A Tale of Two Budgets

When I moved to this city I did so knowing that the first twelve months would be financially difficult. If I delayed my entry onto the job market, I may have been able to increase my income by $10,000-$25,000/year but I decided not to take that risk. Instead I started working 6 months early knowing that I’d more than likely get a $10,000 promotion in exactly 1 year (and I did!).

One of my friends was fortunate enough to get a higher paying job and started earning $23,000/year more than I did.  We moved to the city around the same, we are both statisticians, have comparable rents  and thus we both should have a fairly good grasp about the importance of financial planning and budgets. But what shocked me was the realization that she finds it extremely difficult to live on her income and her income equates to roughly $1,000/month more in take home pay.

From our conversations, I gathered that on a good month she was able to tuck away $600 into savings, basically the amount of money I was managing to tuck away on my income prior to promotion!  Where her money is going is beyond me, but I’m beginning to realize that intentionally starting off at a lower income for one year may actually have been a savvy financial move.

Now that I’ve received my promotion, I’ll still be earning about $10,000 less pre-taxes than my friend. But I’m already seeing this as a year in which I can max out my Roth IRA and 401K plan while tucking about $200/month into a regular savings account . I’m definitely patting myself on the back for a job well done on this one. Even though I do manage to fall short of some of my goals on some months, overall, I’m still doing very well.


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