One 26-year-old Silicon Valley CEO knows a little something about money after starting her first business at the age of 11.
Jessica Mah is a high school drop out and the CEO and co-founder of inDinero, a cloud-based accounting software company that caters to small businesses. InDinero employs 200 staffers, operates out of five offices and reached an eight figure revenue this year.
The Berkeley graduate has built up quite an impressive resume since the fifth grade when she began coding and building websites for people. According to Business Insider, Mah brought in a few thousand dollars a month setting up websites for people before starting a new service for leasing servers out of a few data centers.
Mah staffed her business with four part-time employees and generated six-figure revenues. However, she closed her server business at the age of 14 after some difficulty with cash flow. At the time, the young business-minded Mah was spending 40 hours a week on her ideas. As a consequence, her grades were poor and she dropped out of school.
Mah then attended an early college for students who wanted to get a college education before graduating high school. Afterwards, she applied to UC Berkeley’s computer science program and graduated at 19.
Her prior experience with small businesses led her to believe that there was a need for an updated accounting software. By importing data from a business owner’s financial accounts, the software would take care of a all the back office work of tax filing, payroll management and more.
Upon graduation, Mah took her prototype to Mountain View, California where she joined Y Combinator’s summer program. Her idea raised $1.2 million for a seed round after three months.
Today, Mah is reaping the monetary benefits of her hard earned success. However, Mah believes that her money struggles early on in her journey have developed her healthy spending habits that she has today. She told Cosmopolitan about the financial challenges she encountered while in college:
“I co-founded a company called inDinero when I was in college. Even though I was building a finance company, I had no money of my own at the time. I was borrowing roughly $2,000 a month from my parents to cover my rent and groceries, even up until four years ago as I was scaling our business.”
Though she was cash poor at the time, Mah invested in her financial intelligence. The habits she cultivated helped her grow her company and manage her personal finances.
“When I wasn’t making enough to cover rent, I was spending as much time as I could reading books and listening to finance-management podcasts like The Dave Ramsey Show. Ramsey’s advice to “live like no one else now so later you can live like no one else.” In other words, instead of trying to “keep up with the Joneses,” live your own frugal life now and let your habits pay off later. That idea got me through the some tough times when I was running my business and living on Ramen noodles.”
Even today, Mah doesn’t indulge herself in glitzy hotels and exorbitantly priced restaurants. She learned to live within her means instead of trying to measure herself up to someone else’s standards.
“I just don’t feel as compelled to eat at fancy restaurants or stay at fancy hotels and do expensive things that don’t increase my happiness on a meaningful level.”
Mah meticulously kept track of her budget and spending habits. She said:
“I developed a detailed budget for the entire year when I was finally starting to support myself. It included everything—even the exact amount I could spend per meal. I allowed myself $7 per lunch and $12 per dinner, which is reasonable if you’re cooking at home. I remember an argument in Costco with my roommate about whether we could afford a jar of pickles.”
It may seem that a person’s spending habits is relative to their income, but Mah hasn’t let the money get to her. Most of her spending is on travel, but she designates a corporate budget for those business expenses.
“I also keep personal expenses like food and clothes to less than $1,000 per month. Recently, my admin assistant tried to book me for sushi at a place that cost $250 per person, and I told her absolutely not—that is way too freaking expensive!”
Mah doesn’t have to worry about money too much nowadays and says most of it goes back into her business.
“Those years of pinching pennies and living frugally taught me that I don’t have to change my lifestyle just because I’m making more money. My business is now healthy enough to pay me a nice salary, but I invest most of it back into the business. I pay myself enough money to live and just enough to do my hobbies, and everything else goes into savings and investments.
“Today, 99.5 percent of my net worth is in investment holdings—mostly invested in my own company—and I live on less than .5 percent. Aside from investing in my company, I also invest in index funds (instead of playing stock picker, and I make those investments in a Roth IRA because of its tax advantages—all things I learned from Dave Ramsey), but I avoid real estate, because it seems like a pain. I also donate about 10 percent of my taxable income to charities.”
The few things she has actually splurged on include purchasing a Tesla to replace her old Toyota Camry and renting a fancy apartment overlooking the San Francisco Bay.
“I read my diary from a few years ago—back when my co-founder and I were borrowing money from our parents—and I had written about how free and happy I was, despite being in debt to them. And now I feel like I’m under a lot more stress, and maybe even less happy, compared to when I had nothing.”
She also surrounds herself with like-minded people who she can be herself around and not feel the need to impress.
“I think your spending habits are often pressured by the people you’re around, and I hate the pressure of feeling like I have to be fancy around someone. For instance, my boyfriend leads a billion-dollar company, and I thought he would be into nice restaurants and expensive things, but we’re really both more comfortable eating at a local dive—and the food is usually better anyway.”
There are a few things that Mah will spend a pretty penny on and that includes her hobbies. Even so, she has been smart to budget for it. She said:
“I definitely splurge sometimes. Despite the importance of having a budget and being frugal, it’s also important to have one thing in your life that you’re willing to splurge on. For me, it’s aviation.
“I love flying—and I know it’s a hobby that costs a lot of money—but it’s the one thing I’m willing to splurge on, and I budget for it. I budget $2,000 per month to charter planes, but it’s a lot cheaper than buying one of my own. And when I take friends along with me, [I ask that they] split the cost with me, so it isn’t so bad. I recently took some friends to South Lake Tahoe and North Tahoe. It was a half-day adventure, and that’s worth splurging on to me.”