My colleagues Joyce and Isaac conducted a session open to our Providend client’s children. The talk was titled Young Adulting: Understanding the Fundamentals of Personal Budgeting, Insurance and Investments, and they managed to squeeze a set of primers into a short 1-hour session.

Sometimes, I wonder where our clients’ kids will find the motivation to learn money management. We should not discount that some of their parents tried their best to stress the importance of managing money well. All that is left is to help them answer: So, how do you manage your money well so that you don’t fxxk it up?

The old man in me feels like the kid who understands the WHY better than the kid who goes through the motions because mom and dad told him or her to gain the most excellent mileage in managing their wealth in the future.

For example, the first thing that they share is to save up for 3 to 6 months of emergency fund for these young adults (and for you older adults as well!).

But why?

I have to answer enough weird questions from friends who don’t dare to use their emergency fund especially when it looks like they most needed it. Why did this happen? They were told to have that emergency fund but seems like no fxxking one told them what exactly are the emergency that they need to activate it.

I get a fair bit of questions coming along this line.

But it takes tremendous skill to connect with a less motivated kid and make them see the WHY and get his or her shit together.

I feel that some lessons can only be learned the hard way.

Staying on this topic of saving up when you can, many people eventually realize they need to save, even if they don’t feel like it, and came to regret it when they cannot leave a toxic work place.

I don’t know about you, but as a younger person I can never connect with the idea of saving up for retirement that is like 30 years away when I have supposedly more important things today.

But if you tell me “Eh Kyith, you know one of these days you are going to have toxic bosses, toxic colleagues. Almost anywhere you go it is justs as fxxked up. Of course you can try your best not to keep getting into them but I will tell you the odds are not good. When those kind of situation happens, many of my friends couldn’t quit their job because they didn’t save up anything. They don’t have a run way. So would you want to end up in the same fxxked up situation?”

Unfortunately, many will have to learn this lessons the hard way.

Frugality is Getting Cool in China

One of my SG Financial Independence Telegram group members linked us to this Los Angeles Times article explaining how frugality is the new cool wave in China. However, this cool wave hurts the Chinese economy because spending less is not good!

We need less motivation to be frugal if our whole fxxking clique is into frugality.

The whole article partly feels like pornography for frugal people:

1. “The main thing is just not to starve to death.”
2. Gym memberships cost $8 a month.
3. Waiting for sales at fast-fashion clothing stores.
4. At the beginning of last year, a typical Chinese lunch customer spent between $1.40 and $1.70 on a meal. By the end of July, that range dropped to $1 to $1.30 as many diners stopped ordering their noodles with pork in favor of egg or vegetables.
5. Someone gained a following by reviewing children’s meals that adults in Shanghai can eat cheaply. “This is so economical. Also included fried children.”

Hou Muhan’s shift is particularly interesting:

Hou Muhan, a 28-year-old modelling agent living in Shanghai, used to borrow money from her parents every month to cover her bills until they started to ask her to pay them back this year.

Then, she started to track her expenses and became much stricter about spending at bars or trendy restaurants. “I noticed every time I exceed my budget, it’s usually because I go for drinks,” she said. “Socializing usually costs money. This is something hard to avoid in Shanghai.” Now she mainly cooks at home. On the rare occasions when she orders in, she divides the rice into three portions, freezing two to eat with other meals at home.

Holy shit.

It feels like she just uncovered the galaxy’s greatest mystery based on how she says it.

Trauma and negative experiences are sometimes better personal finance teachers than a client adviser with sophistication. I can be pretty naggy and preachy about things like Safe Withdrawal Rate (SWR) sometimes (actually all the time) because I prefer friends not to get into trouble. But sometimes, crashing and burning may be the better teacher, unfortunately.

We won’t learn the true lesson often unless we fxxked it up enough, regardless of age.

I got past the stage of forcing certain opinions on people.

1. If you are so fixated on searching for safe and high returns and don’t understand why I cannot give that to you, I will not spend much effort there.
2. If you think doing reverse budgeting is adequate (basically setting aside a responsible sum of money to invest before you spend), I will not preach about why many people eventually regret doing only that and not be more motivated enough to do more one day.
3. I try not to convince people that we often fall into the trap of helping someone plan without fully understanding how such a person feels (for example, we are a bunch of people with pretty solid cognitive abilities, recommending active investment strategies to a bunch of people with lower cognitive skills.)

The truth will likely prevail and surface in your world, hopefully in more fortunate than unfortunate ways.

Amora reminds me that before Financial Independence, Financial Security was what many of us yearn for.

Most of the people around us yearn for what Amora wants but fail to describe our financial security yearning well.

Amora Liu saved at least $225 of the $1,000 she earned monthly from her job as a legal consultant at a courier company.

“If I spend it all, then I really have no sense of security,” said Liu, 25, who posts video diaries of her budgeting on social media. In May, she moved from the city center to the suburbs more than an hour away, cutting her rent in half. She also started cooking for herself every day instead of going to restaurants.

She managed to save up about $4,200 before she took an even more extreme step: quitting her job and moving back in with her parents in Changsha, the capital of Hunan province.

She has used her savings to travel a little, but living at home has cut her consumption and spending dramatically.

Her video blog details a new budget that would make the economists cringe.

Rent? Free.

Lunch and dinner? Free.

We often lament that our culture today is about spending and lifestyle inflation. So it’s good to see what happens when things get flipped around when we have a frugality culture.

I think the magic will happen in the bulletin and community boards and the chat groups.

You will learn certain nuances of money only through more and more interactions.

How important is a topic such as retirement in a world without knowing where life takes you?

I think we assume too much that everyone takes the traditional path of work, find a spouse, get married, have kids, climb the corporate ladder, then retire, play with grand kids.

Money is more useful during the interim when life is less than traditional.

If you feel less than certain where life takes you, perhaps that is a good reason to be motivated to put more money away saving it.

Instead of looking at it as an emergency fund or retirement, build a financial run way. The longer run way that you have, the more secure your life can be because you have the optionality to try other things. And if you keep doing this throughout your life, you would eventually have enough for retirement.

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