This story is part of CNBC Make It's Millennial Money series, which details how people around the world earn, spend and save their money.
Ask Maria Melchor how she spends her money, and the 25-year-old pulls up an elaborate budgeting system she has fine-tuned over the past few years. Whether it's going toward one of her many financial goals, is earmarked for rent or is slotted into the "unaccounted for" column, Melchor can account for nearly every cent she earns.
She didn't grow up being so fastidious with her finances. But the system is one of the ways Melchor has taught herself to make sense of her money, a topic she once found difficult to navigate.
From 9 to 5, Melchor works as a paralegal case handler for the Legal Aid Society, helping low-income New Yorkers access government benefits and affordable housing. She is paid around $52,000 a year and receives generous health benefits.
On the side, she offers financial coaching for individuals and couples via FirstGenLiving, a community she founded in 2020 as a space for first generation immigrants, college students and young professionals to unpack "their histories with money and design healthy financial lives." In the beginning of 2021, she was earning around $800 per month from her coaching sessions, and pocketing $400 of that.
Her side business was inspired by her own experience as a first generation immigrant in the United States. Melchor, who is currently a permanent resident and is applying for her citizenship, moved to the U.S. from Veracruz, Mexico, when she was 9. Her father had been working in the U.S. for years at that point, and Melchor and her mother joined him in Connecticut (she also has two siblings who were born in the U.S.).
Growing up, her father, who was undocumented when he came to the U.S., took on odd jobs, working as a day laborer, in restaurants and as a carpenter. Her mother stayed home with Melchor and her siblings when they were young, before getting a job as a house cleaner.
"My parents are very, very hardworking. They always have been," Melchor tells CNBC Make It. "But given that my dad and my mom were undocumented for a while … we were pretty poor." Her parents bought her new clothes just once a year, at the start of the school year, and her mother kept a strict grocery budget.
Melchor first became interested in personal finance when she started attending Yale University in 2014. Money took on a different meaning when she got to college and saw how other people outside of her immigrant community lived.
"I was naïve. I didn't understand I was going to school with the 1%," she says, recalling being shocked to learn that some of her classmates owned designer jackets worth thousands of dollars. "I'm like, 'Wow, these are $1,000 jackets, and you leave them on the couch at a party.'"
Melchor earned just over $46,000 her first year out of school at the Legal Aid Society and remembers feeling "overwhelmed" by her first paycheck. Although she wasn't making much compared to other Yale grads, it was an "incredibly high" amount for someone from her background, she says. After paying for rent and groceries, she was amazed to still have money left over each month.
While finances were an ever-present concern in her life growing up, Melchor realized that she didn't know how to manage her money on her own. To learn, she "inundated" herself with financial information, reading books — "Get a Financial Life" by Beth Kobliner is a favorite — listening to podcasts and watching YouTube videos. She learned the basics of saving and investing, and created her elaborate budgeting system.
She hopes sharing her story will show other first generation Americans that finances don't have to be scary.
"I've learned that everyone needs a basic, minimum living wage and government benefits in order to leverage financial literacy to reach their biggest money goals," she says. "But I believe that, above a certain income level, everyone can set up wildly easy and successful financial lives."
Melchor lived undocumented in the U.S. from the time she moved until her last semester of high school, when she got her green card. Before then, she didn't think much about her status, she says. But when she began her college application process, being undocumented in the U.S. limited the number of schools she could realistically attend.
She was worried that she wouldn't be able to afford her dream of attending college after years of hard work. Because she did not have a Social Security number when she first started applying to colleges (she now has one as she is a permanent resident), she was not eligible for federal student aid. So when she got her first acceptance, to Wellesley College, complete with a financial aid package from the school itself, she couldn't help but tear up.
"I was just crying and crying because it meant that I would be able to go to college," she says. "I was just so happy that I would be able to afford it."
More acceptances rolled in. She decided to attend Yale because it offered her the most generous need-based financial aid (contingent on her working while attending classes), which covered tuition and housing expenses. But other first-year expenses, like a laptop and books, weren't included. Melchor didn't want to ask her parents for money, so she took out a $2,500 loan to cover them.
When she told her parents she had taken out a loan, they made her promise never to go into debt again. They didn't want their daughter to start thinking of debt as an acceptable way to finance things she wanted, even relatively small amounts.
"It definitely left an impression that debt is bad," she says. "I didn't borrow again. I either asked my parents for help or took on jobs, and really didn't spend on much in college."
That lesson has stayed with Melchor into early adulthood. She puts away as much of each paycheck as she can, has no debt and lives frugally. She enjoys interior decorating, and buys most of the décor and furniture second-hand, scouring sites like Craigslist and Facebook Marketplace for good deals.
That said, she is planning to apply to law school this fall, and will likely have to take out student loans to finance her education. But it's worth it at this point in her life: She has always been interested in "pursuing justice through the law," she says, and she wants to continue to be an advocate for immigrant communities like the one she grew up in.
"I think the discrimination that I faced as an immigrant in my town, as an undocumented person, that inspired my interest in the law," she says.
Here's a look at how Melchor spends her money as of February 2021.
- Rent: $1,012 (her share of the one-bedroom apartment she shares with her partner, including utilities)
- Discretionary: $775 (includes "fun" money, donations, savings for her parents and more)
- Savings: $640 (includes liquid savings and a brokerage account for future wedding expenses)
- Roth IRA: $500
- Food: $500 (includes her share of groceries and dining out)
- Phone: $45
- Ubers: $20
- Subscriptions: $5 (includes iCloud storage and Spotify)
- Renters insurance: $3
Melchor has lived with her partner, Ian, since 2019. They split food costs and rent on a one-bedroom apartment in Manhattan evenly (utilities are included in their rent).
She has three savings accounts for different goals: her emergency fund, graduate school applications and other goals, like a new laptop. She keeps a separate brokerage account for her future wedding, in which she invests around $100 each month.
Melchor aims to max out her Roth IRA this year by investing $500 per month to hit the $6,000 limit. She decided to opt out of Legal Aid's 403(b), a tax-advantaged retirement account offered by some non-profits, because it did not offer an employer match on contributions. She also wanted to invest with a different company.
This year, Melchor plans to grow FirstGenLiving to supplement her income. She aims to make $10,000 from coaching sessions in 2021. By March 2021, she was averaging about $400 take-home each month, which she accounts for in her budget breakdown.
Between building her business and her new labradoodle puppy, Tuna, Melchor's 2021 is shaping up to be a busy year. She also recently learned that the union she is a member of will help her apply for her citizenship at no cost. That's a major relief for Melchor, as adjusting her status would have cost her thousands of dollars otherwise.
She hopes that she can build on everything she's learned about money over the past few years and empower others to take control of their lives.
"I really like seeing people go from feeling very confused and scared about their money, to feeling very much like they are in control and taking ownership," she says. "That's been super rewarding."
What's your budget breakdown? Share your story with us for a chance to be featured in a future installment.