Developer’s Sins: Lack of financial consciousness

Salaries in IT

I think we all agree that salaries in IT don’t belong to the lowest ones on the market. Compared to many other professions one could say those are irrationally high.

Another very important factor is that devs rather aren’t much afraid of getting another job if they need to (unless they really do something bad :)).

That’s simply linked to the fact that there are still more jobs on the market than the people able to cope with this workload.

The problem with this approach is that since the early days, developers are taught they are the kings of their lives and they can do whatever they want. They can afford whatever they wish, there’s no limit. That’s encouraging, but life is much more complex.

Is it enough?

Let’s take as an example something really tough, like being really sick. Something that you just can’t cure yourself. Something that requires hundreds of thousands of $$ in a very short period, and may be regularly needed for some longer period of time.

How much could you get, let’s say in one week?

Well, if you’re living day after day, spending money here and there, probably you didn’t have much time to think about savings. That is a problem. There’s even a bigger problem here, that many of those people can’t say what are they spending the money on. The money just disappears magically.

I know many guys in IT who are earning a lot of money but can’t afford much because they’re also spending a lot, sometimes a lot more than they earn 🙂 I also know a lot of people who earn not much but are doing pretty well, because they are managing their home budget properly.

So it’s not really about earning enough, it’s more about knowing what does it actually mean enough. How much do I need, and how much of the expenses are simply a waste of money.

Happiness

There’s also the thing that people are setting their goals to earn more and more because they think it will make them happier. The thing is that usually people that do more, need even more than that.

There are many rich people who are leading a very stressed and fucked up life, while there are people living at the lowest standards while being perfectly happy and satisfied with their lives. Partially I wrote about it in my blog post about being successful.

So if earning more doesn’t mean we’re saving more and it doesn’t guarantee happiness, what’s the point in earning so much? Well, that’s where the notion of financial consciousness comes in.

Financial consciousness

Being financially conscious means for me being in charge of my finances. Being aware how much I earn, how much I really need, and what to do with the money that’s left.

One could save the money, invest it, spend it on something that is consciously chosen and that is helping dreams to come true, or support some charity, help some people on the street, organize something meaningful for the people to improve their lives’ standards.

There are many options what to do with the extra money, but first, you need to have money, that you could say are extra for you.

How to start

There are so many books and blogs about personal finances management that I won’t say much about it, but among the simplest things that work for me, I would note:

  • First and foremost, please put everything somewhere out of your head. On the paper, Excel, whatever, it needs to be written somewhere. You will need it to refer to the initial values after some time-period, many times as the time goes by and the cycles are repeating.
  • Define your regular expenses that are simply necessary during the billing period length (let’s say monthly).
  • Define your expenses during the year (insurance, taxes, or anything that happens other than each month, but you can’t miss it during the year)
  • Analyze your monthly expenses on the other things for a couple of months, if you find something regular, decide if it’s necessary or you could live without it, and if you can’t, add it to the regular expenses
    • Living without it doesn’t mean to suffer, it means that it’s irrelevant and removing it won’t break anything
    • Sometimes it’s just a matter of getting used to a different lifestyle or changing your customs
  • If it goes about daily expenses like food, you should take some assumption (like 500$ a month) and eventually modify it after some test period (few months)
  • By proceeding with the previous points, you should be able to calculate how much is left. You have to decide what to do with that
  • Unless you have clear plans how to follow your dreams with that money, please store it on any account, that you are not using on a daily basis (without credit/debit card). It’s usually very easy and free of charge, whereas it allows you to clearly separate the part you want to save from the part you need for living. It is totally fine to have 5 accounts if you have 5 goals to save for.
  • Carefully manage the part of what is really needed. If you get a raise, you have two choices: either you increase your standards and your expenses are getting higher, or you decide to spare more.

As I said before, you could do many things with the money that you save. It’s totally up to you. I am not a very big fan of dying with millions on the bank account. You could spend your life totally different if you clearly define your goals, how much do you need to reach those goals, and consistently following this path.

The only thing that I challenge you to do today is to take the charge of your budget. If you won’t do this, somebody will take the charge for you, probably this is already happening today!

So, are you making conscious decisions regarding your finances? What are the tricks that help you with your budget? Let me know in the comments!

Get in charge of your money. Stay happy. Stay conscious.

Advent of Blog

This is my tenth post in the series of Advent of Blog 2017. I will be publishing one post per day as I mentioned in my first post of the series.

Stay tuned.

 

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