How To Make Money

Illustration: Celine Ka Wing Lau

All the good apartments are out of your price range, there’s no room for growth in your job, and it feels like you’re being left behind. You want more. But where to start? Is going back to school worth it? Do you need to start a side gig or find a way to generate passive income? Should you use your savings to buy a house or put it in the stock market? The possibilities are overwhelming. So we did some of the work for you.

We asked five women around the country — with ambitious goals, in various phases of attaining them — to open up about their finances and tell us what they want to achieve. Then we consulted financial planners, educators, and career specialists. They gave us formulas for growing your investments, identified the first three people you should consult if you want to start a business, and told us how much money you really need to have saved before you buy property. Then we crunched the numbers. Here’s what we found.

Dylan, 29, works at a private school and lives with her parents in New York.

I want to buy a one-bedroom apartment on the Upper East Side. It needs to be in the $400–$500,000 range, like this one, have certain bells and whistles (in-unit laundry and a doorman), and be located close to the private school where I work as a prekindergarten teacher, as well as to Central Park. For me, owning an apartment is a strategic investment to build wealth — my own payments would go toward my own equity in the property. It also ensures that I wouldn’t be priced out of the city by rising rental costs.

Affording an apartment at that price point is no small feat, but especially on my $71,000 annual salary, I want my money to stretch as far as it possibly can toward a down payment of between $90,000 and $120,000, which is around the standard 20 percent in New York City. I have $101,000 already set aside, which is a number I’ve been building since I graduated from college in 2017. I live with my parents to save money, and they’ve never charged me rent — without them, saving this money would not have been possible.

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But even though buying an apartment is my dream path to wealth, I often wonder if it’s really a smart idea instead of renting, or if I should invest my saved money in other ways first. I also save for retirement but worry about whether I’m putting away enough money to live comfortably later in life. Right now, I contribute about $1,360 each month to my 401(k). I also work a second job babysitting for two Upper East Side families, which brings in about $10,000 a year, which I use to max out my Roth IRA.

In the future, if I stay at my job, I don’t expect my salary to increase by more than 3 percent per year. I also plan to move in with my girlfriend later in 2024, so my living expenses will increase substantially. Paying rent — my share will be $1,300 a month — makes me more conscious about the ways that I’m spending. Is what I’m saving right now enough? Do I need to pick up more babysitting or after-school jobs to make more money?

$100,000 is quite the nest egg. But when buying a home, especially in Manhattan, a 20 percent down payment is often just the starting point. You also need to factor in closing costs, which can range from another 2–6 percent of the home’s value, plus additional cash reserves to fix the inevitable leaky window or wonky toilet that the previous owner conveniently forgot to mention. So if you’re looking at a $500,000 apartment, you’d probably need to bank at least $130,000, if not more.

Beyond the down payment, there are significant monthly costs to consider — including your mortgage payment, home insurance, property taxes, and the sneaky one everyone tends to forget: maintenance fees. Those numbers can vary a lot. But as an example, let’s look at the apartment you linked to. The maintenance fees (almost $2,000 a month) plus your mortgage payment (about $2,650 a month, assuming a 30-year mortgage with a 6.98 percent interest rate and 20 percent down payment) adds up to about $4,600 a month before insurance and property taxes, which would tack on another couple hundred dollars at the bare minimum. Unfortunately, that’s more than your take-home pay (a little under $5,000 a month).

So, even if you can save up the down payment for a $500,000 property, the ownership math just doesn’t add up unless you more than double your income (or become a two-income household). But there are other ways for you to build wealth. To weigh your options, we spoke to financial educator Melissa Jean-Baptiste, a former high-school teacher and current homeowner, and Ally-Jane Ayers, a New York–based certified financial planner and homeowner as well.

Both said that you need to plan your housing around your finances, not the other way around. The general rule of thumb is to spend less than 30 percent of your gross income on housing costs. So if your salary is $81,000, that comes out to about $2,000 a month, either toward rent or total carrying costs for a home, including a mortgage. If you still want to buy an apartment, this calculation would put you closer to the $200,000–$250,000 range, maximum, says Ayers. It’s pretty tough to find a place for that price on the Upper East Side, let alone a one-bedroom close to the park. Plus, it’s risky to get a mortgage that stretches you too thin.

Luckily, you have more affordable and secure options: renting or living with your parents (as long as all parties are amenable). To keep building wealth in the meantime, Jean-Baptiste recommends increasing your contributions to your retirement accounts and adding extra income streams. Picking up extra babysitting hours could be a great idea.

What to do with your hard-earned savings? If you want that money to grow but also want to keep your homeownership options open, Ayers recommends splitting it into three buckets. Keep one-third in cash in a high-yield savings account or CD. Then invest the rest into two different portfolios — one with a low-risk profile, and one with a more aggressive, higher-risk profile. “That way, your money will grow, and you won’t have all your financial eggs in one basket,” she says. “You could still use some of that money for a down payment in five or ten years.”

Anna, 38, works as a sales representative for a health-supplement company and lives in Florida.

I moved back to Florida several years ago. My fiancé and I purchased a home and we live here with my mom. She retired in her 50s and then realized she didn’t have enough money to keep supporting herself. So now she lives in a little house on our property for free. She’ll be 75 this year. I love her and I love that she lives with us. But I’m not sure how much to plan for her, financially. She’s on Medicare and pays for her own groceries and stuff like that, but I’m not sure what her health-care costs might look like in the future.

Ideally, I’d love to retire by 55 or 60, with a paid-off house. I think I could live comfortably off of $100,000 annually, post-tax, but I don’t know how much I’ll need to invest to get those returns. And I’m not planning to have kids, so nobody’s going to do for me what I’m currently doing for my mom, so I really need to plan.

I earn a base salary of $150,000 a year, but my bonus could be up to 30 percent more than that. On average, I probably make about $180,000 a year. I max out my 401(k) and get an employer match, and I have about $420,000 saved in my 401(k) so far. That might sound like a lot, but I have a long way to go until that’s enough to live off of. Aside from my mortgage ($2,200 a month), I don’t have any debt. I paid off my student loans a few years ago and my employer pays for my car because I travel so much.

I currently save about $3,000 every month, and I want to learn more about how to invest outside of my 401(k). I have about $100,000 saved in various CDs, but I don’t know what to do with my bonus this year, which will be about $60,000. I want to put some of it into home improvements, but then I want to put the rest somewhere it will grow. I don’t want it to sit in my savings; it’s too easy to fritter it away on dinners and other stuff. What are some investments that I can access if I retire before I’m old enough to take distributions from my 401(k) without penalty?

Your goal is to be more strategic and aggressive about investing so that you can eventually live off the returns, and there are financial models that will game this out for you. To find out what yours could look like, we consulted Georgia Lee Hussey, a certified financial planner and the founder of the wealth-management firm Modernist Financial. She and another financial planner, Katia Brahy, created a plan that has “an 85 percent likelihood of success” in meeting your goals. If you follow it, Hussey says you would reach your objective (retire by 60 and sail off into the sunset with a $100,000 post-tax annual income) in 850 out of 1,000 stress tests that they conducted. That doesn’t mean that there’s a 15 percent chance you’ll go broke — just that you might need to adjust your plans.

Let’s start with the numbers. First, keep doing what you’re doing: Max out your 401(k) every year, pay down your mortgage, and live well within your means. Your next step, says Hussey, is to open a Roth IRA and max out that contribution every year as well (for 2024, you’ll be able to put in $7,000).

Finally, you should also create a regular, taxable investment account. This is where you could put your bonus; Hussey also advises investing $50,000 from your CDs. (Your money will grow faster in the market than it will in the CD over time.) Then aim to contribute $29,000 to this account each year until you retire.

For now, you’ll want to allocate all of your investments aggressively, Hussey explains, ideally with 80 percent in global stocks and 20 percent in short-term bonds. “The projected average return for such a portfolio is 8.31 percent,” she says. Of course, that’s not a guarantee — remember, we’re talking averages here. But even with a conservative outlook on the market, you should be in excellent shape. Based on Hussey’s calculations, this plan will leave you with approximately $5.5 million in total investments to fund your retirement at 60. That will be enough to provide you with the inflation-adjusted equivalent of a $100,000 after-tax annual budget until you are 97.

As for your mom: Hussey recommends setting aside some time to help her with Medicaid planning, tour some local senior communities, and learn about what the costs would look like once she can no longer live independently.

Tara, 35, lives in Sarasota, Florida, and wants to start a supplement business. 

In early 2020, I took a gamble: I left my full-time job — I was the VP of finance for a caregiving agency for people with developmental disabilities — to pursue being a full-time entrepreneur. Two weeks later, COVID hit. I left Los Angeles and bought a house in Sarasota, Florida. During the pandemic, I sold the property, pocketed $60,000, and moved in with my dad to save money. For a while, I collected unemployment, but right now, I have no annual salary.

I also have big dreams: I want to get rich by launching my own businesses, with the eventual goal of taking home between $5 and $10 million after taxes. I want to invest that money, live off the interest, and do other projects because I want to — not because I have to. For me, being rich is less of a number and more of a feeling. I want to take trips without thinking about how expensive hotels are. If a family member needed to borrow money, I’d want to be able to give it to them without feeling concerned about getting it back.

Currently, I’m in the process of launching a new venture with two friends — a supplement business — that I hope will set me on my way to those goals. In early 2024, we’re launching with one SKU (a powder in an emerging category); I think our quality ingredients and luxury branding will set us apart. I’m building our website and handling operations; the second partner is funding our start-up costs; and the third, a full-time influencer, will handle organic marketing on TikTok and other social-media platforms. We plan to sell on Amazon and Shopify, as well as on TikTok and Instagram. I want advice on the basics of building a multimillion-dollar company from the ground up — how to attract investors, finance product inventory, and scale so that I can walk away with the money I want.

As the company launches, I also need some form of income to afford living expenses (like my car payment and health insurance) — one that’s relatively passive so I can devote time to my start-up. Last year, I joined Amazon’s Influencer program to make shoppable review videos, like these, on the company’s product pages. Currently, I spend about ten hours per week making videos, which nets out to about $800 to $1,000 per month in affiliate-link commission. Because my pay depends on the traffic my videos receive, it’s potentially inconsistent — plus, if Amazon changes or nixes the program, my income would suffer. Is this a good use of my time, or is there another lower-lift income source I should pursue instead?

To build your business and protect your own piece of it, you need to start with your own support team. “Begin by finding a lawyer, a financial adviser, and an accountant who you trust,” says Ashley Stoyanov Ojeda, a business-development strategist. These are people who work for you, not your company, and can help you secure your equity and make sure you aren’t too financially exposed. Ojeda recommends using the Legalmiga Library, which offers legal templates and resources for business owners and entrepreneurs, as a starting point.

Next, you’ll need to drill down on your niche. “The supplement market is large but crowded, so it’s important to clearly articulate what is unique about your company,” Ojeda explains. “If you can establish your brand as the go-to supplement for a particular issue, then it will help build a community of customers who identify with these products. Then, if you decide to launch more supplements, that community will be able to refer more business.”

Then, you have to attract investors. “When investors are looking at a start-up, they are typically looking at three things: the team, the market, and the traction,” says Angela Lee, a professor at Columbia Business School who also founded the angel investing network 37 Angels. In the team — that would be you, your co-founders, and any other leadership that you hire — investors are seeking “relevant domain expertise, self-awareness, and ‘It’ factor,” like previous ability to sell products (if your influencer co-founder can demonstrate this, great). Investors also want to see potential demand for your product — in business parlance, “an attractive competitive landscape.” And finally, you need a plan to bring in customers that’s easy to repeat. “What channels are you using to attract customers, and are you able to acquire those customers consistently and affordably?” she asks.

In terms of timing, founders usually raise money from angel investors or venture-capital firms on an 18-month cycle, Lee adds. “I would recommend writing out your projected costs for the next 18 months and approaching investors asking for that amount.”

Because you are selling a physical product, you’re right to be careful about inventory. “The goal is to have as little of your cash tied up in inventory as possible,” says Lee. “This means finding a manufacturer who can take orders that are smaller, while still affordable.” She also suggests asking for more lead time to pay your manufacturers for shipments (for instance, you’d have 60 days to pay for a shipment rather than 30). That would potentially allow you to keep more cash on hand.

When it comes to scaling your business, pay attention to your LTV to CAC ratio, says Lee. This is a metric for determining how much your customers are spending on your products compared to how much you’re spending to attract them. “LTV stands for customer lifetime value — it’s how much a customer will spend with you over the lifetime of their relationship with the start-up,” says Lee. (So if an average customer buys three bottles of supplements for $30, then your LTV is $90.) Your CAC is your customer acquisition cost, or how much you’re spending to get one customer to buy your product (basically, your marketing budget divided by the number of your new customers). According to Lee, you want your LTV to CAC ratio to be at least 3:1.

Finally, you’re right to pursue a side gig if you’re not taking an income right now. “When you are budgeting, I would encourage you to plan for a solid two years before your business either starts generating revenue or you are able to get fundraising,” says Lee. In the meantime, making shoppable videos for Amazon’s Influencer program isn’t a bad idea — it’s widely considered to be a decent way for creators to monetize their content and product reviews, especially if they already have a large following. But it can require a lot of work up front, and it might not be the best use of your time, especially if you’re only making about $25 an hour, tops.

Ojeda offers an alternative: Given your background in finance, you could consult for other businesses in the wellness industry. “That would help you establish your personal brand as an expert in this area,” she says. “And once you do, you could be charging around $300 an hour.”

Leilah, 39, lives outside of Atlanta, Georgia, and is a manager at a nonprofit that trains caregivers. She also does freelance advocacy work for people with disabilities.

I want to amass wealth out of necessity and survival. There are a number of medical procedures in my future. I’ve had over 40 surgeries already. I’ll need assistance as I age and as my level of disability changes. I never want to be in a position where I need care and I can’t access it. That can be difficult, because a lot of government programs are not designed to be accessible to the average middle-class person like me. I don’t currently qualify for Medicaid programs, but that doesn’t mean I can afford to pay for everything out of pocket, either.

I currently work full-time as a training manager for a policy-advocacy nonprofit that focuses on caregiving. I started that job in 2021. Before that, I had an eight-year gap on my résumé because I was caring for my mother full-time. After I finished undergrad, over ten years ago, my mother was diagnosed with dementia, so I left my job and became a full-time caregiver for her and eventually for my father, too. Then, during the pandemic, remote work became more normalized, which enabled me to get a job and work full-time while continuing caring for my parents until my mom passed last summer. My dad is 71, and I would like to continue caring for him for as long as he lives.

I have about $40,000 in student loans, which I started paying again a few months ago. Because I work for a nonprofit, I will be eligible for public-service loan forgiveness, but it will take a number of years and require me to stay in the nonprofit space. I make a little more than $90,000 annually, but I’m still living paycheck to paycheck, primarily because I’m paying for out-of-pocket medical costs for myself and my father. All of my basic needs are met, but I have to hustle a lot. In addition to my full-time job, I do some freelance advocacy and consulting work on the side, but it doesn’t make much money — I think I made a few thousand dollars last year. I do think about transitioning to the for-profit space, which could be better-paying and provide more security for the future.

In terms of monthly expenses, rent is $2,015 for the three-bedroom condo where I live with my dad. Medication is at least $1,000 a month. Transportation for myself, because I do not drive, is a couple of hundred dollars per week on rideshares like Lyft and Uber, so I can go to doctor’s appointments and run errands. Other out-of-pocket medical expenses are $1,000 per month, minimum, just for myself, or $1,500 including my father. So it adds up really quickly. My father gets social security, which right now covers our rent. I am trying to save money, but it’s difficult; every time I save, something else comes up that is not covered by insurance.

I would love to get a Ph.D. in medical sociology, to study the root causes of health inequities and how we solve them. To pay for one of these programs, I think I would be eligible to secure funding through grants and other opportunities; I don’t plan to take out more student loans.

I think that getting my Ph.D. would put me in a better position of authority, especially in the independent work that I do. Those credentials would help instill trust in my audience, my clients, whoever it is that I’m engaging with. It would put me on a higher pay scale than what I’m at now, and equip me with opportunities to be in spaces based on my education where I lack job experience.

In my ideal life, I would love to live in a beautiful home in a community that is safe, vibrant, pedestrian-friendly, and will age with me — maybe a community like Bridge Meadows in Portland, Oregon, or CareHaus in Baltimore, Maryland. I want to get to a place where I’m not living paycheck to paycheck anymore and can amass the amount of money that I would need to retire on, whenever that happens.

It looks like you have two options: Pursue a Ph.D. program, which seems fulfilling but less financially stable, or look into for-profit career opportunities that could provide more economic security. One doesn’t necessarily negate the other, though, so it’s worth exploring both paths simultaneously.

The caregiving industry is growing fast and offering more and more remote jobs, says Matthew Patrick Marhefka, the CEO of Glades Talent, a recruiting firm that specializes in health and home care. Given your background, you could potentially be a good fit for recruitment or training for caregivers; at the more senior levels, both areas offer salaries ranging from $100,000 to $200,000 and up, depending on the size and location of the organization you work for. “As far as the opportunities within that world, they’re really limitless,” says Marhefka. “Plus, caregivers relate to other caregivers. So your background and experience in this realm can be a strength and set you apart as a manager.”

The financial downside to working in the for-profit space would be that you would no longer qualify for student-loan forgiveness. But depending on the salary increase — and the potential for better health-insurance coverage and other benefits — that might be worth it. At the very least, you could try it for a few years, build your credit, bank some money for retirement, and save up some reserves.

If you pursue a Ph.D., your career and income growth is less clear. But one option could be to work for an advocacy group that works on health-care policy changes at the state level. “There are very well-organized, well-funded advocacy groups that work with state legislation to do things like push for better reimbursement rates for Medicaid patients or drive other new programs,” says Marhefka.

The salaries for those jobs are harder to determine, especially since they can vary so much from state to state, he adds. “But these groups are typically well funded by other home-care companies who are invested in that space, and there are well-paying jobs to be found there.” These organizations are also nonprofits, so you’d be eligible for student-loan forgiveness.

When we reached out to Bridge Meadows, the housing community in Oregon that you mentioned, they referred us to NeighborWorks America, which offers affordable financial-planning resources to people who need help navigating health costs, caregiving responsibilities, housing accessibility, and other issues that traditional financial planners may not be equipped to handle. (Many financial planners will probably just tell you that you need to save more, which isn’t helpful.) NeighborWorks America is also connected to a wide network of organizations that can direct you toward affordable and comfortable living options for you and your dad, wherever you choose to settle.

Carina, 29, is an emergency responder who lives in Colorado.

I work for Colorado’s public-health department and I love my job. Except for one thing: its lack of upward mobility. Right now, I make $73,000 a year. Government salary tends to top out at around $120,000, even when you reach the most successful positions in a department. I love helping people, but I’m worried that my salary will never be able to provide true security and support my ambitious financial goals.

I want to get rich without sacrificing the career I love. For me, there’s no magic number, but I want to be able to provide for my future children and comfortably support my parents as they age. Currently, I live in Denver with my fiancé, who works in tech, and our mind-set is to double down on saving. We’re trying to enjoy this unique time in our lives, too, but we’ve made some sacrifices, including putting off our wedding in order to focus on our savings.

Instead, we’ve been working toward another milestone: buying a property in Denver with the eventual goal of building equity, buying another one, and renting out the first. (Right now, we rent a one-bedroom apartment for $2,000 per month.)

But my fiancé and I don’t agree on the best path forward. I’d prefer to buy a condo that costs between $200,000 and $500,000 (plus HOA fees) as soon as we can; he’d rather continue to save and buy a more expensive house, of between $500,000 and $700,000, later on. He wants a house that we have complete control over, but I’d rather make the investment in property sooner. Regardless of which path we choose, we’re aiming for a 20 percent down payment. Currently, we have $120,000 saved, which is about enough for the house option but would absolutely wipe out all of our savings, including investments. This is why I’m leaning toward a condo with a much lower down payment (about $60,000).

I want to know which path makes the most sense here, but overall, I want to know if we should be exploring different wealth-generating options so that our total income is not necessarily tied to our jobs.

No matter what you do, you definitely want to avoid wiping out all your savings to buy a home, says Megan Kanter, a certified financial planner based in Denver. So let’s consider scenario A: You buy a $200,000 condo, live in it for five years or so, and then rent it out to buy something bigger. “For that to work, you’ll need to be able to charge rent that is well above what the property costs you to own,” says Kanter. In other words, if your monthly mortgage, maintenance and/or HOA fees, taxes, and insurance add up to $1,800, you’ll need to rent it out for more than that. In the meantime, while you’re living there, you’ll need to keep saving aggressively in order to cover your next down payment on a bigger home if that’s your goal.

All of this is certainly possible. The carrying costs for a $200,000 condo in Denver are, for the most part, under $2,000 a month (you can use a tool like this to play around with the numbers, including a range of HOA fees and mortgage rates). If you’re currently paying that amount in rent and have a decent chunk of income left over to save, then this could be a viable option.

The potential downside is that the housing market can be unpredictable, and you may wind up having to live in your “starter home” for longer than you anticipate, says Kanter. “When you’re buying a home that will be your primary residence, the general consensus is to consider living there for at least five to ten years, to recoup some of the value of the initial expenses like closing costs,” says Kanter.

This is particularly true in Denver right now, she adds, because the area has seen so much growth — and rising prices — in the past few years, and the market may be slowing down. So if you buy property in the near future, it’s reasonable to anticipate that its value (to rent or sell) might not increase at the same rate that you’ve seen recently.

Moving onto scenario B: You wait, save more, and buy a bigger home (say, for $600,000), where you’ll presumably stay for longer. To do that, you’d want to budget for about $150,000–$160,000 up front (including the 20 percent down payment, closing costs, and other fees), plus some cash reserves. The carrying costs would be roughly in the neighborhood of $4,000 a month, depending on your mortgage rate and maintenance costs. If you and your fiancé can cover that with your combined salaries, then godspeed.

Ultimately, you and your fiancé need to get on the same page about what kind of home you want to live in and how you want to build wealth. “Real estate is only one way to diversify income streams, and owning property can be a lot of work,” says Kanter. Before you sign up for a mortgage, she advises that you take full advantage of lower-lift investment opportunities like a 401(k), 403(b), or Roth IRA. “A lot of people think that real estate is the best path to passive income, but investing in the market works just as well and requires a lot less time on your part,” she says.

(Some mortgage lenders even require you to have up to six months’ worth of mortgage payments on hand.)

Why not 100 percent success? You don’t want to play it too safe and overshoot your savings goals, especially since you’re young and don’t plan to have kids. “We don’t aim for 100 percent, but rather the 60–90 percent range for your age group, because to achieve ‘the perfect score’ means that you would die with a large sum of money in your accounts,” explains Hussey. In other words, you don’t want to save so aggressively that you don’t get to enjoy your life in the meantime or die before you can reap the benefits.

You can open one at a brokerage firm like Vanguard, which will allow you to contribute money directly from your bank and invest it yourself (although if you want a certified financial planner to help you set things up, go for it).

As you get closer to retirement age, your portfolio will need to be adjusted for risk; a certified financial planner can help you with this process, too.

When you do retire, you should spend down your regular investment account first for tax-saving purposes, says Hussey. Don’t tap into your retirement accounts or social security before you’re at least 70, because you want to maximize the tax benefits and growth they offer. To see what your social security benefits will look like, you can check your statement online.

Here is a good sample pitch deck to use.

(Examples include the Home Care Alliance of Massachusetts and the California Association for Health Services at Home, to name a few.)

As a rule of thumb, you want to keep your housing costs around 30 percent of your household income.

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