How to crush your financial goals on a not-for-profit salary

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So I have this weird thing where I seem to not pick very lucrative career paths. I am a former teacher. I currently work in the not-for-profit sector. Both of these fields can be enormously rewarding and interesting, and I have loved both of these career trajectories for so many reasons:

  • They are different every day (this is really important for my restless brain syndrome).
  • They are creative.
  • You work with other people, and you sometimes even get to help them (to this day, teaching kids and teenagers is one of the things that has made me feel most accomplished).
  • There is always room for growth and professional development.

Not-for-profit work can be many things. As the name suggests, however, it is not known for being super profitable.

And I am totally okay with that. I have come to realize that money is not a huge motivator for me. I need some of it, I want a little more of it…but then I’m pretty much good. Rolling into six-figure territory was never a huge priority for me when I was building my life and making career decisions. Although that mindset is slowly shifting (cause let’s be honest, I would not complain about making more money), I am very happy working in the non-profit world.

Since entering the personal finance realm, however, I have been faced with a lot of stark realizations about my finances. Many of these revolve around my income bracket.

And I have been faced with the inevitable question:

Can I make my financial goals happen on my modest income?

Answer: duh, obviously.

Having a not-for-profit salary is no excuse for not killing it in your financial life. But there are a few things that may help you along the way to manage both your expectations and your more limited means:

Reap the rewards of those sweet, sweet benefits.

Salary may be a limiting factor for a lot of not-for-profits, but you know what often isn’t? The benefits package.

One of my employers more than doubled my pension contributions. Amazing.

I have also negotiated for my benefits to start right away, and not after the typical three-month probation period. This added thousands of additional dollars to my pension, and provided me with much-needed health insurance during those three months.

Added bonus: NGOs seem to rock vacation time, flexible work arrangements, and a host of other things that will make your work life way more awesome.

Be realistic about potential for salary growth and plan accordingly

You can make a good living in the not-for-profit sector. Many NGOs do offer salaries that are competitive – they just may not be able to scale in the way that you see in other (read: corporate) industries. Can you eventually earn a six-figure salary working at an NGO? For sure. But the not-for-profit world is generally going to compensate a similar skill set at a much lower rate than the corporate world. Check out this tidbit from Canadian Charity Law when it comes to paying CEOs:

“Even so, charities tend to pay less than private sector firms for similar competencies. For example, the charities in our study pay a median total compensation of roughly $150,000, compared to median salaries at S&P 500 companies of $1 million, excluding bonus packages and stock options that drive the median compensation up to $6.6 million.”

Overall, my advice is to be realistic about salary potential. Think carefully about your current role and your future career trajectory in the not-for-profit arena. Can you move up, and when and how would you be able to do that? Where will your salary max out? Some jobs are just never going to pay more than 50K a year. Are you okay with that? If you are, awesome! But if you’re not, you need to map your career accordingly.

Build the appropriate skill sets that make you competitive for moving up and working as a senior program officer or in an upper-management position at a larger NGO. Consider what areas of the non-profit world (e.g. fundraising) may be more profitable if this is something that is important to you.

You should still negotiate your salary.

It is already difficult to ask for more money when negotiating in a corporate environment. But I felt superrrr awkward asking for more money from an NGO. At the end of the day, though, you are providing a valuable skill set that deserves to be compensated fairly. I had to remind myself this about forty thousand times when I made a counter offer.

But it worked for me, and it can work for you too.

salary_negotiation_infographic_1450px_042915Be ready to side hustle.

But you already knew this was coming! Yes, yes you did. But the thing is, I didn’t. Until pretty recently, I really thought my 9-to-5 was the end of the road. I was too exhausted at the end of a workday, and I “deserved” to be able to relax (i.e. lounge around watching Netflix) every night.

In fact, working outside of work could be the very thing that separates me from just getting by every month and actually achieving financial wellness.  

I do make a good living at my current job. But supplementing it with an extra $5-10,000 a year?

That bump is what I need to make my financial goals happen, unless I want to be ridiculously frugal (which, I just can’t).

The great news is that education and not-for-profit work already set you up for some potentially lucrative (and enjoyable!) side hustles. You already have valuable and in-demand skills – if you decide you want to make extra money with it, there is no reason you can’t.

Here are some awesome things in both fields you can do to add some extra to your bottom line every month:

  • Coaching.
  • Tutoring.
  • Facilitating PD workshops/online courses for other educators.
  • Proctoring/invigilating exams.
  • Grading exams/assessments.
  • Passage/item writing.
  • Consulting.
  • Researching.
  • Freelance writing.

And finally, the single best thing you can do if you want to make it on a not-for-profit salary:

Track your spending and live within your means.

Most people are terrible at doing this, regardless of their income bracket.

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So beat out the rest by making an annual budget, using Mint, having a spending journal, ditching your credit cards (or all of the above!) – whatever it is you need to spend less than you earn.

Not-for-profit work can be beyond amazing, and there is no reason that you cannot destroy all your financial goals on a not-for-profit salary.

Is anyone else working in the non-profit sector (or another “traditionally underpaid” career)? What have you done to chart a successful career path?

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Why is personal finance so scary?

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I feel like many conversations about money I have had with friends, colleagues, and family members get stonewalled pretty quickly.

It’s just too much for people to handle.

There are too many things to figure out, to learn. For the love of God, why are there so many acronyms?

More importantly, there are too many things to decide.

I owe a big part of my financial awakening to Ramit Sethi’s “I Will Teach You To Be Rich.” I read it in the summer of 2015 (on a trip to Italy that I really couldn’t afford LOL). It took me another year and a half and a re-read in the fall of 2016 for some of the big takeaways from the book to really sink in.

In it, Ramit breaks down why most people are bad with money and it really comes down to our inability to make decisions. Decision fatigue is real. It’s why some pretty awesome people wear the same thing every day.

We don’t even want to pick our outfits in the morning. So learning about stock portfolios, GICs, dividends, tax-free accounts? It’s a lot.

Here’s a for instance for you.  I used to be totally crippled by this big, scary word: investment. I didn’t know how to get started; I didn’t know where to put my money, or much money I needed to begin investing. Do I have to pick stocks? Do I have to pay fees for this? Can I do this through my regular bank? What is a mutual fund?

So what do most people do when faced with an absurd number of questions?

Nothing. They do nothing at all.

That’s exactly what I did.  I never bothered trying to navigate the world of investing – I just got overwhelmed and gave up before I even began.

But doing nothing is one of your worst moves. Inaction is still a choice. In IWTYTBR, Ramit argues: “It’s more important to get started than to spend an exhaustive amount of time researching.”

If you do something, if you act, if you decide to be proactive with your finances, even if you don’t know everything about finance  (and you won’t) – you are still two steps ahead of 90% of people around you.

I am the furthest thing from an investment expert. But I am now an investor. Do I pick individual stocks? God no. But you don’t have to! (and many would argue that you really shouldn’t).

I think the biggest reason Ramit’s IWTYTBR made such an impact on me was because someone was finally speaking my language.

Somebody was finally articulating in a real way this challenge that we all face: deciding what to do with your money each and every day. And it can be overwhelming.

So start small. There is definitely something you could be doing differently with your finances.

Maybe you know that you should be saving for retirement, but have just been too freaked out to figure out how to do it. Maybe you tried investing, but you had a bad run-in with a broker or local bank associate, and then you just never revisited it. Maybe you have no idea what you’re spending your money on (hands up if you’re guilty…I am so so guilty).

It all gets very scary if you have to do everything all at once…but you don’t.  You just have to get started. Could you:

  • Spend 15 minutes reading about what an RRSP/401K is to help you figure out if you need one?
  • Take 10 minutes to set up an automated monthly transfer into a savings account, even if it’s only $20 or $50 a month?
  • Google an online budget or spending tracker (or steal one from the many amazing PF bloggers who graciously share theirs), and commit to tracking your spending for a week or a month?

Baby steps are okay.

But not making any decisions at all?  I did that for my entire twenties, and it didn’t turn out awesome.

So pick your thing. Work at that one thing. Learn about it. Get started. Make a decision, even if it’s not the perfect decision. You got this. Just remember:

“The single most important factor to getting rich is getting started, not being the smartest person in the room.” – Ramit Sethi, IWTYTBR

5 things about your finances when you move abroad

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When I was offered a job in Thailand in 2010, I only had 24 hours to consider the offer – which was pretty much all I needed, because I was in my early 20s and this seemed like the best. idea. ever.

The many implications of this decision – emotionally, financially, and beyond – were totally lost on me. It took me a number of years, and a painful amount of trial and error, to figure out things like “Oh do I need to be filing a tax return while living overseas?”

So here are five things about my finances I wish I had known more about when I first moved abroad:

 1 ) Your residency status matters (like a lot)

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This mostly applies to Canadians, and will involve some contact with the Canada Revenue Agency – sorry. For Americans, it’s more cut and dry because you typically pay tax on income earned anywhere in the world, regardless of whether or not you are residing in the United States (fear not, Americans, there are some fun things for you like the foreign earned income exclusion [FEIE], which exempts your first 91,500USD of foreign income from tax while abroad).

The main issue for Canadians moving abroad is that your residency status determines whether you will have to pay taxes on your foreign income. So this is a pretty big deal. For tax purposes, you will either continue to be a Canadian resident or become a non-resident when you move abroad. A couple things to know:

  • You can only be a non-resident if you are out of the country for more than half of the year (183 days, to be exact) and do not have significant residential ties to Canada. This sounds complicated but it basically means: Do you own a vehicle in Canada? Do you own property in Canada? Is your spouse in Canada? And so on. Quite literally, do you have things that tie you to Canada
  • The government determines your residency status on a case-by-case basis, so you will need to fill out a “Determination of Residency Status” form before you leave! (http://www.cra-arc.gc.ca/E/pbg/tf/nr73/README.html­). Basically you answer a bunch of questions and if you have “too many ties” to Canada, you will probably maintain your residency status despite living abroad.

If the CRA determines you to be a non-resident, you only have to pay taxes on your income inside Canada (i.e. from a rental property, Canadian dividends) – whatever you earn in your new country of residence will not be touched by the Canadian government (yusss). You will usually still have to pay some kind of income tax to your new country of residence, however.

Remaining a Canadian resident means that you may be liable to pay taxes on your foreign income. Rest assured, all is not lost – you need to check if your home country and new country of residence have a tax treaty. If they do, this most likely means you would be considered a deemed non-resident (woot you get the benefits of being a non-resident even though you have residential ties) and this keeps you from getting double-dinged on taxes. The US has tax treaties with many countries as well for this exact purpose.

Also, side note: a bunch of countries DO NOT HAVE income tax at all. Um so get exempt from taxes in your home country and just move to one of those: http://nomadcapitalist.com/2015/09/07/tax-free-countries-second-residency/.

2) You might not have to pay for flights or moving costs or insurance or rent!

Now for the fun part! Going overseas for a new job often means you get a killer employment package. Here are some of the amerzing perks I have either personally had in my overseas posts or that friends and colleagues have had:

  • Round-trip airfare. This is usually from your point of origin/hometown to your new kickass city. This could be just at the beginning and end of your contract, but many places will fly you home once a year.
  • A moving allowance. These vary enormously – I have seen them range anywhere from 500 to 5000 USD. Use it to ship things in advance or for unaccompanied/extra baggage during your move.
  • A settling-in allowance. Oh the magical settling-in allowance. I got a hefty sum when I moved to Istanbul and newbies use it for everything from IKEA trips to pub nights.
  • Housing allowance. You will often have your accommodation mostly or entirely covered. Let that sink in for a minute – you do not have to pay rent. In my most recent overseas gig, I received 1100 USD/month for my housing allowance.
  • Medical insurance. I am not kidding when I say that private medical care in other parts of the world is state of the art. Your employer will usually hook you up with a pretty impressive medical and extended health insurance package.
  • Pension.  Much like moving allowances, retirement plans vary on the international scene but many potential employers offer something in the way of a retirement fund. There are often eligibility requirements, such as fulfilling a two-year contract before you become eligible, but there is usually something. And many employers will match.
  • Free tuition for your little humans. International gigs will usually include tuition at an international school for your kiddos. If you are teaching at said international school, you will typically have tuition for one or two dependent(s) per teacher. Other jobs may cover tuition for all dependents.
  • Cars, cell phones, language lessons, and more! Depending on how crazy you are willing to go with location, the packages become more and more enticing.

With all these perks, your monthly expenses could be anywhere from significantly reduced to almost non-existent. Hello, savings potential. And that brings me to my next point…

3) Savings potential, not salary, is what matters

I cannot emphasize this point enough – the actual salary of a job posting overseas can mean so very little. There are many international job postings with salary ranges between 20-25,000USD. Chump change, right? Not so much if you’re working in Nicaragua.

European jobs will often post salaries well into the 70-90,000 Euro range…and those employers may tell you not to expect to save a dime of it.

Ultimately what does matter is the savings potential of your particular salary in your new country. Colin over at Rebel with a Plan does an awesome job in one of his latest posts breaking down how he lives well on $1200 per month in Bangkok, Thailand (check it out here: http://www.rebelwithaplan.com/how-i-live-well-on-1200-a-month/)

I know couples that have been able to live on one salary and entirely bank the other – while living an extravagant lifestyle. They found the right country with the right savings potential.

4) You might not be able to contribute to your RRSP, or 401K, or TFSA…

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[Insert familiar financial acronym here] – you might not be able to contribute to it while you’re away. You can leave the money already in your RRSP and TFSA alone and let it grow while you’re abroad. But for Canadians who are considered non-residents, you do not accumulate new contribution room in your TFSA and RRSP. For Americans, whether you can contribute to your IRA or 401K depends on a number of factors, namely whether you have earned income on your US tax return. Please please do a little homework to make sure you are still eligible to contribute before dumping money into your tax-sheltered and/or registered accounts while you’re away – you may need to find new investment alternatives while you are living overseas.

 5) Staying on top of your finances at home is super important

One of my biggest financial missteps took place the first year I was living abroad. It was this super fun time where I missed my Canadian cell phone bill….by more than 90 days. Just for a little perspective, this is as bad for your credit as filing for bankruptcy. And my credit score is still paying the price about six years later.

The worst part? Nothing about missing that bill had to do with the fact that I didn’t have the money to pay the bill. I was making great money at the time. I just had different bank accounts and credit cards and bill payments in different countries…and I lost track. When you leave your home country, get systems in place to keep your financial life at home running smoothly. Ensure that you have an automated stream of money into your home accounts and automate your bill payments from there. You might be overseas, but your financial obligations back home do not disappear.

Living abroad can be an incredible (and lucrative!) experience, but definitely takes some unique know-how when it comes to your finances.  This list is by no means exhaustive, but I hope it offers a starting point for five things you really need to consider if you’re thinking about (or already!) living overseas. Hit me up in the comments if you have any more questions about your finances when abroad!

A Year of Financial Firsts: Those 2017 Goals

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2017 has already been a financially noteworthy year for me.

Why? Because this is the first year of my life that I have set financial goals. I mean, who has time for financial goals when you’re busy throwing your next paycheck at a week-long trip to the south of Thailand?

When I was 25, I would have awkwardly shrugged if anybody had asked me how much money I planned on saving that year (which nobody did, ever). RRSP? The acronym alone was enough to make me shudder.   And if my conversations with my co-Millenials tell me anything, I know I’m not alone here.

As I started digging a little more into the PF community, I realized that money is like everything else in life. You don’t need to have everything figured out right off the bat. You just need some basics and more importantly, if you want to make things happen, you actually have to set some goals. Crazy that.

So I did. In early January, I thought really long and hard, not just about what I wanted to see in my accounts at the year end, but what the journey would look like. What would make this time different? It’s not like I had never tried to get my financial act together before. I had, and failed many times. What would suddenly making saving and budgeting compelling to me – compelling enough to actually do it for the whole year (and beyond)?

I thought about other areas of my life where I have been successful. I lost 30 lbs. about seven years ago and have since kept it off. In fact, I never worried too much about gaining it back. Sure, I continue to count calories here and there and go to the gym on a semi-regular basis. But I realized why I was successful in getting – and keeping – that weight off. I never wanted to give up chocolate or wine when I was losing weight (uh, obviously). So I didn’t.

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For real.

I set reasonable, attainable goals. Things I was actually willing to make myself do for more than a couple weeks. Goals can be ambitious, sure – and if you look around the personal finance community, you will find people who are making absolutely magical things happen – but you have to make sure you are actually going to swallow the pill you prescribe yourself for more than a week.

With that in mind, I developed my three financial goals for 2017:

 

Goal #1: Track every dollar I spend – for the entire year.

To PF vets, this might seem like no biggy. But this is HUGE for me. I can’t tell you the number of times I’ve tried to “make a budget.” This is seriously deserving of air quotes because they were such half-hearted attempts. I would always hang in there for a couple weeks, and then one of three things would happen:

  • Life.  Life would happen. Stress, fatigue, or unexpected commitments would inevitably arise. Suddenly, jotting down my expenses for the day seemed not so important.
  • Boredom. Tracking can just be sooo boring. I was usually attempting it pen-and-paper style and wow, there were few things I hated more than that little notebook.  I just didn’t wannnnaaa.
  • Fear.  So much this. One or two weeks into my spending diet, I would make a purchase that would knock my monthly budget out of whack. I would freak out, go into complete denial, not write it down in my little tracker – and then never track anything ever again.

So how was a former binge-money tracker going to actually pull off this goal for the year? Answer: I developed an amazing, colour-coded, totally inspired Excel spreadsheet. I know, inspired and spreadsheet do not belong in the same sentence but bear with me for a second.

It’s colourful. And it has all the automatically summing cells.

It just so happens I have to Excel my way through work every day so I’ve actually picked up a few handy tricks. I finally devised a spreadsheet that I knew I could fill out in less than 30 seconds every day, and that would automatically tally all my spending – not only for the month, but the year. I told you – amazing, right?

Not only that, but being able to see how my daily expenses would look in the big picture of months and years – and affect my larger financial goals – now that is something that is actually interesting to me! I am definitely a big-picture person so this was a huge win. January got me off to a great start – I have tracked every penny in 2017 so far and I am now mildly obsessed with my beautiful, colourful spreadsheet.

 

Goal #2: Outdo the “average” Millenial

Okay okay, I know comparison is the thief of joy, but a little competition never hurt. The average Millenial has a net worth of $10,400. Plain and simple, I want to exceed this before the end of 2017. Given that I have a small mountain of debt from my graduate degree, this will take some work, but it is definitely within reach.

If I achieve this, it would also represent the first time in my adult life that my net worth is in the black.

 

Goal #3: Add an additional source of income

Although this may be a mistake, I haven’t quantified this particular goal. I have no set amount that I want to earn in addition to my regular income. My regular income is sufficient to meet my monthly budget needs, pay down debt, and save. But I am so over being in debt and would love to pay it down more aggressively while throwing some extra dollars at my investment account.

I have some good prospects and a handful of leads for extra income that I’ll get into in another post. 2017 is really about developing them and making additional income streams part of my mindset for attaining financial well-being. There are limits to my frugality so a big part of making it rain to me is figuring out how to channel my skills to make additional income outside my day-to-day.

 

I am pumped about these three goals and I am so excited about how my January has gone. What goals have you set for 2017 and how has the first month of the year treated you?