A mix of full-time, side hustles, and contract work.
I have been—by all accounts—incredibly fortunate in my career thus far, but there are a few distinct takeaways I notice when I reflect on the last five years.
Since I went to a public state university and studied communications (not exactly a field with investment banking-level compensation), I figured I’d be a median earner forever.
Discovering the art of the side hustle (and freelancing, contract work, and online businesses) sent me down a meandering path of trial and error that I’m recounting on the show today.
When I started working, I earned $12/hour, which transitioned later to a full-time salary of $52,000. By 2021, as a 26-year-old with no advanced degree, my total cobbled-together income encroached on $400,000.
Looking back on it, I realize: The rules are fake. You don’t need to study finance or medicine at Harvard to make good money (though to be fair, I’m sure those things make it a lot easier). Regardless, it’s my hope that something in this episode will spark something useful for you.
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Katie: Just five years ago, my total pretax income was less than $20,000, and last year my pretax income was more than $300,000. Today, I am breaking down the winding road I took to increasing my income, everything from side hustles to contract work to freelancing to starting my own little operation. If you're trying to increase your income or you're just curious, today's episode probably has a nugget or two of hot and spicy takes for you.
Welcome back to The Money with Katie, Show, #RichGirls and Boys. And today we are diving into what I am colloquially referring to as “My Income Journey,” because it makes it sound more mythic and cool. I'm your host, Katie Gatti Tassin. Now, I wanna clarify up front that I think it's mildly dicey territory to take specific things that worked for an N of one, and attempt to deduce broadly applicable themes as generalized advice or takeaways. But to the extent “My Income Journey” is useful or inspiring or sparks an idea or two for someone, we're gonna walk down that meandering path today, and as if I were an elected official running for reelection, I'm going to use my tax returns as helpful guidance to make sure I am being as accurate as possible. It's gonna be all pre-tax income we're talking today, as reported to the IRS. We stan a documentation queen. Hashtag Form 1040. Before we get into it today, I wanted to mention that the 2023 Wealth Planner (ahh!) launches at midnight tomorrow, November 25th. So excited. This is the first year we hired an Excel freelancer to help beef her up, and I'm really pumped about some of the enhancements we've made. I'll link more information in the description, but this is the Money with Katie flagship product, and I am proud to say it is the best it has ever been.
All right, let's start with high school and college, 'cause I've always found those life income recaps that include someone's first six figure business they started their junior year of high school, selling charm bracelets to unsuspecting middle schoolers, to be hella demoralizing. At the time, I was mostly concerned with concealing my cystic acne and not getting caught schlepping bottles of Pink Lemonade Burnett’s to Molly's house in high school. All that to say, fortunately for you, “My Income Journey” does not begin there. I did work part-time making $7.25 an hour at a daycare and a gym (fun), but I usually spent that money right away on gas and trips to Applebee's on half-price appetizers. Wish I were kidding. In fact, “My Income Journey” doesn't really begin in earnest until after college. I worked two different part-time jobs in college. One during the school year for $8 an hour for a real estate marketing company, and another internship between junior and senior year that paid $12 an hour. I mostly blew through that money immediately on $20 bar covers and Tuscaloosa's hottest boutique fashion. So by the time I graduated, I had less than, well less than, a thousand dollars to my name, but crucially, no debt. I attended a public state university on a full tuition scholarship, and my parents covered room and board. So I was incredibly fortunate to be in the minority of students, I think it's like 39%, who graduate from college without any debt.
In some ways, the fact that I could blow through all my part-time income in my teens and early twenties is less a, like, flippant admission of my own irresponsibility and more a function of the fact that my basic needs were met by my parents. I didn't have to learn to budget because I was not accountable for providing my own food and shelter, and that in itself is a tremendous privilege. But that all changed once I crossed the graduation stage.
So let's pick this story back up in 2017. After graduating, I got a postgrad internship, again, making $12 an hour, for the same Fortune 500 company. And as anyone who's attempted to pay their rent in the 21st century knows, $12 an hour is not enough to live on. After taxes, my take-home pay was around $1,400 a month. That summer I benefited greatly from the generosity of a friend's empty nester aunt and uncle. Without her relatives, I would not have been able to afford to take that job. My friend had landed a similar internship with similarly low pay at the same company. So we both lived in her aunt and uncle's spare bedroom for the summer, and the deal was that once the summer ended, we needed to have real jobs and move out. Fortunately for her, she scored her full-time position at the company first, earning a bewildering sum of money: $52,000. And when she told me her starting salary, my jaw dropped. After graduating with a communications degree, I was hopeful that I would earn $45k on the high side. $52k might as well have been $520k. I was envious. Simultaneously, it did give me this number to anchor to, and I started to wonder whether it would be possible for me to get a salary that high, too. So that summer was spent going above and beyond to catch the attention of someone, anyone with decision-making power, because I desperately wanted a full-time job and desperately wanted it at that company. The office environment was pretty casual, but I still tended to be that try-hard who was always dressed up, always there early, always seeking out work from other teams in an attempt to impress anyone who would look in my direction for six seconds, and my absolute delight, all the sucking up worked. I lucked into a really fantastic manager who advocated for me when it came time to determine if any of the open positions would be a good fit. And a director-level colleague took notice of my work. She called me into her office on Friday afternoon and informally offered me the copywriter role on our team, starting at the level above entry.
To this day, it was one of the happiest, most surreal, gratifying moments of my entire life. It felt like all the corporate jockeying and worrying that I had done for the past two summers actually worked. And when the recruiter called to formally offer me the position, she said the same number that I had been clinging to since my friend received her offer: $52,000. And bizarrely, that is also the same day I met my now-husband, Thomas. I went to meet a friend after work to celebrate, and he was there. So like a life-changing day all around. Over the moon was an understatement. At that moment, I felt richer than at least three of the Kardashians. Sorry, Rob. I started my job that year in late September, and between my internship earnings and a couple months of full-time work, my 2017 pretax earnings were $19,252. We'll be right back after a message from the sponsors of today's episode.
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Katie: Moving on to 2018. So 2018 was another year mostly the same. That spring, about six months into working full-time, I was given a 3% merit increase. This was mostly just the inflation adjustment that everyone received, but I was still really excited about it, and my salary went up to $53,560, and I received a small cash bonus that year of around $600. This was also the year that I became a yoga instructor for a big name corporate yoga conglomerate. You probably know the one. And I earned $12 an hour teaching classes. So I went through this hundred-hour training in the spring—it was a thousand dollars—and started teaching two classes per week in the summer.
This was my first side hustle, and it was valuable to me for three reasons. Number one, it opened up my eyes to one's ability to earn money outside of one's full-time job. I will never forget a conversation I had with a particularly ambitious, cool, older girl colleague in my full-time job who mentioned that she babysat the children of rich people every night after work to supplement her income. And I remember asking like, wait, but you have a full-time job already. Why do you need to have part-time jobs, too? And her response made me feel, accurately, like a person who had not yet come to terms with the reality of wage stagnation. “Uh, to make extra money.” Only a few months into working full-time myself, it had not yet occurred to me that this was an option on the table, and I wanted in.
Number two, it made me realize how much free time I had. I adjusted quickly to my new schedule, which was one class at 6:00am on Tuesdays before work, and then another class at 6:45pm on Thursdays after work. And I noticed I kind of felt bored on the evenings where I wasn't teaching. By this point, my postgrad working girl happy hour obsession had subsided, and I found myself spending a lot of time in my apartment watching TV. So paradoxically, teaching two classes per week made me notice all the other free time I had in my schedule outside of my nine to five.
And number three, it introduced me to my love of fitness and consequently getting hashtag #fitforfree. Making an incremental $12 an hour twice per week was not life-changing money for my median cost of living area. But the gig came with a free membership to the studio worth $140 a month, as well as standby access to other studios in the area, allowing me to try other formats that were previously way out of my range of comfortable affordability, like Barry's Bootcamp and SoulCycle. Crucially, this made me realize that taking a part-time job in an industry I liked patronizing as a customer could serve the financial double whammy of supplementing my income a little bit, and helping me save a lot on things I'd be paying for anyway. When all was said and done, in 2018, I earned $54,108 from my full-time job and $852 from teaching fitness, or $54,960 total.
Around this time, though, my obsession with personal finance was reaching a fever pitch, and I started doing little coaching consultations with friends, acquaintances, colleagues. So for like 50 bucks an hour, I would spend a few hours reviewing someone's income, spending, and debt, and build a budget and teach the basics of investing in like a 401(k) and Roth IRA. I supplemented my income with this little tiny consulting business, mornings, evenings, weekends, whenever I wasn't at work or in cycle training. Finally, in October, I got onto the schedule teaching two classes per week, Monday 7:45pm and Thursday 5:30 pm, and the classes actually paid an outrageously higher sum than my previous teaching gig. It was $25 per class plus $2 a head, meaning you could earn $125 for a full 45-minute class, which was a far cry from the $12 a class I had earned at the aforementioned yoga conglomerate. So all told in 2019, I earned $60,656 from my full-time job and $2,085 from teaching cycle. $62,741 pretax total. I'm not sure how much I earned from consulting because I didn't really do it very often or charge very much, and didn't have any tax forms associated with it. It was a pretty informal Venmo op, but pretty sure it generated less than $500 overall (sorry, IRS). When I say 2019 laid the groundwork, I'm mostly referring to the fact that I finally felt like I was earning real money from my side hustle: several hundred per month, which, with a take-home pay of around $3,000 from my full-time job, was relatively substantial. It also was the first time I realized I could charge another individual for a service or product rendered, and was probably my first taste of entrepreneurship on a very micro scale.
But 2020 was when things really started picking up for me, and I realized my income limitations were somewhat imaginary. Being freed from the daily commute and 40 hours per week in an office building was given the privilege of seeing my time as endlessly monetizable, which is a blessing and a curse, my therapist says. So by the end of 2020, I had earned $64,121 from my full-time job, $13,489 from hourly contract work and freelancing, and $12,475 from teaching fitness, or a total of $90,085. Unfortunately, my tax forms also revealed that I ended up owing $4,920 in taxes, mostly because the hourly contract work didn't withhold anything and the fitness gig didn't withhold enough.
So by this time, I was inching closer and closer to the six-figure mark, and I was becoming really, really obsessed with generating extra income; I had nothing better to do, and it started to feel like a game. By year end, I'd been doing Money with Katie as a side project for about eight months, and I wanted to launch my first product, the Wealth Planner, the fourth iteration of which launches in a day.
So that brings us to 2021. In 2021, I doubled down on everything, with the exception of teaching fitness, because I moved to another state, didn't find a comparable studio, so I kind of let that go. With my weekends, nights, and early mornings now freed up from going to a studio, I had plenty of time to channel into my full-time job, hourly contract work, and turning Money with Katie into something that would generate actual revenue. About halfway through the year, I switched companies. I figured the road to recovery for my pandemic-affected industry was going to be long, and my single largest source of income was limited as a result; pivoted to tech. And after several failed interviews and ghosted resumes, I finally landed a job with a new salary of $115,000. On the Money with Katie front, I released an episode a few months ago entitled “Building a Six-Figure Side Hustle” that goes into detail about exactly how I monetized Money with Katie.
But the TL;DR is, Money with Katie became my largest source of income in 2021. While I had worked part-time doing contract work and continued to work full-time throughout the first half of 2021 while building Money with Katie, by the time I switched to my higher-paying full-time job, I decided to stop working part-time and only focus on two things: my new full-time job and Money with Katie. Between my two full-time jobs—so, one in the first half of the year and the higher-paying job in the second half of the year—I earned $96,379, and then another $34,867 from the hourly contract work in the beginning of the year before stopping. And here's the big one: $241,016 for Money with Katie, before taxes. Like I said, for the breakdown of revenue and how I scaled, check out that “Six-Figure Side Hustle” episode because it's super in-depth, but in total 2021 pre-tax, it was around $372,262. So I owed about 40 grand in back taxes on my business income. So call it like $332k in take-home pay…I don't know. Another sidebar: One of my earliest episodes was about ways to lower taxes on self-employment income. The production quality is terrible, but the content is great. So check that episode out too. I would've owed a lot more had I not instituted the practices in that episode. We'll be right back after a message from the sponsors of today's episode.
Sponsored content: Paid non-client of Betterment. Views may not be representative. See more reviews at the App Store and Google Play Store. Learn more about this relationship at Betterment.com/MoneywithKatie. Today's Money with Katie episode is brought to you by Betterment. I would never dismiss your concerns surrounding market volatility. What I will tell you is that personalized investing was built for days like these. Betterment can help you make a plan tailored to your goals to help you make the most out of your money. They offer expert-built portfolios that you can select based on your interests and the issues that matter to you, like social justice or innovative tech portfolio. And with automated rebalancing, your portfolio can stay diversified at your chosen risk level. Sign up in minutes at betterment.com/MoneywithKatie. That's betterment.com/MoneywithKatie. You’ll thank you later.
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Katie: Let's bring it all home. I have no idea what my final income in 2022 will be. Obviously I don't have any of those tax forms yet, but now I only do Money with Katie and other Money with Katie-related things. And for me personally, increasing my income meant trying a smattering of approaches, switching companies, freelancing in my traditional career field, doing part-time work in a completely different industry, starting my own business twice. I hope this episode highlights two very crucial things. There was certainly sacrifice and hard work involved, no doubt, but there was also a fair bit of luck that I wrote about in this past Monday's blog post. We’ll link it in the show notes. That's partially why it's challenging to say any one takeaway is broadly applicable or perfectly replicable. It was a lot of trial and error. Taken together, though, I think it paints the picture of diversifying effort, making the best decisions we can with the information available to us at the time.
Only one of the things mentioned ended up being singularly high-income-generating with a lot of upside. But it's important to remember that no two paths are the same. It is probably reasonable to assume that had I stuck with a career in tech or really doubled down on building a personal brand around being a fitness instructor or something else entirely, that eventually any one of those things could have had the potential to pan out into a similarly successful venture. That's just not what happened for me so far. At least the thing that panned out brought with it an opportunity that introduced some semblance of stability and longevity, via the Morning Brew acquisition and contract. And I had a choice to make about which direction I wanted to take. And of course the story's not over yet. I have no idea whether or not I'll look back on this someday and feel like I made the right decision. I'm still figuring things out as I go. And for right now it does feel like the best decision. But like I said, we can only make decisions with the information we have available to us at the time.
So to close, I wanna talk about making your own luck. This is the mantra that has really stuck with me since college: make your own luck. It sounds like a worst hits compilation of woo woo mindset and grindset culture. But its origin story in my life may explain why it has been so sticky. My senior year of college, it felt like the prior four years of extracurricular activities and studying were finally paying off in a couple big ways. And I called my dad one day, rife with imposter syndrome, and divulged, “Oh my god, I feel like I'm just getting really, really lucky right now. Like I have this fear that the other shoe is about to drop. I'm afraid my luck is gonna run out. What if this is the most success I'm ever going to have in my life? Like, what if it's all downhill from here 'cause I've just gotten really lucky?”
And what he told me stuck with me. He said, “Well, it might be, maybe it is, but maybe you can make your own luck.” And it gave me a sense of control that has helped me keep my head down and keep going when things feel challenging. “I'm making my own luck,” I would tell myself as I was driving across town at 4:45am to teach a 5:30 class, or as I would stay up late writing a blog post for a website that had yet to earn any money. Whether that sense of control was false or not, it certainly incentivized me to keep going. There is, of course, the element of luck that is inherited from various socioeconomic factors. Growing up as the only child of two college-educated, working parents who emphasized the importance of education both psychologically and financially—I did nothing to deserve that. I just benefited from it. But like I said in the beginning, it's not necessarily accurate to take specific things that worked for one person, in this case me, and claim that they make great applicable advice or takeaways for everybody. But I am hopeful that there's at least one nugget in here that may serve someone else who is hoping to increase their income, or at the very least, satiate your curiosity about how I ended up in the position I'm in now. And if this episode works for you in the same way that the conversation with that older babysitting coworker did for me, then that is a W in my book.
Welcome back to Rich Girl Roundup. We take listener questions every month on the Money with Katie Instagram account and answer it from a “What would Katie do?” POV. I am not a licensed financial professional and this is not financial advice. Paid non-client of Betterment. Views may not be representatives. See more reviews at the App Store and Google Play Store. Learn more about this relationship at betterment.com/MoneywithKatie. This segment is brought to you by Betterment, the online investing platform that gives you the tools, inspiration, and support that will help you become a better investor.
This week's question is from Haley. “My husband works a government job with great retirement benefits. He loves his work and doesn't have the FIRE desire like I do. Is there a way to run the calculations for a pension and lifelong health insurance plus steady income through his work? I want to retire early.”
Same, Haley. Okay, Haley, you and I are on the same page here. I also have a husband who works a government job, so we are kindred spirits. I am struck by this question, because while we are approaching it as a FIRE exercise, what it really boils down to is the relatively common family question, which is, can we afford to drop down to a single income and still retire? So the first question I have is, is the income you will be retaining enough to support you both with your current standard of living? That will make a big difference in the answer today. So let's break down this question into a few different components. We have the pension aspect, we have the healthcare aspect, and we have the continuing steady income aspect. So each facet of the situation will impact it a little bit differently. But I think the first important step is determining how much our lives cost, and by extension, how much income we need to produce after we FIRE completely. For the sake of the example, I'm gonna use $5,000 per month in expenses. Nice round number. So if your life costs $5,000 per month in 2022 dollars, that means your income, either from work or from investments, needs to spin off at least $5,000 per month after taxes for you to comfortably live your life adjusted for inflation, though we'll get to the inflation part in a little bit. Of course, that assumes our expenses right now are representative of what they're gonna continue to be in the future. So for example, if we plan to have three children between now and then, our expenses will change. Likewise, if we already have three children and they're about to be out on their own, our expenses are also probably going to change. This is part of the underlying challenge of FIRE more broadly, that as your circumstances change, often, so do your expenses. Healthcare is part of this uncertainty conundrum in the US (fun), though in this case it almost cancels itself out. Having healthcare now and later means your health expenses actually may not change very dramatically after FIREing anyway.
So it's difficult to plan for these things perfectly, but we can give ourselves some broad frameworks to think about this. Speaking about the pension first, assuming your spouse will receive the pension, things can always change, of course. But if you are working the standard amount of years for the US government, you're probably going to be fine. We can probably pinpoint an estimate for when the pension will kick in and how much of our $5,000 per month spending it'll provide. What's important about FIRE is having enough sources of income to provide for our expenses, right? So let's contextualize how much the pension component is worth. For example, I don't know how much your pension is going to be worth, but if we know we're gonna get $1,500 a month from a pension, that's $18,000 per year, which is roughly equivalent to having a stock portfolio worth $450,000. We can calculate this by multiplying $18,000, the annual income from the pension, by 25, to understand what number $18,000 represents 4% of, right? So we're really just taking the inverse of the 4% rule. This is great because it's $450,000 that we no longer need to save and invest in order to have that $18,000 chunk of annual income. Now in this situation, the earner who will be providing the steady income will also be the earner who provides the pension. So theoretically this means we will never have both at once. The pension will replace the steady income when the earner leaves work.
So this leaves us with our original major question: Is your spouse's income high enough to support your $5,000-a-month spending? If yes, that means we just need to save and invest enough before retiring early such that it'll grow sufficiently by the time our spouse retires, to be able to supplement our pension income and provide for all of our living expenses in retirement, assuming the pension alone is not enough. Now in this example, with some of these fake numbers that I'm using, we need our investments to produce about $3,500 per month, yeah, in 2022 dollars, to supplement the pension. If it does not, right? Like if we don't have enough income from the job that we're retaining to support our living expenses, it means that we need to save and invest enough before retiring early such that our investments can both make up the difference between what our spouse is earning and what we need to spend before traditional retirement age, and still have enough left over when our spouse retires to supplement the pension.
Using our $5,000 per month figure, we know that our FI number is around $1.5 million. Like, a portfolio worth $1.5 million will usually safely spin off $60,000 in income per year, or $5,000 a month. But we know we don't need the full $1.5 million because we have this hypothetical pension that's worth $450,000, right? 'Cause it's producing $18,000 per year, dropping us down to about $1,050,000, which will provide the other $42,000 per year. Now it just comes down to our spouse's income. If their income is more than enough to cover our living expenses until traditional retirement, great. We just need to invest enough such that it grows to an inflation-adjusted $1,050,000 by the time we hit traditional retirement age and the pension kicks in. How old we are, and therefore how much time we have before real retirement age, and how much we earn now are both crucial factors in being able to determine the actual answer to the full equation here, as well as how much we need to adjust upward for inflation, right? 'Cause it determines how many years are gonna pass between now and then. But hopefully this framework gives you a sense for how to think about solving this problem in your own life. Of course, things can always change, and your husband might decide he does not want to work for the government in two years from now. He might forgo the pension and healthcare completely. That would change the situation dramatically. So it's always good to be on the conservative side when making these types of decisions, so you don't inadvertently lock yourself into a situation wherein you lose your flexibility.
All right, y'all, that is all for this week. I will see you next week, same time, same place, on The Money with Katie Show. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Sarah Singer is our VP of multimedia, and additional fact checking comes from Kate Brandt.