I got my big girl job in 2019. While I was so excited to make a salary, I remember being laser focused on making sure I was doing the right things with my money.
For my fellow 20-something year old’s, here’s some good news: we are in the perfect spot to set up a strong financial foundation.
But, how the heck do we do that?!
Today I’m chatting with Certified Financial Planner Rianka Dorsainvil on how to manage your big girl salary. Rianka is the Co-founder and co-CEO of 2050 Wealth Partners, a black woman-owned financial planning firm that provides holistic financial planning to clients. Rianka specializes in helping entrepreneurs and first-generation wealth builders on their journeys to financial success. If Rianka’s name sounds familiar, you’ve likely seen her articles, Forbes, on USA Today, or on CNBC.
Not much of a reader? Check out the full conversation on The Colors of Her Success Podcast!
When we get our first check from our “big girl” job, what are the first things we should do to set ourselves up for financial success?
RD: First, you have to understand how taxes work. Know what’s coming out of your paycheck and determine if it’s appropriate and correct. The next thing you want to make sure is being taken out of your check is your retirement savings. As a twenty-something year old, you think, “Oh, I have a lot of time.” However, the quicker you start saving, the faster you’re going to get to financial security.
Yes, there are competing goals when you get your first big girl paycheck, and you’re probably wondering, “How do I divvy this all out?” You have to pay yourself first. So if you have competing goals of debt – personal loans, student loans – at least invest up to the employer’s match of the 401k so that you’re not leaving free money on the table.
If you work a part-time job, are there ways to save for retirement that isn’t necessarily tied to your company’s 401k?
RD: If your company does not offer some sort of retirement plan, then check with your financial institution to see if they have an Individual Retirement Account (IRA). Depending on your income, you can invest in either a Traditional IRA or a Roth IRA. If you have enough space in your budget to contribute something – that is better than nothing.
Today, many people graduate and are the highest earners in their households. I know that’s been the experience you had when coming out of college. Can we talk about how you managed that experience and how you learned how to navigate that new level of responsibility?
RD: Oh, my goodness, this is something that I hold near and dear to my heart, which is why I have this passion for working with millennials and first-generation wealth builders. I was 26 when I started out earning both my mom and dad. I felt this urgency to give back because I wouldn’t be where I am without their sacrifices. I think many of us do that, but unfortunately, at the detriment of our own financial security. You have to put your own financial oxygen mask on first before you can help others. And how do you do that? Boundaries.
You have to create your own budget and start putting in place what you need first. Determine the top five financial items you want to take care of, and then make sure your emergency fund is funded. Your emergency fund is where you set aside at least 3-6 months of your living expenses. If you lose your job, you can still pay for the essential things: a roof over your head, food on your table, and clothes on your back. Then, you create a line item on your budget for family and start putting money there every month. So when a family member asks for money, you’ve set aside money to help. But, when you’re tapped out of that family budget, you have to say “no.”
How do you set boundaries with friends who are spontaneous spenders?
RD: A lot of times, the friend that’s always asking you to go out and go shopping doesn’t have a budget and has a lot of consumer debt. It looks like they can afford these things, but what’s their budget look like? When I was in my early 20s, I wasn’t making much money. I had just gotten married, we wanted to save to buy a home, so I had to say no. Comparison is the thief of joy. Yet, I will say, comparing myself to those peers who went out a lot, there is a large discrepancy between where I am and where they are. It’s because I set those boundaries and made it clear what my financial foundation would look like when I was in my early 30s.
What is your advice for people who may be influenced by social media to spend to keep up?
RD: It’s honestly you vs. you. You really are your own boss. Remember that the “no’s” you say today allow you to have so many more “yes’s” in the future. It’s all in God’s timing. Delayed is not denied. Your time will come, but you have to stay focused.
I was having a conversation with one of my best friends– she’s a therapist – and one of her clients asked, “Have you ever compared yourself to someone else?” and she said, “Honestly, no,” and I realized that I haven’t either. What good will that do me if I compare myself to you? Who knows what you are dealing with and what financial insecurities you might have? Instagram is a highlight of our lives. Most of us don’t show the days we’re in the valley. Don’t allow Instagram to make you take a whole bunch of steps back.
What are some of the cons that people may not recognize that come with making good
RD: Taxes are a thing! When you start making your big girl salary, many of us just want to DIY things — like taxes. However, when you start hitting life milestones, hire a Certified Public Accountant (CPA). Because you don’t know what you don’t know. There are also Enrolled Agents, which are good as well. But you need to make sure you work with someone who works all year round. There are going to be some situations where you will have tax questions, and you need to be able to lean on this person.
As you start to earn your big girl salary, you need to assemble a team around you. Your team includes the CPA or EA, a Certified Financial Planner — like me – and then you need to have some sort of attorney. Don’t be afraid to pay for services; it’s worth it.
As a 24-year-old, which one do I need first?
RD: It depends. If you have one source of income, you probably don’t need a CPA right away. But, everyone needs a financial planner.
When working with a financial planner, we check all the things you don’t see. You are financially undressing in front of us. It’s uncomfortable, but it will be so rewarding because we check your blind spots. Most young people don’t know that they need an estate plan. You may not understand what estate attorney to hire, but that’s where we come in because we help you assemble your team.
Here’s the thing when it comes to estate planning, everyone has an estate plan. However, it is whether you tell the state what you want to happen with your belongings, or the state will tell you what will happen with your belongings. As a 24-year-old, you think you don’t have a lot of stuff, but you do. You probably have the technology, you have a computer, you have shoes, you have bags, who do you want that stuff to go to? That’s why it’s so important for an estate plan. Again, you wouldn’t know this unless you hired a financial planner.
Where can people find a financial planner?
XY Planning Network: There are many fee-only advisors like myself. You can go to their homepage and select if you want an advisor or planner in a specific state or deals specifically with your type of industry.
National Association of Personal Financial Advisors (NAPFA): NAPFA is another place that has fee-only advisors. I’m emphasizing fee only, which means that there is just no conflict of interest. They will share things with you because it’s in your best interest, not because they want to sell you some type of product for a commission.
Association of African American Financial Advisors: If you are specifically looking for an advisor of color, specifically African American, you can go to that website and find a financial planner.
Keep up with Rianka on Instagram, Twitter, Facebook: @Rianka_D