Dwarves Radio Talk takes place once a week. Considered as a team sharing, we ping pong the team for advices/ lesson learnt on a variety of topics. From casual soft skills to in-depth technical knowledge. Anything that helps us grow.
We let the Dwarves select their favorite topics. It's better to start with what everyone wants to know about, rather than forcing them into a shaped concept.
In 60 minutes straight, we gathered the ideas from different Dwarves on how they manage their expense, and what method should be adopted. It all came to one thing in common: What goal we are trying to pursue at the time?
Hosted by Han, the panelist was randomly picked as everyone was welcomed to open their mic.
Han: How many of you have a plan for personal financial management? Nam, wanna start first?
Nam: I currently have mine managed with an Excel file. Monthly and manually, of course.
Han: Why did you decide to do that in the first place?
Nam: So I won't overspend my income. Living far away from home means I need to control my spending on a budget. You know, how many percentages should be spent on living expenses,
shopping, renting, or other stuff. It keeps me aware of how much I have spent or how much I have left.
Han: Any tools or app to help you with that?
Nam: I downloaded Money Note and Money Lover, but those two required too many manual steps that I finally dropped them. I’ve wasted too much time just to input the expense. Somehow it didn't support me as much as I needed.
Han: But seriously, what's the point for personal financial management? Why should people do that? Is anyone here to wish to manage their income in another way?
Giang: Has anyone of you heard of the 6 Jars Budgeting Method? I find it's pretty flexible to adopt.
This method divides your income into 6 categories, each with a different percentage.
- 55% of living cost
- 10% for investment
- 10% for long term saving
- 10% for self-development
- 10% for entertainment
- 5% for other activities such as charity or gifts
But from what I see, your financial management will depend on the current need, based on what stage of life you're in. Because our essential needs won't stay the same throughout times. It changes constantly.
Han: I applied this once, but the laziness beat me up. Lmao. But yeah, I do agree on the purpose-driven thing. And also, the biggest challenge is to maintain the effort to update your expense persistently. So, next question: How to automate?
Giang: Tbh, it doesn't take up much time. But using a debit card is also a solution. You'll be able to track how much money you need to earn/ pay up to purchase stuff.
Han: If this helps, then marriage is a solution too. You'll get yourself an accountant. Actually, I think there's someone in here who can share his perspective toward this. Speaking from experience, indeed. Khai, you there?
Khai: Here. There was a time I took up mostly 80-90% of my income for saving. Managing the income & expense at the time was really challenging. From what I know, having more than one bank account and open online funds can support a lot in distributing your income in the right places. Usually, I'll roll them out into 4 categories. 30% for family expenses, 30% for future investment, 10% for self-development, and the leftover are for casual spending. The last part will make things easier, as you get to spend on necessary needs and still indulge yourself every once in a while.
Han: I feel that financial management is a domain that most tech companies are heading to; since people have started to develop the need to manage their personal income. Trung, any advice as a family man?
Trung: Maybe I can add up a bit. Being married and having kids means I must put the family as the top priority. I often save up to 50% for the family expense, 25% for essential household needs, and the other 25% for self-development or long term saving. I personally don't support installment purchases. It might give you an unnecessary burden. Purchase what you can afford is a safer choice, I think.
Han: It can be seen that categorizing the expense is what we all agree on. The only difference is the percentage. But how to know our categories are the most optimized?
Giang: Actually, the critical point drops in 2 aspects: Essential Expense and Saving. Essential ensures your daily needs are fulfilled, while Saving allows you to prepare for unexpected situations. As a matter of fact, I think the most optimized category exists when you balance the well-being of mentality and physicality. We can only function properly if both of them are in good states.
Khai: Yes, I'm on board with Giang on this.
Han: Guess it's time for another point of view. Quang, what do you think?
Quang: I will adopt Trung's method. However, I would optimize the saving part. Because let's face it, money can't be increased just by putting them in a lockbox. I'd prefer to use it for something more profitable. I would cut 30% of my income and go for investment probably.
Han: How about Ngoc? You have any point on this?
Ngoc: I might do things on goals-based. Like setting out the resolution for the new year. Any goal to reach. Any wishlist to check off. My expense throughout the year will stick with that. And when it comes to Saving, my trick is to put them into 2 places: Apart for a long-term saving account; and ask for an investment agent to take care of the rest.
Han: Most young adults out there are buying in the fact of saving more and more money for the unexpected. So many what-ifs. And many more of just in cases. It somehow swirls us into a place where money must be saved, but with no purpose.
I think I've figured what theme to do in our next talk. Instead of preparing for the risk, how to save money for the bigger things?
- If you plan on saving, find a purpose first
- Earn and enjoy. At the same time
- Marriage can also be a solution. Who knows?
In fact, different stages of life come with different goals to pursue. And specific need to keep up with. The age from 5 to 25 is the period to focus on health and education, while 25s to 40s should be pushed harder on making a living. And from the 40s to 60s? Live, definitely.
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