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Yes, one particular pet peeve for me is the idea that the personal finance part of "adulting" is hard. It's really not. Live (far) below your means and invest t

Yes, one particular pet peeve for me is the idea that the personal finance part of "adulting" is hard. It's really not. Live (far) below your means and invest the difference, that's it. Somehow 1.3B Chinese can maintain an average savings rate of 30%, but people in the west cannot help but live paycheck to payceck? Of course, few people are willing to actually go through with it, but it's not difficult to understand. It so happens that getting this part right is a pretty major part of adulting too.

Hackbraten 6y ago
Don’t assume that what’s easy for you is easy for everyone else. There’s more to getting out of debt than just basic math. I’ve been trying to keep track of my expenses for more than 20 years but no success so far. I do have online banking and a list of contracts but there’s no way for me to figure out how much money I actually have left. Because for example, that yearly medical copay may be around the corner. I have no idea how to account for it, or how to spread it over the months while still keeping track of how much disposable income I actually have at any given time. And that’s just one example. Please be aware that not everyone is financially literate.
- heavenlyblue 6y ago
  You don’t know how much money you have left because sitting down and actually doing the maths require time and continuous effort. What’s with the copay? Can’t you estimate that from previous year? Many of my friends are like this, especially the ones I lived with: they come to you and ask how much money they owe you thinking that you’ve got this magical ability to count money while it just doesn’t fit in their head that I actually did spend my (considerable amount of) time on doing the maths (including learning how to do the maths). My parents from Lithuania know exactly how to go around relevant tax law in the country (and everyone they know also know how to do that). They know that because they earn so little that it actually makes a huge difference. And to make it clear I come from a background where having any sorts of education is rare so it’s not like they are privileged enough to know it.
- martindbp 6y ago
  I actually don't think you need to track expenses much, at least I don't. I did at first at 18 just to make sure I could survive on the $1000 I got in loans and subsidies by the government at the time. What I recommend is to focus on the big expenses, those are what gets you. That is, housing, transportation, medical (if you live in the US, but there's maybe not much you can do here). Don't go for the most expensive house or apartment that you can afford. If every house is expensive in your area, then settle for an apartment. If you're not willing to, then that's the root of the problem. Go car free if you can. If you can't, get a cheap reliable used car (mine was $4k, worked like a charm). Don't eat and drink out very often. Cut expenses until you're saving 30-50% of your paycheck. If you're in tech, that's very easy, otherwise it's difficult but still doable. Then, if you start earning more money, you can perhaps allow yourself to spend more. The problem is the expectations that people have of life. Your parents have a big house so you deserve one as well. You're having a baby, so you need a 3 bedroom house and a yard, otherwise that's baby torture! All your friends are buying new cars so naturally you need one too, right? If you're earning below median income, I'm willing to cut you some slack, but I think for most people on HN, that is not the case.
  - pnutjam 6y ago
    I'm on the Midwest, it's not as easy over here as you think. The salary of your first job can hold down your income for a decade, you might not even realize how underpaid you are.
    - hnarn 6y ago
      > The salary of your first job can hold down your income for a decade Why is that?
      - pnutjam 6y ago
        Most employers ask you what your previous salary was, or get it from your past employer. Salary is not protected information. https://www.marketplace.org/2020/07/08/how-salary-history-bans-can-raise-wages-for-female-and-black-workers/ https://www.marketplace.org/2020/07/08/how-salary-history-ba...
- hnarn 6y ago
  > I do have online banking and a list of contracts but there’s no way for me to figure out how much money I actually have left. Here's some relatively easy exercises (just arithmetic and basic excel): 1.) Export your last 12/24/48 months of bank transactions (money in, money out) and calculate how much money you spent in that period, and how much money you made in that period. Is it positive or negative? Tip: If you have a row of + and - entries, you can just sum up the entire column for a quick idea. Still ,it's good to break it down by period, maybe you had a rough year that offsets the others. If positive: You're making money. This is good, but it's still a good idea to find out how much of your money goes to what. Try grouping your expenses (negatives) per year into things you have to pay (rent, medical etc) and things you don't (restaurants, pubs, gadgets). If negative: Urgently figure out what's making you bleed the most money. Group your expenses into detailed categories and figure out what you spend the most money on. "Grouping" is as easy as copying and pasting into different parts of the document. As you start grouping, you'll encounter new expenses that you can't fit into a category, so you can create a new one and improve your overall categorization. Sure, this takes time, and some patience. But you can definitely do it if you just sit down and spend an hour or so. Also, remember that while income is important, what makes your poor is your expenses. I would argue that most people in financial trouble can almost ignore their incomes and focus solely on picking apart their expenses, because like my friend's grandma once said: it's not the large income that makes you rich, it's the small expense. Also, most people kind of know their expenses, because they're so much simpler. Expenses are usually complex.
DangitBobby 6y ago
I'm sure it would be hard for you too if you living far below your means meant spending nothing or next to nothing.
- deleted 6y ago
  [deleted]
hnarn 6y ago
> 1.3B Chinese can maintain an average savings rate of 30% This is a good example of a statistic where the average is meaningless if you don't also know the median. Also, which specific statistic are you referring to?
- martindbp 6y ago
  For example: https://data.oecd.org/natincome/saving-rate.htm https://data.oecd.org/natincome/saving-rate.htm I was wrong, it was 46% in 2015. I don't know what the median is, but it's probably much higher as well. Having Chinese in the family, I also know from experience that they are more frugal and save much more diligently. Now there's a reason the savings rate is high in China: there is practically no social safety net, and borrowing for school or housing is not common I believe. But my point is that we in the west could save more if we tried, it's just that in our culture we feel like, or we're pressured to, spend. To keep up with the Joneses, or because we feel we deserve certain things, maybe the same standard of living as our parents etc.
  - deleted 6y ago
    [deleted]

Hackbraten 6y ago

Don’t assume that what’s easy for you is easy for everyone else. There’s more to getting out of debt than just basic math. I’ve been trying to keep track of my expenses for more than 20 years but no success so far. I do have online banking and a list of contracts but there’s no way for me to figure out how much money I actually have left. Because for example, that yearly medical copay may be around the corner. I have no idea how to account for it, or how to spread it over the months while still keeping track of how much disposable income I actually have at any given time. And that’s just one example. Please be aware that not everyone is financially literate.

heavenlyblue 6y ago
You don’t know how much money you have left because sitting down and actually doing the maths require time and continuous effort. What’s with the copay? Can’t you estimate that from previous year? Many of my friends are like this, especially the ones I lived with: they come to you and ask how much money they owe you thinking that you’ve got this magical ability to count money while it just doesn’t fit in their head that I actually did spend my (considerable amount of) time on doing the maths (including learning how to do the maths). My parents from Lithuania know exactly how to go around relevant tax law in the country (and everyone they know also know how to do that). They know that because they earn so little that it actually makes a huge difference. And to make it clear I come from a background where having any sorts of education is rare so it’s not like they are privileged enough to know it.
martindbp 6y ago
I actually don't think you need to track expenses much, at least I don't. I did at first at 18 just to make sure I could survive on the $1000 I got in loans and subsidies by the government at the time. What I recommend is to focus on the big expenses, those are what gets you. That is, housing, transportation, medical (if you live in the US, but there's maybe not much you can do here). Don't go for the most expensive house or apartment that you can afford. If every house is expensive in your area, then settle for an apartment. If you're not willing to, then that's the root of the problem. Go car free if you can. If you can't, get a cheap reliable used car (mine was $4k, worked like a charm). Don't eat and drink out very often. Cut expenses until you're saving 30-50% of your paycheck. If you're in tech, that's very easy, otherwise it's difficult but still doable. Then, if you start earning more money, you can perhaps allow yourself to spend more. The problem is the expectations that people have of life. Your parents have a big house so you deserve one as well. You're having a baby, so you need a 3 bedroom house and a yard, otherwise that's baby torture! All your friends are buying new cars so naturally you need one too, right? If you're earning below median income, I'm willing to cut you some slack, but I think for most people on HN, that is not the case.
- pnutjam 6y ago
  I'm on the Midwest, it's not as easy over here as you think. The salary of your first job can hold down your income for a decade, you might not even realize how underpaid you are.
  - hnarn 6y ago
    > The salary of your first job can hold down your income for a decade Why is that?
    - pnutjam 6y ago
      Most employers ask you what your previous salary was, or get it from your past employer. Salary is not protected information. https://www.marketplace.org/2020/07/08/how-salary-history-bans-can-raise-wages-for-female-and-black-workers/ https://www.marketplace.org/2020/07/08/how-salary-history-ba...
hnarn 6y ago
> I do have online banking and a list of contracts but there’s no way for me to figure out how much money I actually have left. Here's some relatively easy exercises (just arithmetic and basic excel): 1.) Export your last 12/24/48 months of bank transactions (money in, money out) and calculate how much money you spent in that period, and how much money you made in that period. Is it positive or negative? Tip: If you have a row of + and - entries, you can just sum up the entire column for a quick idea. Still ,it's good to break it down by period, maybe you had a rough year that offsets the others. If positive: You're making money. This is good, but it's still a good idea to find out how much of your money goes to what. Try grouping your expenses (negatives) per year into things you have to pay (rent, medical etc) and things you don't (restaurants, pubs, gadgets). If negative: Urgently figure out what's making you bleed the most money. Group your expenses into detailed categories and figure out what you spend the most money on. "Grouping" is as easy as copying and pasting into different parts of the document. As you start grouping, you'll encounter new expenses that you can't fit into a category, so you can create a new one and improve your overall categorization. Sure, this takes time, and some patience. But you can definitely do it if you just sit down and spend an hour or so. Also, remember that while income is important, what makes your poor is your expenses. I would argue that most people in financial trouble can almost ignore their incomes and focus solely on picking apart their expenses, because like my friend's grandma once said: it's not the large income that makes you rich, it's the small expense. Also, most people kind of know their expenses, because they're so much simpler. Expenses are usually complex.

DangitBobby 6y ago

I'm sure it would be hard for you too if you living far below your means meant spending nothing or next to nothing.

deleted 6y ago
[deleted]

hnarn 6y ago

> 1.3B Chinese can maintain an average savings rate of 30% This is a good example of a statistic where the average is meaningless if you don't also know the median. Also, which specific statistic are you referring to?

martindbp 6y ago
For example: https://data.oecd.org/natincome/saving-rate.htm https://data.oecd.org/natincome/saving-rate.htm I was wrong, it was 46% in 2015. I don't know what the median is, but it's probably much higher as well. Having Chinese in the family, I also know from experience that they are more frugal and save much more diligently. Now there's a reason the savings rate is high in China: there is practically no social safety net, and borrowing for school or housing is not common I believe. But my point is that we in the west could save more if we tried, it's just that in our culture we feel like, or we're pressured to, spend. To keep up with the Joneses, or because we feel we deserve certain things, maybe the same standard of living as our parents etc.
- deleted 6y ago
  [deleted]