Spencer Klein: From Grad Student to 6-Figure Salary
This week, we have Spencer*, a pharmacist from Cincinnati who sheds light on jumping from no-income as a student into a six-figure salary and setting yourself up for success.
Location: Cincinnati, Ohio
Salary Range: $110,000 — $120,000
Big Expenses: Mortgage, Car Payments (totals to 2/3 of monthly budget)
Subscriptions: Hulu (shares Netflix and Disney+ with his family) & Spotify
Kavya: What has post-grad life looked like for you?
Spencer: I graduated in 2018 and worked at the pharmacy that I worked in as an intern. So the biggest thing that I saw was a jump in my pay from being an intern to a full-time pharmacist. At that point, I was kind of trying to figure out where I wanted to put all my money and I didn’t really have any sort of direction. At the beginning of 2019 is when I started reading blogs and getting into the personal finance space.
I was fortunate enough to not have any student loans coming out of school. So it was really about now that I have this big (salary) increase, what can I do to set myself up for the long haul?
As a pharmacist, we’re uniquely positioned to where you have a high starting salary, to begin with, but we don’t get many big raises. My dad is an engineer where he started out at $30K when he graduated and got significant pay raises up to a six-figure salary. However, I’m in the position where I have a six-figure salary, to begin with, and I get small cost of living raises.
I didn’t want to fall into a lifestyle creep where I automatically start spending all the money I have. I wanted to figure out what I could do to maintain a lifestyle I am happy with but still save money because things can change at any time.
K: What prompted you to even think about that change or start looking into personal finance?
S: I saw this group called Your Financial Pharmacist which is run by two pharmacists who are trying to help pharmacy students get out of debt and help them live with their six-figure salary. They started a book club at the end of 2018, where they read Rich Dad Poor Dad. Then, we read the Next Millionaire Next Door. This group introduced me to the communities online who were living the lives they want today but also saving for tomorrow.
The people that inspired me to finally open accounts and set things up were Millennial Revolution. They had a free investment workshop that went week by week and walked you through opening up an investment account with step by step screenshots.
I think the hardest thing is just knowing where to start and how to start because you hear all these success stories of like “This how I got there!”, but I don’t know the details of how you did it.
So that was how I opened up the first Vanguard account and I started putting money in it. I felt like I got some traction and can now go from here.
K: You mentioned graduating debt-free. Was that because you decided not to take any loans going into graduate school?
S: Fortunately, I had my undergrad and graduate school tuition paid for by my grandfather. His wish was to put all his grandchildren through college. So I didn’t have to stress about that, but I worked part-time all throughout undergrad and grad school so that I could fund all of my other expenses. Housing, extracurriculars, food, etc. I was still learning how to manage my money without the burden of student loans looming over my head — so very fortunate in that regard.
K: Did you have any best practices for managing your everyday expenses when you were in college?
S: Not really. It was more of the money that came in, went right back out. I wasn’t struggling to pay for anything and I have a level of security in my checking account. I kept it at $3000ish at that point. If it dropped below that I was okay I have to rein it in a little bit. That happened pretty infrequently so it was just like I have enough money to go out on the weekends, eat out for my meals, and go to these conferences and travel. It was not something that was always at the forefront of my mind but I was cognizant enough to where I didn’t have to worry.
K: Were all your expenses funded with the money that you were making through the jobs you had in college?
K: So was taking that course that taught you about investing, the first step you took? What followed that, where did you go from there?
S: Yeah, so the first step I took was opening up the Vanguard account — it was just a traditional brokerage account. Listening to other podcasts, reading other blogs, I had a stepwise approach that I personally used for the different accounts.
I started to max out my 403(b)*. I work for a nonprofit, so that’s what I have access to. Then, I have my Roth IRA that I fund, mainly through extra money I have leftover each month. So it’s not funded at the beginning of each year, but rather I work towards (maxing) it throughout the year.
The system that has been working for me now is that I keep my checking account at $10,000 right now, which I know is a high emergency fund, but that’s just where I feel comfortable. Two times a month, any money that is over that 10,000 mark, I funnel into my brokerage account. I’m not sure what that money is for yet, whether it’s for saving or if I want to use it as a down payment on a rental property, but that’s just where the extra money is going right now.
*Like a 401(k), it is available for employees of public education organizations, some non-profit employers, cooperative hospital service organizations, etc.
K: How did you end up with this system?
S: It was definitely a trial and error kind of thing. I would listen to podcasts and hear someone saying, this is what I do. Oh, like I should do that because this person has been super successful. Oh, they are maxing out their 401(k), I was like that sounds like a great idea! Someone would say they were trying to get into real estate and it’s like oh I can do that too. Initially, it was a lot of hodgepodge things. All these people are so successful I felt like I needed to emulate everything that they were doing.
Obviously that became too much, so I switched from trying to do too many things to find a system that worked personally for me. That’s where I got to where I am with doing the two deposits a month thing. Depositing money twice a month feels like it’s growing faster, sort of a mind game kind of thing.
K: Do you also do any day to day or monthly budgeting as well?
S: So the biggest thing that I first started doing was tracking my expenses. I have an Excel sheet that I put all my transactions on. I only use my credit card and don’t keep cash on me at all. Once a week, I put all my transactions into it. It has my mortgage, my car payment, literally everything on it. There are 20 categories that everything goes into.
Then, I go in at the end of each month and I look at okay, where was I spending most of my money? Most of it is going to my mortgage or my car payments. I really think it’s just being cognizant of where your money is going. That’s been one of the biggest eye-openers for me.
K: Absolutely! When you realize those things, do you tweak it, do you have a limit that you set for the next month, or it is just for you to be aware.
S: There’s no actual limit, mainly because right now it’s just me that I’m worried about. I’m fortunate enough to where the monthly paychecks still exceed the expenses I have. I spend roughly $2500-$3000 per month. This includes my mortgage and car payments. If I do notice myself spending way too much eating out or going out with friends then I try to rein it back a little bit, but right now I’m very happy with the amount of spending I’m doing.
K: How did you get introduced to the FIRE movement and how you emulate those principles in your money management?
S: The Choose FI podcasts have helped me the most. I devoured all of their episodes and by listening to them, picking up the little tidbits. It’s not the big grandiose changes you need to make within your life. It’s the small little ones that if you add them up, they make big changes. It’s just being aware of where your money is going. I was eating out for all of my meals for the last couple of years, and now I cook at home twice a week. I could be cooking at home more but I still enjoy eating out with my friends and picking up something is just convenient. Not spending the money where I don’t find the value has also helped. I used to individually pay for all these subscriptions but now my mom, my sister, and I split Netflix, Hulu, and Disney+.
I think the biggest impact has been just being more aware and cognizant of where my money is going.
K: What is one piece of advice that has really helped you with your relationship with money?
S: Tracking my expenses and knowing where it’s going. You don’t have to change your habits if you’re happy with where your life is at and you’re not feeling stressed out or anything like that. I don’t want people to put off enjoying their life today to have a good future.
I’m also trying to be more aware of the things I’m purchasing as well. Do I need to make this purchase right now or can it wait? I think you need to make little changes as you see fit.
K: What is a mistake you have made in your personal finance journey?
S: I bought a brand new car in a rush. I had just totaled my car and was needing a new one. I didn’t take much time to think about it or run the numbers. I don’t necessarily regret the decision but I do wish I took more time to figure things out before I had bought it — I could have gone for a used or less expensive car.
K: Are there any financial decisions that you’re considering for the future?
S: Right now I am saving for a down payment on a rental unit. I bought a house for myself in August 2019, and now I’m putting money away for a rental unit. I am still figuring out where I want to get the rental unit. Thinking about an apartment on a college campus or sticking with another single-family house. It’s one of those things where I’m not 100% ready to put any money down and I am still saving the capital for the down payment but that’ll be the big financial decision I’ll be making within the next three to five years.
What credit cards do you own and why?
I have a few cards but I only use one of them. I got most of them for travel rewards and points.
The main one I use right now for all my purchases is the Chase Sapphire Reserve.
American Express Delta Sky Miles — my oldest card so keeping it around
Marriott Bonvoy — for the bonus but I have downgraded it so that I don’t have to pay the monthly fee.
Chase Freedom — first card for bonuses that I got.
2019 Income: ~$120,000
403B — maxed it out $19,000
Roth IRA — maxed it out $6,000
Brokerage — put in about $15,000 (then used this for a downpayment on house)
My goal for 2020, is to have $100,000 total in all my savings accounts. Right now (February) I am at about $65,000.
What tools apps or services do you use to manage your money?
The one I use regularly is Mint. I also use Personal Capital. I have the apps that relate to my credit cards and accounts: Vanguard (Brokerage, Roth IRA), Chase (credit card), American Express (credit card), etc.
I check Mint almost every single day, probably more than I should, but I like knowing and being aware of how my accounts are doing.
Are there any resources that you recommend?
The Simple Path to Wealth by J.L Collins — shaped how I think about investing and breaks things down into a step by step approach. It’s a great book to understand the stock market especially if you feel like you don’t know anything and are scared about where to start.
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, 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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