Hasan: Anxiety Around Personal Finance
Today we have, Hasan*, a recent graduate who after a stint at building his own company is an incoming software engineer at Facebook.
Job Title: Software Engineer Salary Range: $110K + stock + benefits Location: Vancouver → Bay Area Big Expenses/Debts: Student Loans Monthly Expenses: Spotify, Nights Out
Kavya: Tell me a little bit about yourself. Where did you go to college and when did you graduate? Hasan: So I graduated in April of 2019 from the University of Toronto. I studied industrial engineering, which is essentially systems engineering. I spent the past few months on my own startup with a few friends and then decided to accept a job at a large tech company.
When was the first time you seriously thought about your own finances? I think it happened in stages. The first stage was when I was getting into college and I had to apply for student loans. It seemed like a normal thing to do, so I just kind of went through it. Part of the process was writing out a budget so I could get grants from my school. I didn’t really take it super seriously because it just seemed like all of my money was going towards school and I was okay with that. I wasn’t serious in the sense of long term thinking as I didn’t consider saving my money.
Another stage was when I did a year of back to back internships during college. Even then, it felt like most of my money was going towards my tuition or costs associated with my education. I never really thought about finances for myself or the long term consequences of money until 3 months ago.
What made you start thinking about it 3 months ago? I was working on my own startup after I graduated with my friends and we were burning through our money. I realized that having money was nice, because I liked to go on vacations and enjoy those kinds of things. It made me think about what money meant for me.
I was also evaluating continuing with the startup or going to a corporate job and thinking about personal finance in that lens was really hard. I had all the numbers (the expenses and salary) and it seemed scary to me. It’s always been pretty scary to me, because when you do have money, it’s like what is the right thing to do with it or the right place to put it?
My family is decently well off, in the sense of having a roof over our heads and food on the table. But we’re not filthy rich and we do have some debt beyond our mortgage.
My mom is very conservative about money but my dad still believes in building wealth while being conservative. They’ve always clashed on this, so it’s a core part of what they argue about. As a result, personal finance has always scared me. It still does seem like this big stressful thing that never seems to have an answer no matter what.
It’s interesting how much your parent’s relationship with money has impacted yours. There’s a lot to unpack there so thank you for sharing! Let’s go back to when you were applying for student loans. Did your parents help out with that or were you on your own? It was a hybrid of them and me. My student loans ended up covering all of my tuition and other related costs, so I am responsible for paying off that. I owe OSAP, Ontario’s loan provider, $27,000 while my education cost about $50K. I made up for the difference with grants and internship money but it was mostly funded on loans.
My dad gave me a credit card which I used to pay my phone bill and for commuting expenses but I was responsible for paying off that credit card every month. However, I saved a good amount as I lived at home during college, so I didn’t have to pay for food or housing.
How did you manage your money in college when you were paying off your tuition? I kind of budgeted because I roughly knew my standard of living. I knew how much commuting and going out cost but I never really paid close attention to it. Growing up, money was a scary thing, so for me my version of financial freedom, is to go to a restaurant and order anything I wanted without looking at how much it costs.
When I interned over the summer and I had some extra money, I did that at restaurants where I knew the most expensive item was under $20. I’ll admit it’s a pretty bad habit but I still do it sometimes. Money still gives me a certain degree of anxiety. But overall, I wouldn’t really budget per say. I roughly knew what was expensive and what wasn’t. I also often considered a lot of things that were luxuries, as the costs of doing business. So when I stayed late on campus, I would order food to eat because I wouldn’t be able to study if I was hungry.
So when you decided to actually tackle your money more seriously a few months ago, how did you go about it and where did you start? Honestly, just through having conversations with people. A big one was with my dad. I also started talking to a lot of my friends who were already working full time jobs. I would ask them how much they spend on things and I made a rough budget based on that.
One of my friends literally sat me down and he helped me make a budget. He asked me questions to help me think about the different expenses I would have.
What does the budget look like? I made this based on the cost of living in the Bay Area since that’s where I am moving to for my full-time job. I basically took the paycheck amount (post-tax amount), and then I matched up my expenses to that which gave me a lot of clarity. Here’s the breakdown:
*Khums is an Islamic tax on savings (20%) and Sadaqah is charity.
When making the budget I realized a few things.
The quality and standard of living I wanted determined the categories and the associated estimates. One of the things that was really important to me was moving out and living on my own. That really informed everything else because to move out I needed to make a specific amount of money.
My friend and I also looked at financial goals, such as getting married in the next 3–5 years. Weddings are expensive and I would have to start saving now and that was another reality I had to face.
Was a big part of the reason for leaving the startup and going to a corporate job, the money? I wanted to move out sooner than later and there was no clear path to that with the startup. Whereas big tech was going to unlock that for me a lot sooner than later as well since I’d have to move to the US.
It was also more about what the money could buy than the money in and of itself. There’s no marginal difference in my life if I was making $90K vs $110K. But it was more about the freedom the money would give me.
When you were going through the categories of building your budget, what else did you learn? Another large expense was wanting to own a car. Not just the cost of gas but the insurance and everything else it was getting to be pretty expensive. I also see money as the means so it was worth it for me to have the car as having a car would enable so many other things for me once I moved.
I also realized I had a religious perspective on this, in the sense that I believe that your sustenance comes from God. So it’s not about the numbers but it’s more about working hard and being reasonable with what you’re spending your money on, and not being ridiculous or frivolous. Recognizing to live within your means. I was taught that if you work hard God will take care of the rest, and I actually deeply believe this. But it’s also really weird considering that it’s super easy for me to say that given what position I’m in.
It’s funny how money just comes and goes and sometimes it’s like at your own whim. I remember during the summer after my first year of college I was working at a call center, making minimum wage but despite that I was happy because that felt like a lot of money since I could now afford to go out and eat whereas my first year I barely had any money since everything I had went towards my student loans. So it’s also being thankful for what you have.
Absolutely, I do agree that it’s all in your perspective. How did you come up with the numbers on your budget? I think I did fudge the numbers a little bit, my goal when I was making this budget was to make the budget as freaking ridiculous as possible. So like my idea was to maximize the amount of money I’m spending, because then it’s like at worst, this is what I can do. As a result, some of the categories such as housing are very high. I’ll be getting free food at work so I probably won’t be spending as much on food.
Did you think about long term savings? I broke down how much the 401K matching and all would be but that was the extant of it. However, part of the conversation I had with my dad was about saving and philosophies on investing. My dad’s perspective on this was all around this idea of building wealth. His favorite asset for long term wealth generation is real estate. For example, he talked me through buying a home in Orlando, for example. You can find a place in Orlando for around $200,000 so the down payment on that property would be around $40,000. While you’re paying off the mortal age you can also bring in money through rental income which will often subsidize or cover part of the mortgage. You can essentially start there and keep building your own empire by buying more properties.
What do you wish you knew in college that you know now? I think the main thing is just to be brave and to try and figure it out. So much of the way I usually approach problems it just tackling them head-on. However, with personal finance I have just kind of put my head in the ground like an ostrich. I wish I forced myself to start learning earlier.
During my internship year, for example, I actually didn’t think about money at all. I was just blissful about the fact that I was making more money than I could spend. Looking back, I had terrible spending habits then so I wish I focused on saving more then.
What credit cards do you own and why did you get those? The only credit card I have is the one my dad gave me, which I’m essentially an authorized user on his account. It’s an American Express Preferred Card.
I also use my debit card from my bank quite a bit. Once I move, getting a new credit card is at the top of my list.
What are future financial decisions you are thinking about? Getting married as weddings are expensive is a big one. I love traveling so vacations I want to take are another one. And finally, paying off my student loans is another big one.
What resources would you recommend, that have been helpful for you as you’ve been learning about managing your money? Talking to my friends was super helpful. I also went through this online course called CS 007, Personal Finance for Engineers which was great. They have all the slides up online and they go through stocks and dealing with different aspects of money management.
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Most personal finance blogs only share stories of the people who have it all under control, save 50% of their income, and retire early. While that is impressive, most of us don’t live our lives like that. Some of us want a career and some of us just need our almond matcha latte every morning. However, we all still face the same woes when it comes to managing our personal finances. MoneyStories is a series of interviews with young professionals and recent graduates sharing their stories on how they have and are navigating their personal finances.
*Name changed to protect identity.
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