Monday, May 11, 2015

Why am I interested in personal finance?

I thought this is a more relevant question that we can answer for ourselves, instead of why other people are not interested in it. As personal finance bloggers, we tend to think that the people from the other side of the fence are not as enlightened, at least in financial matters, as us. I guess those who are not interested in such matters will likewise make similar stereotypical viewpoints regarding these people are are obsessed over money. So I think the best way to convince is to let people hear your story, and how your personal experiences make you who you are. Hence, let's start with me.


Primary school:

When I was in primary school, I was just a normal kid who receives pocket money from parents. There's no entrepreneurial streak in me, as you would typically see in the childhood of people who are great business people. They would have started trading cards or doing some basic buying/selling right from the start. That's not who I am. I did receive a weekly pocket money though. I know some of my friends are getting money from their parents as and when they need to buy stuff. Some received money daily from their parents, but somehow mine is done on a weekly basis. On hindsight, this taught me a lot of knowledge regarding budgeting, that would have been completely missed out by folks by received their pocket money daily or on a needs-basis.

Verdict: I'm not financially acute then. Quite clueless regarding money.


Secondary school to JC:

The weekly pocket money upgraded to a monthly one. And that covered everything single thing - from bus stamps to food to entertainment and books. It wasn't a lot, though I can't remember how much. But thankfully, there isn't a lot of distractions anyway. The monthly pocket money that covers every single thing, means that I have to be a lot tighter in my personal accounting. I've to make sure my money last the entire month. Again, there's no desire for me to work for more money and I did zero vacation work in my entire secondary to JC life.

Verdict: I'm still not interested in money, though the lessons in budgeting due to the monthly pocket money is actually quite a good start to teach about how to maximize your output given constraints in your resources.




Army:

That was the time I stopped taking pocket money from my parents, but instead gave them half of my allowance as a pocket money to them. The money back then wasn't a lot. It's about $360 towards the end of my 2.5 yrs, which means it's substantially lesser in the earlier part of my NS days. I spent very little amount in the canteen. I doubt I can afford it, so I always visited the cookhouse for the free food, no matter how sucky it is. If I can do extra duty to earn money, I guess I would at that stage. But my camp do not practise that sort of thing, so my NS allowance is all that I have to survive. Again, not much spending because I don't think I could afford it, though I remember I bought my first CD player from Sony from my hard earned IPPT and marksman award.

Towards the end of the whole army, I saved about 5k from the lot. It's the most amount of money that I have in my entire life, at that point in time.

Verdict: With more exposure to consumerist lifestyle, I realise more and more the importance of having money. I was constantly reminded of the lack of money. I couldn't spend all that I want and expect my parents to bail me out of my debts. The responsibilities of giving money to parents taught me how important it is to pay your salary to something important first, before you proceed to spend it. Again, monetary constraints is the most important lesson to teach regarding budgeting. In army, I learnt how to set aside money for something important. In this case, it's giving money back to my parents.


University:

With more exposure to more social life and a introduction to a young adult socio-sphere, the need to spend more money on clothing and entertainment increases. And hence for the first time in my life, I had to work during the vacation. It was cheap, uninspiring kind of work. I remember that I had to complete 30 mins of work in 1 full working day, dragging longer than necessary because otherwise I had nothing else to do. It was just unbearably painful earning that miserable $5-$6 per hour for 1 month. I also had my first handphone, which I paid out of my own savings. The monthly plan is also paid for by me, using the monthly pocket money given. Thus, I can only afford those free $0 handset that comes with the plan. I remembered at that time, I wish I can start work sooner so that I can start earning my own keep.

Dating is also incredibly expensive. An average restaurant meal will mean I have sacrificed about 1 week of school canteen's meal money. That means I couldn't afford it. That applies to my then girlfriend (and now, wife) too.

Verdict: While I can work my life within monetary constraints in the past, it's getting harder and harder because you need money to have a normal kind of social life. I also realised how expensive dating can be - that need to impress and show generosity. Income needs to be raised because there's only so much things you can limit yourself from buying.


Working life:

For the first 2-3 years, suddenly I have this huge income coming in that I never had in my life. I proceeded to spend it, perhaps partly to compensate for the 'sufferings' I had in the earlier part of my life. I don't recall that I have much savings, if at all. But at least, I didn't bust my budget at all. Even with credit cards, the training from the earlier part of my life kicks in. I paid my bills on time, took advantage of the rewards granted by the usage of the card, and never exceeded more than what I earned.

But I wasn't going anywhere.

During the bull market phase, someone asked me to open a brokerage account together so that we can learn about the stock market. We heard that we can earn a lot of money from there. From there on, it was a roller coaster ride in the stock market. I wrote my journey all over the blog so I won't repeat it here. But after losing and winning money, it makes me want to find out more about it, so I read and read and read. I started reading 52 books a year to cram in all the information available so that I can make more. Those books are initially almost all personal finance, accountings, market analytics based.

It was during that period in time that I started my blog also, which is one of the smartest thing to happen in my life. It gave me a chance to meet like minded people and form an environment in which financial success can take place. You can't expect to fly if you keep mixing around with chickens, so they say. It's this immersion in an environment where I'm constantly reading financial news that makes me want to keep on reading and learning all that is about the money game. You start to form models of people whom you can emulate, and you realise that hey, it's possible to reach a certain level of financial enlightenment. Others can do it, so can I. That belief is very very powerful - that others can do it and so can you.

That's the pull factor. There's also a push factor towards learning more about personal finance, and that leans towards the darker side of motivation.

Sometime during that period, I felt that I was sold a big fat whole life plan that it constantly eating at me. I felt there's something wrong about it but I couldn't figure it out. I was that clueless in financial matters. That feeling eventually accumulated until I was so fed up, I need to research and read more about insurance. That started the whole ball rolling with regards to personal finance. There's a lot of incentives for me to find out what the hell is wrong with my feelings with regards to that big fat whole life plan I was sold to. On hindsight, I took personal responsibility and didn't blame the agent. Though it's a painful experience, it literally KICK start my ass to learn more to cover up my lack of knowledge in this area.

Also due to the nature of my job, I have to be my own HR manager and accountant. I have to keep track of where my income is coming from to see how much money I'm making per month. I didn't keep track of my expenses though because I thought it'll be too troublesome. I don't want to be fixated on money. Panzergrenadier, a blogger, introduced me to this book called "Your money or your life" by Joseph R. Dominguez that literally changed my life. In the book, the author talked about tracking your expenses. I wanted to start tracking for 1 month, but it gradually became 6 months, then 1 yr. I've been doing it since 2008, always taking care to update my spreadsheet and improve my tracking. Basically I'm hooked on improving my own personal productivity, and that includes productivity in terms of spending money.

On-going verdict: It started from greed in wanting to get more money, then the winnings/losses make me want to find out more about money. I would say that the fact that my skin is involved in the money game makes me want to find out more about the rules and how the money game is played. If there's no skin involved, we're just armchair critics. Of course, my childhood training in working tightly within budgets makes it one full package. Immersion into the conducive environment is extremely important too. If you want to be financially acute, join such a group in facebook or blogs. It's like learning a language, the more you read and hear, the better you'll be.

We have to learn how to unwind our money journey we had in our childhood. For mine, it's about learning how to relax and spend more. For others, it might be the complete opposite. I'm still learning how to relax a little and spend on things I should spend on, instead of living in a survival mode that I had been in the earlier part of my life.

11 comments :

Singapore Man of Leisure said...

LP,

I always remember this story my late maternal grandma used to tease me.

Ah ma tells me my kindergarten teacher complained to her, "You ah boy himself don't know likes to teach others!"

LOL!

la papillion said...

Hi SMOL,

Good observation :) that's where we have to change our 'Wa kali Kong' voice towards sharing experiences :) this usually helps more for adult learners too haha

Ferns said...

For those who don't have an innate interest, it would be driven by a need I guess.

For me, I got started after I bought my house. Then I realised I need to plan for the future, make my money work harder. Understand how interest rates for home loans work. Fortunately my mathematical background made it easy for me to pick up the calculations. Not so for the analysis part though.

On another note, I noticed you've read Through the looking glass. I hope you enjoyed it. I just finished Grapes of Math by Alex too. Enjoyed it thoroughly!

la papillion said...

Hi Ferns,

Haha, you're the only one who reads my 'Books read' section :) It's indeed a very good recommendation by you. Will read a few more of his books. I find them thoroughly refreshing :)

Thks again for your book recommendation!

Createwealth8888 said...

We see more retirees at free previews. They have plenty of free time for free food and drinks to pass time. Why not? Sometime, they can bring back pen and even door gift for their grandchildren too.

Why no pretty ladies at such seminars? They have no more spare time; too busy with dating? :-)

la papillion said...

Hi bro8888,

I think it's the same reason why shopping centres have more female shoppers than male. It's the way the products are placed (you'll notice that in the men's department, all the goods are packaged neatly in arrays while the female are almost all displayed out for them to browse and pick) and how they are marketed.

Why there are no females? It's because they are marketed to men. Why are they marketed to men? Because pple thought they hold the family's decision in monetary matters and because mostly the person holding the events are men themselves.

I always believe that the economy is driven by women, not men.

HS said...

After witnessing many PMETs were retrenched and cannot find back the same job and pay when economy turned south, i decided that i shall never follow their footpath especially during the prime age of 40s where family committments and stress level are high. At that age, i should not worry about my monthly pay cheque for my family. This driving force is still pushing me after over 10 years of seeking financial freedom journey.

Rolf Suey said...

Hi LP,

Simple but genuine life story! I will share mine too - soon to come! :-)

I am like-minded as u, that sharing of personal experiences is always the best and most genuine! It definitely better than merely extracting the experiences from all the Great and Famous, compile and sell!

Coming from a v humble bkgrd, I noe the impt of Money since young! The problem I have is I am gd at earning money, but not gd in keeping money, until I realized in my career set-back.

The biggest problem I see about the "so call" financial expert blogger is they are so technically sound "reproducing financial teachings from Ben Graham, Buffett, Lynch... Who cannot do copy and paste!!!

BUT when it comes to life experiences / exposures and wisdom, they lacked big time. This means mentally they r not ready to take the real life set-backs. The true life setbacks will inflict lots of pain, and this is when we will see the true "man of steel!" Women inclusive!

Createwealth8888 said...

It is something like this ...

If we don't see you at our free previews to listen to our "successful" investment stories; you are not interested in personal finance. It sounds like vested parties advertising their wares.

Good for non-vested bloggers to speak up. We are not doing it for advertising wares.


la papillion said...

Hi bro8888,

Haha, vested interest, so I see :) I could be one of those too: if you're a student and you're not interested in tuition, it means you're not interested in your studies!

I learn fast ;)

Createwealth8888 said...

Think it is. They are not interested in improving their exam scores. Ha Ha!