“Congratulations, son! I am very proud of you! Now that you have started earning, invest some money into an index fund every month. This will help secure your future.”, my father told me on a phone call the day I earned my first paycheck in January 2015. My response to him, “Yeah dad, I’ll do it eventually. By the way, how’s the weather there?” My parents lived in a different city and I was obviously trying to avoid the conversation. After all, I just became independent! I make my own money. I’m a grown-up now! The first thing I did with my paycheck — buy the latest amazing smartphone. My father on the other hand, started investing a small amount of money on my behalf from his salary every month into an index fund and a fixed income bond with me as a primary beneficiary. This was on top of some investments he was already making on my behalf since I was a kid. Meanwhile, I completely forgot about it as I was enjoying my newly found freedom.
Obviously I wasn’t grown up enough!
Fast forward to May 2020. By now I am living in Melbourne, Australia — the second most livable city in the world which had the longest COVID lock-downs. Companies were losing money, people were losing jobs, and Governments were panicking and making random decisions. No one was prepared for this.
However, the ones who still had a job (I was among the lucky ones), enjoyed the newly found comfort of working from home.
One Sunday morning, since there was nowhere to go outside and nothing much to do locked down at home, I decided to finally explore the world of money. My first two Google searches (Yep, ChatGPT didn’t exist back then):
- “What is money?”
- “What is the history of money?”
What I found blew my mind. The deeper I went into researching the topic, the more fascinating and funnier it got.
Ever since then, I’ve picked up lessons from all sorts of places — books, podcasts, historical events, inspiring people, and more than a few mistakes of my own. I started scribbling down these lessons in a notebook, just for myself.
However, the more people I met, the more I realised that many are in the same boat as me — making the same mistakes.
So I decided to start sharing my notes.
Some things you might agree with. Some you might not. That’s perfectly fine. I truly value different perspectives, and if something I’ve shared sparks a new thought or even disagreement, I’d love to hear about it. Your experience might just teach me something new.
Neither am I a ‘finance guru’, nor am I a ‘crypto bro’. I am not a super successful millionaire… yet. I can’t claim to know everything about the topic of finance and neither do I enjoy following such people — the ones who claim to have cracked all about money and make majority of their living by selling half-baked courses to confused and under-confident people, with a promise to make them instantly rich. But I do respect them for they taught me something too. It is a part of my third note below.
Understand the difference between money and wealth.
You got your shiny new credit card with a credit limit of $10,000. You go to your credit card’s mobile banking app and check the balance. Do you see that $10,000 as money you can spend or do you see it as a $10,000 debt?
The answer to this question will clarify your understanding about money vs. wealth.
Money is earned. Wealth is built. Money keeps you going. Wealth sets you free. Money is what you pay in exchange of goods and services. Wealth is what remains even after money stops flowing. Money is a tool. Wealth is the foundation for security, freedom and medium to generate future money. Basically, the money that remains after spending on all the necessary and unnecessary things in life is defined as wealth.
Spend money while protecting your wealth.
Never depend on a single source of income. Diversify.
We live in a world where unpredictability is the only constant. Wars, pandemics, natural disasters, impulsive politicians making rash decisions, cringey content creators getting rich by fearmongering, AI scoring jobs at organisations, and countries divided on the topic of immigration add to this unpredictability.
When the COVID-19 pandemic hit Australia, many companies reduced the pay and work days of their staff to stay afloat. My work days at my full-time role as well as my pay got impacted. I worked 4 days a week instead of 5, which meant a 20% pay cut from my salary. I had no option but to accept this change to pay the bills. I don’t blame the company. It was an obvious tough decision they had to make.
Luckily, I was also working as a teaching assistant since 2018 at my alma mater in the evenings along with my full-time job. This meant I worked non-stop for 12 hours a day, two days every week.
Was it worth it? Keep reading…
Even though I had lost 20% of my pay cut with no guarantee about the future, I still had a second flow of income. Now that I had one day off at my main job, I immediately took up extra sessions and subjects that semester and the next.
Fast-forward to today, I work at a bigger company, in a much senior position, and take away more than 4 times the salary I earned in that company. I still continue to teach two sessions a week in the evenings at the university.
If you are skilled at certain things, turn them into a product or service others are willing to pay for.
Security and freedom comes from having options.
Bonus tip — Don’t have multiple sources of income that require the same core skill set or that belong to the same industry. For example, don’t run two businesses with the same target audience or that get impacted by the same market cycles.
Get skilled in earning money passively or with minimal daily effort.
Learn how to invest your money correctly and automate it. This could mean investing in well-known index funds, individual company stocks, commodities such as gold and silver, bonds, start-ups and businesses. Spend some time in understanding how the world operates — basic macroeconomics. Of course feel free to dive deeper into microeconomics if it intrigues you.
Basically, either learn how to invest in something that will earn you money passively, or invest in developing a skill set which enables you to build and earn from a product/service with minimal daily effort. This is the point where I said earlier that I respect those finance course-sellers.
Image yourself working hard for 28,404,000 hours a month to earn money.
Have I gone mad? Nope, I’ll explain.
Apple Inc. — one of the largest companies in the world — has approximately 164,000 employees (as of 2024) working 8 hours a day, 5 days a week around the world.
Once you invest in a stock of Apple Inc., these 164,000 employees are working over 28 million hours a month combined to make sure that the value of your stock goes up and you make profit. All of this while you live your normal life during the day and sleep peacefully at night.
Now do you think I have gone mad? I guess not.
Tools like index funds make it even easier for you to invest and earn income passively based on your risk appetite.
I am not saying become a wolf of wall street, nor am I claiming to be one. If not investing in stocks, build skills in creating great quality courses or digital products which once set up can provide you with a steady and passive flow of income without you having to spend a lot of time managing them.
Avoid debt.
You might ask me, “Hey smarty pants, what about a home loan?”
I agree there are debts which you cannot escape such as a home loan or an education loan. But with these too, you must think very carefully and determine what would be a sustainable and practical amount for you to pay-off. Just because the banks give you a borrowing capacity of $2 million doesn’t mean that you take a debt of $2 million. It is not free money. You need to pay interest every month from your hard earned income. So think carefully. Maybe you just need to borrow $800,000 with a manageable interest rate, with an aim to systematically pay it off and become debt-free as early as possible.
I know there are finance geniuses out there saying debt is great and one must leverage the bank’s money instead of using their personal wealth for expenditures. I agree with them to a certain extent but many of these ‘finzards’ (finance wizards… I’m a dad with the right to crack such jokes [me patting my back for this one]) fail to explain that one must do it only if they have enough assets to settle that debt any given day.
Simply put, if you have $10,000 saved up then feel free to take a debt of $5000 from the bank and use this for spending. The $10,000 you have saved up can be used to invest and earn profits. Now let’s say any given day you need to pay back the debt for whatever reason, you can use that $10,000 to pay back the debt including any additional interest you might have incurred.
This way, all you do is win win win no matter what!
Yes, I just quoted DJ Khaled.
Spend less than you earn.
Isn’t it obvious? Yes it is but sometimes it is important to keep reminding oneself that because it is very easy to lose track. Especially if you are addicted to swiping (or tapping) your credit card everywhere.
I use a credit card — not because I love debt or I can’t afford to pay. There are 5 reasons why I use it.
- To earn points which I can use to get discounted or free flight tickets or get a discount on everyday household items and grocery shopping.
- Security. If my card details get stolen (I’ve faced this twice) and the thief goes on a shopping spree, it is easy for me to immediately block the card, contact the bank and highlight the fraudulent transactions. A new card is issued and all the money used by the thief is credited back. No questions asked.
- Free travel insurance on domestic and international travel.
- Build a positive credit rating.
- Save up on my home loan. By keeping money in my offset account and using credit card to do daily transactions, I save on the interest rate charged on my home loan. This interest is calculated daily. I clear my credit card balance the day I get my salary.
The main thing to note here is to pay off credit card balance in full and on time. To do this, it is extremely important to keep track of your daily expenditure and never go beyond your set monthly budget.
Therefore, I recommend getting a credit card only if you understand the difference between money and wealth (check point 1 if you skipped it).
Now do I finally sound like a grown up to you?
I hope so. My father will be very proud.
The more I learn, the more I will keep adding to this post. I have shared some more practical tips on managing personal finance in another post.
I hope you like this so far.
If you are after a quick pointer version of this, please feel free to check out my website. I have written some more posts there plus you can know more about me, books I recommend and what I do for work.