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
- 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.
- 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.
- 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.
- 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
- 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).
- 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:
- "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.
- "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.
- "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).
|| Ram Samudrala