a home, but she should come up with a target date for when she wants to buy. That could change where she chooses to keep her down payment money.
"If she's planning to buy soon — within the next year or two — keeping that money in a high yield savings account is a good idea because it's probably too short of a period to invest," explains Egler. But if she's looking to buy in three, five or 10 years, "it might make sense to actually invest that money in some sort of moderate-level investment risk portfolio based on that time horizon."
While returns aren't guaranteed, her money could grow more if she invests it, rather than keep it in a high-yield savings account.
As a whole, Gonzalez is in great shape, and even though she does have major money goals, she also believes in balance. "I still spend money. It's not like I eat ramen every day," she says. "But I do tend to be more on the conservative side when it comes to money."
What's your budget breakdown? Share your story with us at email@example.com for a chance to be featured in a future installment. We are especially interested in hearing from first-time homebuyers.
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