This story is part of CNBC Make It’s Millennial Money series, which profiles people across the U.S. and details how they earn, spend and save their money.
Drake Pooley is standing in the middle of his Williamsburg apartment, surrounded by tiny bottles of shampoo, body wash and lotion.
Collected from his weekly work trips, he can tell you which hotel chain offers each beauty brand, and the benefits of the Hilton’s Crabtree & Evelyn soaps compared to, say, the Bliss products stocked at W hotels.
If you’re like Pooley, away from home four days a week, often working until 11 p.m. out of a hotel room, those seemingly insignificant details can make all the difference. As an associate management consultant for a top New York City-based firm, the 23-year-old spends Monday through Thursday in a different U.S. city — Chicago, Cincinnati and Nashville are all recent destinations — helping organizations come up with solutions for the problems plaguing them.
He doesn’t mind the long days. Working hard, Pooley says, is in his blood. His dad is an entrepreneur who is always coming up with a new business idea to test out. But it’s his grandmother, a Lithuanian who came to the U.S. from Venezuela at 14, who Pooley most admires.
“My grandmother was actually a refugee. She was the hardest working person I ever met,” he says.
His family’s experience immigrating to the U.S. informs all of Pooley’s financial and work decisions. He makes a point to do charity work — he operates a website that reviews and critiques resumes for students and people making under $35,000 per year, for free — and donates to politicians and organizations that support immigrants’ rights. All of those mini bottles of shampoo and conditioner will be donated to a homeless shelter.
“I recognize the immense privilege I have as a 23-year-old to work in these settings, and I want to make sure that I’m always putting the best foot forward and doing as much as I can,” he says.
What he earns
Pooley’s situation is somewhat unique in that he knows what his projected earnings will be for the next few years. Right now, he earns a base of $120,000 at his day job and will receive an additional $47,250 in compensation in the form of a performance bonus, profit share and extra 401(k) match. In July 2020, his annual salary will increase to $158,000.
He often works 15-hour days, with breaks for meals and a run in the hotel fitness center. The six-figure salary helps make the constant travel and hours worth it.
“When I first entered consulting, the idea of long days was really scary to me, but I’ve actually adjusted over time,” he says. “You can make that work-life balance work for you.”
On the side, he coaches Chinese college students on U.S. and Chinese employment processes, helping them navigate the beginnings of their careers in a foreign country. He charges $100 per hour and brings in around $400 per month.
“I’ve lived in China twice, and I’m very familiar with how Chinese students think and also the cultural differences,” he says.
He also manages to find time to help his dad revamp his sticker and T-shirt company, Ultra Hot.
“I’ve always been a workaholic,” he says. “I always have to have some sort of project going on.”
How he budgets
Here’s a breakdown of how Pooley saves and spends in a typical month.
Pooley is strict with his budget. Saving money is a priority for him, and he never puts something on a credit card that he doesn’t have money in the bank to pay for.
“I’m always thinking about money, to be honest,” he says. “From a security standpoint, I’m very aware of what’s going in and out of my accounts, and I want to make sure that I’m being the most responsible that I can be.”
That mindset helped him pay off his $12,000 in student loan debt from graduate school — he received a dual master’s degree in global commerce and global strategic management from the University of Virginia and ESADE University in Barcelona — in his first year out of school. A combination of private scholarships, aid from his parents and finishing his undergraduate education in three years enabled him to graduate with a bachelor’s degree from Auburn University with no student loan debt.
Currently, he’s saving for business school, which he hopes to attend next year.
“If I have a few bad weekends, where I’m going out more than I planned, and I really wanted to buy a new suit or something, I will then say, ‘Okay, I can only spend X amount of money for the next few weeks,'” he says. “If I can do that then I will let myself buy what I want. If I can’t, then it’s not in the cards, and I won’t get it.”
The largest portion of Pooley’s gross income is put toward his savings: $700 to his high-yield Ally account, $500 to a Roth IRA and $1,583, on average, to his Roth 401(k). His employer matches 25% of his 401(k) contributions, up to 6% of his total salary, and each August he receives a 401(k) bonus worth 10% of his salary and bonus from the previous year.
His IRA is invested in a socially-responsible fund. You can read more about so-called impact investing here.
“I think consumers have a lot of power in the buying decisions they make,” he says. “I want to support companies through my investments that are supporting gender equality, supporting clean energy, supporting economic empowerment.”
For his 401(k), he subscribes to the Warren Buffett personal investing method: low-cost index funds.
“The most important lesson I’ve learned about money is that you should always be investing in low-cost index funds, because they are going to be the most secure growing over time,” says Pooley. “Trying to find tips and tricks to get rich quick never works, and you should be playing the long game as early as possible.”
He has a savings plan in mind. He wants to max out his retirement accounts — that’s $6,000 for the IRA and $19,000 for the 401(k) this year — and hit $20,000 in liquid savings. Once he does that, he’ll divert some of his savings toward a brokerage account to buy stocks.
“My investment plan really is just to save as much as I can knowing that the security will provide a lot of mental health benefits to me and I’ll feel a lot more secure in my future,” he says.
Pooley splits a two-bedroom apartment in a new development in Williamsburg, Brooklyn. Though he lived in Manhattan when he first moved to New York City from Houston, where he grew up, he said living in Brooklyn was the more financially responsible move.
Pooley’s father is an avid surfer, and he grew up traveling around with his dad to “remote surfer spots” like Nicaragua and Mexico. But it was during grad school, when he studied on three different continents, when Pooley truly caught the travel bug.
He’s already visited 46 countries. This year alone, he’s traveled to Qatar, Singapore, Shanghai, the Maldives, the Azores region of Portugal, Mexico City, Dubai and Australia, as well as domestic destinations, like Auburn University in Alabama, where he went to college. Up next, he has trips planned to Tahiti and Bora Bora. His work offers a generous vacation policy, which also helps Pooley power through the 100-hour weeks.
Drake Pooley on vacation. Photo courtesy of Drake Pooley.
To help fund his trips, he uses five travel rewards credit cards, with annual fees totaling $910:
- Amex Platinum ($550)
- Citi Premier ($95)
- Hilton Honors ($95)
- United Explorer ($95)
- Alaska Airlines Visa Signature ($75)
“When you’re in grad school not really making any money you have to find ways to travel creatively,” he says. “I figured out how to utilize a lot of different points.”
The mileage and points he accrues and other perks associated with the cards are well worth the price for Pooley, and he was able to partially fund many of his trips with his points (and in a few cases completely fund them). According to Pooley, his trip to the Maldives retailed for close to $33,000, but he spent just $2,200.
“My biggest splurge is definitely travel, but I do it in a way where I’m getting a lot more value than what I’m actually spending,” he says. “I spend around $5,000 to $7,000 a year on travel, but with points I’m getting crazy experiences for super cheap this year.”
It helps that his company lets him keep the points he earns through his weekly work travels. Last year, he says, he accrued 95,000 points on his corporate card. Pooley also writes a points newsletter for coworkers and friends, in which he gives tips on hacking the travel rewards card game.
Because he’s traveling during the week for work, most of Pooley’s food is covered by his company. When he’s in New York, he likes to splurge on brunches with friends, happy hours with coworkers and nights out.
Though he tries to keep his food expenses at around $400 per month, he says his recent travel has inflated this portion of his budget.
“Food is the hardest thing to budget for,” he says. “One of the benefits to always traveling for work is that I have an expense account that pays for all of my expenses Monday through Thursday, so I’m only responsible for expenses pretty much Friday afternoon through Sunday.”
He rarely cooks because he’s not home long enough to make a trip to the grocery store worthwhile, he says, and indeed, his refrigerator is virtually empty. Instead, he goes to Williamsburg restaurants for meals or the corner bodega for snacks.
Medical debt: $275
Pooley got Lasik eye surgery earlier in the year and is making monthly payments for the $5,000 procedure. He charged it to on a medical credit card, which allows him to pay it off interest-free over 18 months.
According to Pooley, he was able to knock the price for the procedure down by around $2,000 because he shopped around before he committed to a doctor.
“I got bids from multiple Lasik doctors,” he says. “Always negotiate your medical bills.”
Charity work is important to Pooley, but his busy schedule doesn’t allow him to volunteer as much as he’d like, so he makes sure to donate to causes that are important to him.
Currently, he donates monthly to four Democratic presidential candidates, until he determines who he’s voting for, and gives to the finance program at Auburn University, his alma mater. He also supports CUNY Citizenship Now, an organization that provides free legal services to people seeking U.S. citizenship, in honor of his late grandmother.
“I want to be able to provide new immigrants, wherever they’re from, the opportunity to become American citizens, just like my grandmother had the opportunity to,” he says.
- Clothes: $250
- Subscriptions: $89 (Netflix, Spotify, Hulu, Birchbox, gym, website domain)
- Utilities: $80 (he splits the costs with his roommate)
- Entertainment: $75
- Insurance: $70
- Transportation: $64 (subway fare, Rebel scooters)
What the experts say
CNBC Make It asked Whitney Morrison, certified financial planner and principal financial advisor at LegalZoom, to comment on what Pooley is doing right with his money and where he could improve.
Overall, Morrison says Pooley is doing a great job, noting his savings rate is high for someone his age. “His lifestyle is really lean,” she says, and “his job is setting him up for financial success.”
But there are still a few things he could improve.
Watch out for Roth IRA income limits
Pooley has most of his bases covered, Morrison says, but he needs to make sure he still qualifies for a Roth IRA. Income contribution limits start when an individual makes a modified adjusted gross income of $122,000, and completely phases out at $137,000. With his bonus, Pooley likely doesn’t qualify.
“The IRS won’t like that,” says Morrison. He could face a 6% penalty on the total amount contributed when he files his taxes.
Consider a traditional 401(k)
Right now all of Pooley’s retirement savings are contributed post-tax, which means he won’t pay taxes on distributions in retirement. But if he also contributed to a traditional 401(k), he could lower his tax liability now, which could help with other goals he has.
“Just like people want to diversify their investments, they can diversify their tax risk,” Morrison says. She suggests that Pooley split his 401(k) contributions evenly between a traditional account and a Roth 401(k). Unlike with a Roth IRA, there are no income limits on contributions to a Roth 401(k).
Create dedicated ‘mid-term’ savings
It’s great that he is so committed to maxing out his retirement accounts and building his short-term savings, but Morrison says Pooley needs some sort of “mid-term” savings vehicle or investments, like a brokerage account.
“Once he hits his emergency fund goal, I would tell him to stop putting the $700 toward cash savings, and start putting it toward ‘life goals,'” she says, like buying a house. “He needs a mid-term investment account for the 40 years he can’t touch his retirement accounts.”
Get ‘more defined’ goals
It’s always good to consider what your goals are at every stage in your life. Pooley wants to be financially independent, and he is on the right path — but tweaking the amount of money he’s putting into retirement accounts now might be prudent.
“For someone who is 23, focusing on retirement is smart, but at the same time you have to prepare for the next 40 years of your life,” says Morrison. “You already have 10% profit sharing and your employer’s 401(k) match, do you really need to be maxing out your 401(k) right now?”
Beyond that, Morrison recommends thinking about the concrete steps to reach financial independence and any other goals Pooley might have along the way.
Eventually Pooley would like to help entrepreneurs like his dad grow their companies. But for now, his goals are to work hard, save money and graduate from business school.
“I’m really just focusing on being financially independent,” he says, “so I can do whatever I choose to do, whether that’s continuing a career in consulting or going into a different industry or living on a beach in Zanzibar.”
What’s your budget breakdown? Share your story with us at email@example.com for a chance to be featured in a future installment. We are especially interested in hearing from people in Austin, Denver and Nashville.
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