Trevor Klee, he admits, is a "terrible employee." But he's great at working for himself — and at taking tests.
So the 25-year-old entrepreneur started a thriving business of his own. As a test prep instructor in Cambridge, Massachusetts, he brings in $100,000 a year tutoring people for the GMAT, GRE and LSAT. "It's>What he earns
Klee first started tutoring as a student at Princeton University, where he discovered that he could turn his understanding of standardized tests into a way to earn extra cash. "I've always loved teaching people," he says. "I coach jiu jitsu as a hobby, I love teaching friends … Tutoring was a chance to do teaching for serious."
After graduating from college in 2015, Klee moved to Singapore to work for a test-prep company. While the company provided a good starting point, Klee soon realized he didn't like his employer all that much. Still, he wanted to continue tutoring. "I really do love teaching," he says. "I never really loved school, but I love being data-test=”Pullquote”>You can get more money a lot of the time if you ask for it. … I just charged more, and now I make more money.Trevor Kleetest prep instructor
More than three years later, his monthly income ranges from between $3,000 and $4,000 up to $14,000 during busy periods. He charges $160 per hour for GMAT tutoring and $125 per hour for LSAT or GRE help, and he requires a minimum of 10 hours. He's also started consulting for other tutors>What he gives
Philanthropy is a key part of Klee's financial picture. Each month, he donates a significant amount, around $615, to a variety of charities, including More Than Words and GiveDirectly. The bulk of his contributions go to>What he spends
Here's a breakdown of everything Klee spends in a typical month.
Rent: $825
Klee lives in a shared house with four roommates and>Groceries: $400
Klee eats the majority of his meals at home and typically buys his groceries from Trader Joe's, a chain known for its reasonable prices.
Dining out: $250
Klee does splurge>Transportation: $130
Klee pays $81.50 for a monthly CharlieCard, which lets him use subway and bus lines around Boston. "I live pretty close to where I work, so I take the T," he says.
He also spends between $40 to $50>Phone: $40
Klee is still>Everything else
- Utilities: $195
- Internet: $20
- Health insurance: $270
- House cleaner: $30 (his share of the total cost)
Klee incurs a few additional regular expenses as well. He's developing a personal finance application for Google Sheets to track and analyze emailed receipts, and he maintains a separate bank account for the Google app so he can easily track how much he's spent data-test=”Pullquote”>I don't really save up for goals. I just save.Trevor Kleetest prep instructor
What he saves
Between a brokerage account, money market account and Roth IRA, Klee has around $43,000 put away. He estimates that about $20,000 of that is liquid.
"I don't really save up for goals," Klee says. "I just save. My default mode is saving and I>What the experts say
CNBC Make It asked Pamela Capalad, a certified financial planner and founder of Brunch & Budget, to comment>He's smart to keep his rent low
Not everyone wants to live with roommates. But because Klee is young and doesn't mind, Capalad says it's smart for him to save>An HSA could help boost his savings
Capalad points out that Klee is already excellent at saving money. But>It's a great idea to have separate accounts for side projects
Capalad approves of Klee keeping a dedicated bank account for his Google project. "Separating things like that both physically and mentally will help you track a second source of income more easily and you'll know that you'll have the money for taxes," she says.
Additionally, "it will give you a gauge of whether or not it's worth it to keep going."
It might help to create a business account for tutoring
However, Klee doesn't have a standalone account for his test prep business. Although his current expenses are straightforward, it can still be beneficial to keep things separate, Capalad says.
Opening a business account would allow him to "pay" himself a set salary. Plus, it "will even out those lean months and he'll know that he's>He's responsible with his giving
Capalad explains that generosity can get out hand when you aren't sure how much you're donating, but although Klee gives away a substantial amount, it's not more than his budget can handle.
"If he was living paycheck-to-paycheck and was giving away that much money, it would be a different conversation," she says. "But I think he's thought this through very carefully and is very clear why he's doing it."
He could save even more with a SEP IRA
It's great that Klee is already putting money away for retirement through his Roth IRA, Capalad says, but he could save even more on taxes by contributing to a SEP IRA, or simplified employee pension, as well.
A SEP IRA allows self-employed individuals to make tax-deductible contributions and not have to pay taxes until they retire. They also offer higher contribution limits: As of 2017, you can contribute up to 25 percent of your income after deductions, or as much as $54,000.
For Klee, having two types of accounts would mean twice the perks. "What's great about the Roth is he doesn't get a tax deduction now, but all of the growth is tax-free and what's great about the SEP is he gets a tax deduction now and all of the growth is tax-deferred," Capalad explains. "So he gets to take advantage of the tax savings on both sides."
