After a week of reading on my daily 1h 10 min return trip from work, I finally completed my favourite author’s new book, The Art of Spending Money!
Here are four key takeaways that I absolutely loved and would like to record down for future reflections.
1. Wide funnel, tight filter
Be ruthlessly curious and set a low bar for entry.
You have to put a lot of inputs into your life because you can’t predict where the best ideas—or the biggest joy—will come from.
Take the meeting with the person you barely know. Test out the new hobby, even if you only buy the cheapest gear.
But set a high bar for staying.
The moment your hobby feels like a chore, you stop it. You quit the job that drains your soul.
The sunk cost of a few hours or a few dollars is meaningless compared to the opportunity cost of forcing yourself to stick with something mediocre.
A great example in my life was trying out new books.
In the past, I used to be ashamed of not finishing the book I was reading. After all, it was either recommended by someone or the summary drew me in.
How could I not give it a chance to pay off its initial promise?
But every time I opened the book, it was such a chore to complete a page that I gave up opening my e-book reader altogether.
Which was such a pity because it’s like giving up the forest for a tree. The sunk cost of 30 pages read is meaningless compared to the opportunity cost of forcing myself to finish a bad book when there are ten great ones waiting.
What I learnt: Be a big editor of your own life. Try everything, but quit quickly. You don’t get bonus points for sticking with things that aren’t working.
It’s perfectly okay to try to fail fast and move on.
2. All behaviour makes sense with enough information
I just started a new job, and I’m baffled by the sky-high expectations and drive my manager has.
Till she explained herself over a text to me.
“I have high expectations when it comes to [redacted] because that’s where I started. I also like the art and dynamism of it. So I can’t stand it when work isn’t presented well.”
In a flash, I understood her expectations came from the standard she holds for the craft that built her career.
Similar thing – I never understood why my mum spends the way she does. She’s extremely sharp in looking for discounts in our daily household shopping, but she’ll happily spend hundreds on food and drinks and buying supplements through livestreams.
To me, that’s financially irrational. The $2 saved on veggies is a guaranteed gain, while those miracle supplements are a huge, often wasted, expense. The spreadsheet screams, “Stop!”
But then I thought about her background. My grandparents were poor and my mother grew up in a place and time where access to good food and great health was a luxury. When she started working, she gave up most of her salary to help out her family.
I realised that every seemingly mad decision—in money, career, or life—is the rational outcome of a unique history, a specific set of experiences, and a fear or hope that we as individuals don’t share.
Humility is realising that every decision looks brilliant to the person making it.
No one is crazy. They are just trying their best to solve a problem that only makes sense from the inside of their own experience.
3. Don’t make money your identity
Guilty. As. Hell. Especially during my early years of working.
I used to be proud to call myself a saver. After all, it’s a good thing to be prudent and have delayed gratification, right?
Yes, but to an extent.
I struggle to break away from the focus on money because it has become a big part of my personality. I formed many money identities (saver, frugal person, investor etc), preventing myself from changing my mind and trying new things. I even used to go around dishing out financial advice on how I think one should live their life.
Is money serving me or am I serving it?
I’m now following the advice of author Ramit Sethi: Spend extravagantly on the things you love and mercilessly cut costs of the things you don’t. I’m also growing to be more okay spending on weekend dinners out with friends and family, while cutting back on my daily meals during the weekdays.
4. All happiness in life is the gap between expectations and reality
Fortunately, I feel like I nailed this one.
I feel content with what I have in my life most of the time.
Of course, I still have those days or even weeks when I dream of earning more, having more, getting more, but then I catch myself – I have a healthy body as well as family and friends who stand by me. I have a job, while tough, that is paying me to learn new things.
This feeling of contentment is the simplest, most undervalued financial asset you can own. The math is brutal and beautiful at the same time:
Happiness = Reality/Expectations
You can have a 5% raise, and yet feel less happy than you did last year, because your expectations jumped 10%. Your income went up, but your Reality/Expectations ratio went down. The yardstick you measure with life increases with each raise.
What I learnt – desire is a hidden form of debt that must be repaid before you get to feel any happiness.
And that’s it! I shall add more of my reflections when I re-skim the book again.
Always yours,
Val