Saving is the simplest tool for getting one's finances in order. The importance of saving was instilled in me at a very young age, in my Chinese upbringing.
And then there is a Chinese saying 开源不如节流 with its literal meaning "Opening the source is better than trimming down the tributary". It is always used in the financial sense that "increasing revenue is a better growth strategy than reducing expenditure". It is hard to get rich by saving alone.
But I think your essay hit the core of the issue - getting your finances in order is not just about saving or income, it is about understanding the design of our financial system, or any system.
The elusive American Dream has been preached to us as a "one size fits all" formula about numbers and possessions designed by the system. I have learned that "conventional wisdom" is usually wrong and we should define what works for us. If getting a mortgage is bad for you, there is nothing wrong with renting; if going on that cruise trip everyone is going means getting into credit card debt, staying home reading a book, and walking in the local park sounds like a pretty fantastic vacation to me.
Here are some of the principles I have applied -
Pay off credit card balance every month (so yes, I am a "deadbeat" to credit card issuers);
Paying down mortgage principal by making extra principal-only payments when possible;
Refrain from buying things just because "I can afford it";
When there is no need to borrow money, credit score means nothing;
Understand the power of "compound growth" of my money;
The brutal truth is that people need to build up their leverage. My overly-simple view is that earning power, in our society, comes from:
- doing something the market values (whether it should value it or not is another question)
- your leverage (over bosses, customers, etc.)
If you don't have both, you're in trouble.
Most people live in No Leverage and Low Leverage jobs, and have little earnings power. The way out (in our system) is to gain leverage: e.g. pursue ownership, expertise, being early/only, unions, etc.
Really appreciated this
Thank you! (and sorry for the late reply!)
Just shared! I'm a deadbeat hahaha.
me too!
Saving is the simplest tool for getting one's finances in order. The importance of saving was instilled in me at a very young age, in my Chinese upbringing.
And then there is a Chinese saying 开源不如节流 with its literal meaning "Opening the source is better than trimming down the tributary". It is always used in the financial sense that "increasing revenue is a better growth strategy than reducing expenditure". It is hard to get rich by saving alone.
But I think your essay hit the core of the issue - getting your finances in order is not just about saving or income, it is about understanding the design of our financial system, or any system.
The elusive American Dream has been preached to us as a "one size fits all" formula about numbers and possessions designed by the system. I have learned that "conventional wisdom" is usually wrong and we should define what works for us. If getting a mortgage is bad for you, there is nothing wrong with renting; if going on that cruise trip everyone is going means getting into credit card debt, staying home reading a book, and walking in the local park sounds like a pretty fantastic vacation to me.
Here are some of the principles I have applied -
Pay off credit card balance every month (so yes, I am a "deadbeat" to credit card issuers);
Paying down mortgage principal by making extra principal-only payments when possible;
Refrain from buying things just because "I can afford it";
When there is no need to borrow money, credit score means nothing;
Understand the power of "compound growth" of my money;
Know my worth and never be shy to ask for it.
Thank you so much for this, Yi! Great advice (and sorry I missed this earlier).
Loved this piece.
Oh, thanks, David! Means so much coming from you!
The brutal truth is that people need to build up their leverage. My overly-simple view is that earning power, in our society, comes from:
- doing something the market values (whether it should value it or not is another question)
- your leverage (over bosses, customers, etc.)
If you don't have both, you're in trouble.
Most people live in No Leverage and Low Leverage jobs, and have little earnings power. The way out (in our system) is to gain leverage: e.g. pursue ownership, expertise, being early/only, unions, etc.
More of my thoughts on the topic here: https://newsletter.thewayofwork.com/career-leverage
And then the during the pandemic the low-leverage workers were the essential ones. The rest of us. Not so essential.
Good point… the pandemic only amplified the system.