My "financial" plan

It's not really financial. The overall goal is to have a sustainable and passionate life philosophy without being a slave to materialism.

  1. Start young. The younger you start, the better it is. Preferably the moment you start talking, reading, and writing. If it's too late for you to do this, then make sure any children you can influence get this advice.
  2. Understand yourself. Figure out what your passions are in life, what really motivates you, what you're good at, and what you'd enjoy doing the rest of your life as long as physically possible. In other words, these are things you'd want to be doing regardless of whether someone was paying you money to do it (this is really important since if you are motivated by money, your search for understanding yourself and your passions may become ethically polluted). This isn't necessarily easy, and you may never really reach a firm conclusion, but it is the process that counts.
  3. Among those things that are your passions, prioritise them in the order in which society values them and make it your "profession" (which it really isn't since you'd be doing it anyway). If you're good at it (as you should be), your "income" will be commensurate with society's perceived value of your efforts. Don't forget your other passions and continue to focus on them also.
  4. Based on your current and projected future "income", live within your means and don't care about what society thinks about how you should live. No matter if this "income" is high or low, the main thing that matters is that you're doing what you really enjoy doing and love to do. Everything else is just a way to enable you to focus on your passions more. Stop running in the rat race. It is ridiculous that a feeling and living human being should spend their time living their life according to what society deems is "normal". Don't be a prisoner to materialism.
  5. Plan for the future unexpected events that could throw you off of your passions. Two ways to do this is by investing in all kinds of insurance and dedicating a portion of your "income" for the future in case such events occur. The goal here should be to do enough to replace your "income" for a time when you cannot or do not wish to focus on your "professional" passion for whatever reasons. I view insurance as collectivisation of risk (i.e., a portion of your "income" goes towards paying people who have an unexpected event, in return for the promise that people will do the same for you). This includes health, disability, property, and life insurance (to help take care of people who depend on you).
  6. Realise that luck plays an enormous role in the opportunities that come across you. Enjoy life with that realisation that you're lucky since things could always be worse off. Iterate the above process often. Live to live.

How this relates to other pragmatic financial advice:

  1. "Pay off high-interest and other debt". Since you're leaving within your means, this means either you don't have debt or your "income" can handle debt payments reasonably with the expectation that eventually it will get paid off.
  2. "Save for 'retirement'". The concept of "retirement" doesn't really apply if you can make above approach work for you. Since you've planned for unexpected events via insurance and future allocations, you should be okay.
  3. "Save for kids' higher education". My view about this is that kids should either earn merit scholarships to go to good schools, learn to pay for it themselves using the above strategy (usually not a good idea for undergraduate education but they could take debt), or go to a cheaper (relative to a private school) state or community college. In rare cases, it might be worth it if an undergraduate institution is special, but I strongly feel someone 16-18 years old should be able to handle the responsibility of their higher education (worth teaching them this at an young age).

Pseudointellectual ramblings || Ram Samudrala ||