On a dreary Monday night, I headed uptown to the Young Nonprofit Professionals Network (YNPN) event "How to Live on a Nonprofit Salary: The Ins and Outs of Personal Finance for the Nonprofit Professional." The seminar was led by Dana Skallman, financial adviser and board chair of YNPN-NYC, a regional affiliate of the professional development group that supports "the next generation of nonprofit leaders by providing opportunities for skill-building, information sharing, and networking."
Held at the Support Center for Nonprofit Management, the seminar covered a broad range of issues -- credit, debt elimination, personal budgeting, investing, and retirement savings -- and Skallman's presentation was perfectly pitched to the fifteen or so nonprofit professionals -- all under the age of thirty-five -- in attendance.
Here are some of the topics she covered and a few takeaways from the discussion:
Student loan debt. Two recent pieces of legislation that every young nonprofit employee should be aware of are the public service loan forgiveness program and the Income-Based Repayment (IBR) program. Although you have to have federal student loans to be eligible for either, the programs in combination can help you reduce your monthly loan payment(s) and the actual loan repayment schedule.
Setting up a rainy day fund. Financial advisers used to recommend setting aside three to six months of net income for a rainy day. But these days, with the economy still wobbly, people are advised to set aside six to eight months of net income. Everyone in the room agreed that could be hard, if not impossible, in New York City, so Skallman instead suggested setting small amounts of money on a regular basis with the goal of saving up to six months of net income. Developing a regular savings habit, added Skallman, is much more important than making a big deposit to a savings account every once in a while.
Increasing your monthly income. Skallman also recommended getting creative about your skill set (e.g., selling crafts or investing [wisely] in real estate) as a way to generate additional income.
Investing/saving for retirement in your 20s and 30s. If you're in your twenties or thirties, start saving for your retirement now -- and especially before you start having kids and saving for their education. Skallman also recommended that we consider putting our short-term savings (funds set aside for for things like next year's vacation, grad school, or a down payment on a home) in a money market account. Even though money markets are paying zero interest these days, they are insured (up to $200,000) by the Federal Deposit Insurance Corporation, which means you'll never lose your initial deposit.
Budgeting on a nonprofit professional's salary in NYC. Go for free entertainment options (e.g., DVDs from the library instead of Netflix, concerts in the park instead of concerts at Madison Square Garden, etc.) as much as possible, and try hard to reduce your discretionary spending. Here are a few ideas the group came up with:
- brown bag your lunch
- trim your cell and cable/Internet bills by using Skype and dumping the premium channels (technology is a budget-savvy person's best friend!)
- make a list before heading out to the grocery or discount store
- monitor your monthly statements for erroneous or undeserved charges
Okay, it's a start. What are your tips for saving money and keeping yourself on a budget? Enquiring minds want to know. And what other bits of financial wisdom do you have for young nonprofit professionals? Use the comments section below to share your thoughts....
-- Regina Mahone
