For love of numbers

I enjoy thinking about money. I mentally calculate unit prices in the produce section (counter-intuitively, loose garlic was cheaper than 5-head packs). I built my own spreadsheet to support financial decision-making, and I’m tempted to figure out how to do those Monte Carlo simulations. I have fun balancing books and filing taxes, and I even volunteered to help W- with his.

Why do I enjoy personal finance?

My mom occasionally tells a story about how we played Monopoly when my sisters and I were growing up. In the game, my eldest sister often gave my parents investing advice, my middle sister kept giving her money away, and my parents would often end up giving me money. With a seven-year difference between me and my eldest sister, I suspect that the finer points of real estate value, probability, and negotation were lost on me, and my parents probably just wanted to help me stay in the game. (Saling pusa.)

My mom probably sees the story as a wonderful example that three children can have very different temperaments. For me, that story’s one of the reasons why I think about money a lot. I plan and save so that I can enjoy financial independence. I find it difficult to accept gifts that feel extravagant, because I don’t want to be the spoiled youngest child. I keep my life simple and live within my means.

Living within my means and building up good reserves helps a lot. Being an immigrant means that I don’t have a ready safety net aside from the one I make for myself. I can’t just temporarily move in with my parents or crash with some relatives.

Love has a lot to do with it, too. W- is eighteen years older than I am. If I live frugally and manage my finances well, I might have the flexibility to retire when he chooses to. If he’s anything like my parents or his parents, though, we’ll probably live and work for quite a long time. Money is a major issue in many marriages. Good planning, good habits, and good communication can mean that money isn’t a source of friction, but a source of fun.

What do I think about?

I don’t spend a lot of energy worrying about stocks. Day-trading is a zero-sum game that I’d lose. I invest in the market as a whole instead, building my portfolio out of no-frills index funds.

I think about what’s worth spending money on, and what isn’t.

I think about the balance between the present and the future.

I think about what I need to learn from others.

The last time I talked about saving on my blog, my mom said she was uncomfortable with my sharing that I save more than half of my income. Money is taboo. It makes people feel judgmental, envious, or disappointed.

I write anyway. I need to connect with more people. I like reading about what other people are learning about money. I’ve read tons of personal finance books, and I can’t find enough information to cast light on the road ahead. Most of the personal finance books I’ve read focus on paying off debt, managing a mortgage, dealing with cars, setting up the right kinds of insurance, and investing. My favourite personal finance book is Your Money or Your Life, which also helps you learn how to make better decisions by thinking in terms of chunks of your life.

I’m learning that books can’t teach you everything. Books can’t cover what’s worth spending on, because that’s personal. Books written for young professionals often assume you’re shackled by student debt and buried under the debris of reckless credit card use, and not that you’ve gotten things mostly sorted out. Books don’t talk much about blended families or age-gap relationships.

I need to write and to connect. I can do that here, or I can do that in some anonymous blog to at least nod to the taboos. But I always tell people not to count on anonymity on the Internet. Sooner or later, someone will out you. And I’d rather take a look at that taboo and figure out if there’s a good way for us to talk around it.

What are the next steps for me so that I can learn more about personal finance?

Save and invest. Continue building and using my “dream/opportunity fund” for experiments, reflecting on the results.

Connect with other people who are figuring things out or who have figured this out already.

Flesh out goals. It’s good to put a price tag on dreams – not so that you can sell them, but so that you know when they’re within reach.

  • http://mylenesereno.wordpress.com/ Mylene Sereno

    Hi Sacha,

    I’m glad that I am learning about managing personal finances from you too. My other mentor, Bo Sanchez also talks about being financially independent on his blogs.

    I really think young (and even the not so young) professionals like us should save and invest while we can. Maybe if a lot of people will have that kind of mentality esp here in the Philippines, then maybe we will have a better economy and more people living abundantly. =)

  • http://www.daysstories.blogspot.com mom

    It’s not about taboos, it’s about security concerns.

    • http://sachachua.com Sacha Chua

      Living is a security risk. Any number of things could catch the attention of someone with a grudge against the world. For example, Kathy Sierra (who shared many insights about learning and engagement) received graphic death threats for no clear reason. Life poses many mindless risks as well. For example, a tree could fall on me, and that would be it. The trick, I suppose, is to live in such a way that your life is worthwhile, even if the end comes earlier than expected.

      As for lesser dangers: Protecting against identity theft and fraud is partially about keeping information secret, and partly about being vigilant. I don’t give my social insurance number or credit card information freely, and I monitor all of my accounts regularly. I place more trust in vigilance and back-up plans than I do in secrecy, considering that I’m probably at much greater risk for systematic fraud from people stealing databases with credit card information than from someone individually targeting me and trying to figure things out based on my blog.

      In fact, it’s good that people know that I share a lot. A common scam is for someone to call up another person and pretend to be helping a mutual friend in trouble. Just because that someone knows something about me doesn’t mean others should trust them. If that scammer should say, “But it’s really Sacha, she works at IBM and likes programming,” you might say, “Everyone knows that!”

      I’d rather take the increased risk and get the benefits of sharing than let the fear of an unlikely extreme stop me from reaching out. In fact, the social ties I build by sharing will probably be more helpful than secrecy if I do end up needing a safety net.

  • http://www.daysstories.blogspot.com mom

    Dearest Sacha,

    You’re intelligent, well educated and articulate – and certainly entitled to choose your way. While we may have differences of opinion, I have not and will not be in a contest for the last word. I am simply an old fashioned mother who still believes that “prudence is the better part of valor” (may be considered an outdated quote by today’s generation). I would not mind, and would even be proud, to be proven wrong by my own daughter. :)

  • Uma

    Hi Sacha,

    I’m still in the process of figuring out my own personal finance plans for where I am right now in my life, and so I appreciate reading your thoughts on these things.

    It’s also helpful to see what resources helped you, so I can take a look at them myself.

    Thanks!
    Uma