Latest news with #MichelaAllocca
CNBC
4 days ago
- Business
- CNBC
30-year-old worth $700,000 shares 4 spending habits she avoided in her early 20s: 'I don't have any regrets'
Personal finance consultant Michela Allocca made some financial sacrifices in her 20s, and she has no regrets. At age 30, Allocca has a net worth of more than $700,000 according to documents reviewed by CNBC Make It. In her experience, you sometimes need to make temporary sacrifices to stay grounded financially, even when it feels like everyone else is spending, she says. "We act like not having these things in our early 20s means we're never going to have them," says Allocca, the Chicago-based author of "Own Your Money." But often, "they're status signal things," rather than things people "genuinely and sincerely care about," she tells CNBC Make It. Holding off on certain expenses early in her career helped her stay on track financially, Allocca wrote in a recent LinkedIn post that detailed four financial habits she avoided in her own early 20s. Here are those habits, and what she did instead: The social pressure to travel in your 20s can be strong, whether to become more worldly or simply because it seems like everyone else is doing it, says Allocca. Many young people take big trips right after college, often with little thought about whether it's affordable because they believe, "well, money will always come," she notes. Even a budget-conscious trip can cost $1,000 to $2,000, an expense that's particularly hard to justify early in your career when you're earning a low salary, says Allocca. A single trip can cost as much as an entire month's rent: Gen Z spends an average of $1,600 per month on rent, according to data published in January by credit firm Allocca was 22 and earning $60,000 per year in Boston, flights in particular felt expensive relative to her income, so she focused on taking affordable, domestic trips, she says. While she began taking bigger trips by her late 20s — including a recent visit to Japan — she says they were planned and budgeted for well in advance. While she now travels on her own terms, she says it's "both normal and OK" for people in their 20s to hold off until they can afford the expense. "If I am going to go on a vacation, it has to be something that I actually want to go on, not because I'm feeling pressured to go somewhere," she says. Whether it was sharing one bathroom with three other roommates or moving back in with her parents during the Covid-19 pandemic, Allocca chose not to live alone for most of her 20s. "I was able to continue to save, on average, about $1,000 a month because I wasn't dumping all my money into rent. And that actually really helped me get ahead" on investments, she says. Social media can create unrealistic expectations for what early-career earners can afford, says Allocca. In large cities like San Francisco or New York, residents need to earn more than $100,000 annually to keep rent below the commonly recommended 30% of their budget, according to a Zillow report published in May. "I feel bad for Gen Z, because their perception of what's normal at their age is so warped," she says. "There's all this [online] pressure for young people to live in a high-rise or live alone in these major cities, and it's just not reasonable." At age 27, Allocca finally decided to live alone in a nicer apartment with more space and amenities. She needed a home office, and by that point, knew her income could support a roughly $1,000-per-month rent increase without derailing her financial goals, she says. Allocca took a minimalist approach to her wardrobe in her early 20s, often buying the same pieces in different colors and sticking to a few signature shades so everything was easy to mix and match, she says. She shopped mostly at inexpensive stores like Primark and Old Navy, she adds. "When you have a general color scheme, you can match your clothes easier," says Allocca. "It also helps eliminate the paradox of choice." Her approach kept her clothing costs low. "I wasn't prioritizing shopping as part of my budget," Allocca says. "If I did need to buy something, I was going to those really inexpensive stores so I could get the least expensive version possible." Today, she uses the same principles for what she calls a capsule wardrobe of "elevated basics" — versatile pieces that work with most of what she already owns, she says. She's now more willing to spend money on better quality that she knows will last for years, she adds — like a roughly $450 cashmere sweater that's currently the most expensive item in her closet. In her 20s, Allocca avoided spending on things she could easily do herself. When her walk to work was about 30 minutes, she'd make the trip on foot rather than paying for a ride or public transit, she says. "I didn't take any unnecessary Ubers, I never ordered delivery," she wrote on LinkedIn. Many people justify convenience purchases by thinking "my time is so valuable." Allocca didn't see it that way, she says: "The time that I was saving, I wasn't doing anything valuable with it. So what difference does it make if I spend the 10 extra minutes to go walk and pick up my dinner?" She only ordered out from restaurants within walking distance, she notes. "If I'm not willing to go pick it up, then I'm not ordering it out, I'm cooking at home" she says. "To me, it's creating some parameters around, 'Is this reasonable?'" Even today, Allocca rarely allows herself to pay for convenience, and only in "extenuating circumstances," she says — like paying for delivered groceries after coming home from a long trip. By consistently avoiding most convenience costs, from rides to delivery fees, she says she's freed up around $200 per month. When paired with her low rent, that money "made a big difference" in her ability to save in her 20s, she says. And while she sacrificed some comfort in her 20s, "when I look back at all of these things, I don't have any regrets," she says.
Yahoo
16-06-2025
- Business
- Yahoo
4 key steps to help you retire early
The Financial Independence Retire Early (FIRE) movement is gaining steam as more people aim to retire early by managing their money differently. Michela Allocca, founder of Break Your Budget, explains how tracking expenses can speed up your path to financial independence. To watch more expert insights and analysis on the latest market action, check out more Wealth here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
08-02-2025
- Business
- Yahoo
5 Money Milestones To Work On in Your 20s, According to Michela Allocca
In your 20s, building a strong financial foundation can feel daunting — and it might even be the furthest thing from your priorities. Thankfully, it doesn't have to be overwhelming and can be broken down into manageable, very digestible steps that can be tackled one at a time. By this stage, you likely have the basics down already — understanding debit and credit, saving money, and creating a budget. But this decade is more than just knowing the financial ABCs; it's a crucial time for setting the groundwork for lasting financial success. Read Next: Learn More: 4 Things You Must Do When Your Savings Reach $50,000 Michela Allocca, founder of Break Your Budget, recently shared an Instagram reel in which she highlighted five essential money milestones every 20-something should aim for to set themselves up for financial stability and growth before turning 30. Here are five milestones to tackle in your 20s, according to Allocca. In your 20s, life can be filled with unpredictable twists and turns, as these years are often filled with travel, new career ventures and bigger life purchases. To give yourself a buffer should unexpected expenses arise, Allocca recommended setting aside three to six months' worth of expenses in a high-yield savings account during your early 20s. These 'rainy day' funds are meant to tackle unexpected expenses you can't plan for, protecting you from having to take on unnecessary debt and giving you peace of mind. According to research conducted by Empower, 21% of Americans don't have any emergency savings, and 37% can't afford a $400 emergency. Check Out: At 22, retirement probably feels like it's light-years away. However, the key to building a hearty retirement fund is starting early and letting compound interest interest work its magic over time. According to Allocca, aim to add 1% to 3% of your annual income to a retirement account when you land your first job and grow from there, increasing the amount over time. If you start saving for retirement in your 20s, you are already ahead of the game. Keep in mind, however, many financial experts recommend saving 10% to 15% of your annual income for retirement. Start small and incrementally increase your contribution percentage to get closer to this target before turning 30. While it may seem like a low priority now, your future self will thank you. A decent credit score is essential for life's big milestones — buying a house, financing a car or even renting an apartment. It can also help you secure better interest rates and show off your financial responsibility. Building a good credit score doesn't happen overnight, but by your mid-to-late 20s, aim for a credit score above 700, according to Allocca. If your credit score is currently in the red zone, don't panic. It's never too late to turn things around. Establishing a solid credit score means practicing good habits over time. Pay your bills on time, minimize debt and practice responsible financial behavior. These habits will help you not only build a strong credit score but also establish a solid financial reputation that can open doors for future goals. Thinking smarter — not harder — is key to building wealth in your 20s. By building another income stream, especially one with passive income potential, you can diversify your finances and build wealth at a faster pace. Your late 20s are a great time to start thinking bigger and adding an income stream — whether it's a part-time gig, a side hustle or even a business, Allocca advised. She recommended exploring your passions and choosing something you enjoy doing. After all, if you can make money doing something you love, why not? With fewer financial obligations and more flexibility to take on risks in your 20s, this is the perfect time to experiment with new ways of achieving financial stability. Options like real estate investments, freelancing, online courses and affiliate marketing are some popular avenues to start from, but pick something tailored to your interests and have fun with it. Plus, side hustles are more common than you might think. According to a LendingTree survey, 55% of millennials and Gen Zers have one. The final milestone to tackle before 30 might surprise you. While investing is one of the most widely recommended ways to grow wealth, Allocca suggested holding off until your financial foundation is solid. 'Once you've paid down your debt, [and] are comfortable with your retirement contributions, this is an [opportunity] to invest BEYOND retirement through a brokerage account,' Allocca said. Investments made in your 20s benefit from compounding growth, allowing your money to work for you over time. So it's important to be intentional with your choices so you can reap the rewards later. For young investors, popular investment avenues include stocks, bonds and mutual funds. Stocks offer higher risk with potentially greater rewards, bonds provide low-risk stability, and mutual funds offer broad diversification and minimal oversight — making them an excellent choice for beginners. More From GOBankingRates 4 Subtly Genius Moves All Wealthy People Make With Their Money 4 Unusual Ways To Make Extra Money That Actually Work This article originally appeared on 5 Money Milestones To Work On in Your 20s, According to Michela Allocca Sign in to access your portfolio
