I’m 24 & I Have $220,000 In Savings — Here’s How I Invest

Yesterday, we published a Money Diary from a software engineer living in New York City who makes $286,000 a year. She also saves an impressive $7,000 a month.

In celebration of Money Diaries Month, we talked to the diarist about how she invests her money, where she learned her investing skills, and why it’s so crucial for women to take control of their finances.

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Can you tell us a little bit about your career path? Did you always want to be an engineer?

Growing up, I wanted to be an artist or a writer. But my family had financial and mental health issues that left me incredibly vulnerable.

Before college, I worked at an internship that was similar to what I’d do if I studied English. I made $10.50 an hour but the engineer interns I worked with made an unbelievable $21 an hour. I was asking one of the male engineers about what he did, and he told me I’d never be able to do it. So I signed up for introductory computer science my freshman fall.

I didn’t really enjoy coding. I spent all day debugging my code. I spent all night in my dreams debugging my code. I gave 100% and still got mediocre grades. But, with the support of our college’s Women in Computer Science community, I kept going.

As I was learning how to code, I was in an abusive relationship. My ex made a lot of money and used the financial differential against me. I couldn’t get myself to leave. But I could get myself to study. I prayed that I would get a high-paying job so that my ex wouldn’t have so much power over me.

With every problem set and practice interview, I felt like I was buying my freedom. After studying three-hours-a-day for a whole summer, I got a prestigious internship offer. And I broke up with my ex!

Now, it’s easy to think I was always a superstar. But I was never the best in my classes, not even close. I applied for 20 jobs my senior year and didn’t get any of them, besides a return offer to my internship. I had no leverage to negotiate

Then, on the day before my full-time offer expired, another company called and said they had lost my application. They asked if I could fly out the next day. I did. That’s the only reason I make so much money now.

I was asking one of the male engineers about what he did, and he told me I’d never be able to do it. So I signed up for introductory computer science my freshman fall.

You said that you’ve since gotten a $100k raise. That’s amazing! How did you get such a big bump?

Thank you! I’m stoked. I got promoted a few months after I originally wrote the diary, which meant a $13,000 raise, from $118,000 to $131,000 base salary. Getting promoted was a huge ordeal, so I was honestly pretty disappointed with the amount of the raise, which came to about $500 a month extra after taxes. But then, in my annual performance review six months later, I got another $8,000 raise, to $139,000 base. I also got stock worth $20,000 extra a year. I received another $10,000 more year-over-year in a larger annual bonus and some one-off bonuses.

The other $60,000 is because our company stock (a huge part of my compensation) went up in value. I’m happy about that, but I try not to count on it. I don’t watch the company stock price.

You wrote in your diary you save $7,000 a month! What do you do with these savings? Do you have different savings accounts for different goals? Do you have a variety of investment accounts?

I actually don’t have a savings account at all. I don’t have any goals like saving for a vacation, a car or a house. Instead, I estimate a budget for the year and use it to make an overall investing goal. Last year, it was investing $100,000. This year it’s $150,000.

Since my cash flow varies a lot month to month, I have a strategy to stay on-track:

– I max out my 401(k) and HSA with my bonus that pays out in January.

– I sell 100% of my company stock each month and transfer it into post-tax investments.

– I keep $5,000-$10,000 in my checking account, which is enough to cover my rent and credit card bill. Anything else, I transfer to Vanguard.

– This year, I’m doing the Mega-Backdoor Roth IRA, which means saving an additional $20,000 or so from my salary.

My IRA, 401(k), HSA and post-tax investments are all with Vanguard Admiral Funds. I have about 25% in international (VFWAX), 25% in Small Cap (VSIAX), and 50% in Total Stock Market (VTSAX).

I set up this blueprint but then I don’t sweat the details. As long as I’m saving and investing, I’m happy.

Why do you sell your company stock?

I don’t like the extra idiosyncratic risk of holding a lot of one asset. I don’t buy any individual stocks for that reason.

Holding stock for your employer and industry is especially risky. My income and job prospects are highly tied to the tech industry, so I want to protect my savings as much as possible.

Where did you learn to manage your finances? Do you discuss money with your friends?

I was blessed to have a mom who was obsessed with taxes. Even though she made about $35,000 a year in a blue-collar job, she had an encyclopedic knowledge of tax breaks. (Taxes are now her second career.)

But truthfully, my ex-boyfriend got me investing. When I was 18 and making $10 an hour, he told me that starting an IRA was the best thing I could do for myself financially. Every year since, if I made enough to max it out, I did.

I talk about money with my friends a lot. Older students coached me on negotiating my salary, which is the only reason I make what I do. If other women engineers ask, I will always tell them how much I make. It helped a friend of mine get an offer worth $30,000 more a year.

It seems like writing is more than a hobby for you. I was wondering if you decided what to study in school based off of potential income thinking you could pursue your other passions outside of your day job?

I definitely chose my major based on the earning potential. In high school, I wanted to study creative writing but got a lot of advice against it. (I also wanted to be a doctor, which would not leave a lot of time for writing).

Computer Science was a happy medium for me. Compared to finance or consulting or law, I get plenty of time outside work to write. My income affords me a lot of security, which makes me more comfortable taking risks in my writing. And I get to create what I want, without needing to turn a profit.

I write every day, one to three hours during the week and five or more on the weekend. I try to outsource as much as possible, hiring people to proofread and help with research tasks. (My partner acts as my “momager:” cooking for me, building my website, and editing my work.) I’m working on a project about how I became a software engineer and looking for an agent for my book about my college admissions saga, so wish me luck!

Anything you want to add on the topic of women and money?

Women shouldn’t feel ashamed to want to make money. Money is power. Women today are so, so strong, but what good is strength without power? (This is doubly true for marginalized women.)

Money has given me freedom: freedom to leave bad situations, freedom to pursue my dreams and freedom to stick out tough situations. I’m so glad I was able to negotiate, because my industry is a rollercoaster.

But money isn’t a panacea. Everyone deserves a dignified life and a respectful relationship, regardless of how much money they make. Using money to get the upper hand over your partner is wrong, whether it’s subtle or extreme. I’m so grateful to have a partner now who supports me when I make more, when he makes more and when I’m pursuing my probably-unprofitable passion.

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