Personal Finances: What They Didn’t Tell You in School

The word trauma that is passed around in self-help circles these days mainly covers relationship stemmed trauma— family, friendships, and significant others. They never really talk about a type of trauma that’s actually very prevalent, even in higher-income cities (actually more likely in higher-income per capita cities). Financial trauma, in my words,  is the experience of deep financial struggle over an extended period of time. Kids who leave their “nest” early on can experience this, or even young adults who’ve recently exited college but haven’t secured a well paying 9-5. Early-stage entrepreneurs can also experience this. Financial trauma can be extended down the family line if you come from a family that’s always lived below the poverty line.

I come from a lower-income, first-generation, immigrant family. The reason why we’re lower income is not because my parents aren’t highly educated. They are in the financial position they’re in because they made a conscious choice to come to Canada to start a family and for the optimism of a better life. My father, as much as I love to shit on him, has a master’s in computer science from one of the top universities in Tokyo. My mother had some type of accounting degree from the same school. They both speak 3 languages fluently (Mandarin, Japanese, Taiwanese), but unfortunately, my mother cannot speak English at a conversational level. My father started a computer service business out of necessity; he couldn’t provide for a growing family and a newly bought apartment by staying in Chinatown and delivering burlaps of rice forever. Soon after the business took off, my father actually experienced some good years of financial prosperity. We had different cars every year, ate out frequently, and the thought of money didn’t even arise until I was around 13-14 years old. That’s when things kind of took a turn for the worse.

I adopted some of my father’s spending habits— buy now, worry later. I bought things that I liked without knowledge of how to save money or the concept of living below your means. In fact, I did the complete opposite— spending the little, hard-earned money I made (at that age, I made about $13/hour— by relative, a meal cost about $12 at the cafe I worked at). The funny thing is… the things that I think are so common sense now— save, invest, budget; those concepts aren’t innate. These basic financial safeguards need to be learned and socialized. The sad thing is from the ages of 5-19, no class talks about how to save a part of your earnings. They teach you geometry, English, math, periodic tables, and history about old, dead men, but they don’t teach you about inflation, debt management, or simple daily budgeting. How *not* to spend your hourly wage on lunch. How to put a bit of money away, and how to avoid racking up credit card debt. All these things kind of hit you and follow you into the woods when you’re a bit older. I know many people including myself don’t know how inflation really works, or what’s the difference between an index fund and a mutual fund.

So how do you train yourself into learning about conscious spending?

Ironically, getting into some financial trouble can help escalate this learning curve. I developed a fear of debt early in life, through incurring credit card debt when I was around 19/20 years old. At one point, I was working tirelessly until my feet hurt every night, and not seeing a dime of the cash because it was all going toward paying off the card. A thousand bucks might not seem like a lot, but it was overbearing for me.

Now not all debt is bad. For example, if you take out a loan in order to pay for capital or knowledge, the amount of money you make after the investment could make you a net profit. However, consumer spending debt, ie. credit cards, is a negative type of debt. Ideally, you should be able to pay off your credit card in full with your income. If you can’t, then you probably cannot afford your current lifestyle and you either have to do one of two things: Decrease your spending or increase your income.

Honestly, financial management is a lot like dieting. The numbers are very practical, but human emotion gets in the way of success. 

Don’t Think Like an Asian

Asian folks are notorious for two things (I’m allowed to say this because I’m Asian.)

1. Saving is everything.
2. Taking care of family and the finances associated with that.
3. Getting discounts whenever you can.

I’d like to say we’re more conservative when it comes to money. We do not talk about money. Ever. This is a huge problem. Having a blindfold over yourself and your family doesn’t ‘protect’ them from reality; it hurts them more in the long run.

If anything I learned from my parents, I am going to make sure my future children are educated adequately on basic personal financial management from an early age.

How to work hard for money, but not too hard. The concept of upskilling and scaling, to earn more from your time; rather than working more hours. Building the habit of putting money away with every paycheck, and putting a portion of that towards investing, so that their money grows well into their future. How to write your own tax return if necessary.

These are simple concepts that can help you stay financially sound, and even get you a headstart in life. I’ve seen many well-intentioned friends and family members enter the pitfalls of poor financial management well into their 30s and even 50s. They’re forced to go into labour-intensive jobs later in life, like restaurants, food delivery, childcare, and other hustles because they didn’t invest in a more lucrative skill earlier on in their 20s. Not only were their incomes already low; they were constantly overextending themselves financially. 

They were maxing out their credit cards, incurring debts, and buying things that created temporary happiness, but not long-term security. Being Asian, they constantly treated their “friends” to luxurious meals and treats. Though well-intentioned, they were derailing their financial future at rocket speed. “Just work more to make up for it next month” is the mindset they carried on for most of their lives.

In a perfect world, we would have the resources to treat our loved ones to delightful trips and excursions, five-course meals, and designer gifts. All these are indeed possible, but a lot of people try to achieve the cherry on top before even establishing the base of the sundae; the ice cream. You have to churn the cream, milk, and sugar sternly for a period of time before you even have ice cream. If you’re turning toward one-time purchases to fulfill a desire for happiness—either to make yourself happy or to make others happy, it will soon dawn on you how fickle that happiness is. In the moment you’ll feel elated on how you were able to get someone you love what you think they deserve. But if you’re unable to actually afford it, you’re going to spend a period of time trying to make up for the losses in your finances. These extra financial burdens will show up in distinct ways in your life. Sometimes you’ll be forced to give up on things you enjoy to save extra money. You might become moodier, depressed, anxious, and more withdrawn in your social life. Bottom line: It’s not worth it. Focus on increasing your value in the marketplace. Have a substantial baseline of savings, emergency funds, and investments before you go and try and make rash purchases. Once these are established, if you have extra disposable income coming in and the thing you’re buying will not affect your lifestyle, use that ‘excess’ money to purchase whatever you desire. At the end of the day, no one feels super comfortable receiving gifts from someone they know can’t really afford it. It’s more emotionally satisfying on both sides if the gifter has the financial record to support their purchases.

Unpopular opinion: Always hunting for discounts results in greater spending over the long run.

I’ve always held a disdain for the discount section at stores. First of all, the shopping experience is horrible because the section is rarely taken care of. It’s messy, and frankly, an eyesore to look at, and you have to fumble not only through the disorganized clothing but also dodge the thrifty Asian moms eyeing that cami that looks straight out of the 2000s.

One thing I hate even more than discount sections is warehouse sales. First of all, you’re sifting through all the stuff no one wanted to buy. And second of all, you’re spending 1-3 hours in line to get in. I always think about how much my hour is worth, and whether lining up to “spend more money on clothes that no one wanted” is worth it. The answer is always a resounding no.

This may be a North American mentality, but we perceive value in terms of time. I think in Asian culture, time is not as relevant. If there’s a buck to be made or money to be saved, they’ll go tooth and nail for the task. But ultimately, time is your most precious asset. You can turn your time into more money if you apply the right mindset. So stop with the lineups.

Here’s the truth pill: We automatically perceive goods that are worth more, to be more valuable. At work the other day, we did matcha tasting for “market research.” To our dismay, the most expensive matcha powder tasted the worst (bitter). So underneath the glamorous labeling and exuberant marketing tactics, the matcha was straight-up… garbage. However, there is an advantage of buying goods, like clothing, appliances, or technology that are priced higher. Forget the quality aspect, but we become more conscious of protecting these items, and they tend to last much longer than their cheaper counterparts. Take a good pair of leather shoes, my partners may wear these every 3 months. These shoes will likely last him the decade. Those sneakers he wears daily? Wears out in a year. For me it’s the bags; I’m not wearing out my more expensive bag in fear that I’ll spill or damage it on a casual night out. 

Don’t scout for discounts if the compromise is quality. You’ll end up having to spend more time and money in the future to replace these items.

I think of it like eating low-fat cream cheese vs full-fat. You buy low-fat with good intentions of it being lower in calories, cholesterol, and fat. But you’ll end up going through that tub way faster because more of it’s required for you to feel satiated.

Set up Guidelines for Yourself

When you think about someone with poor financial management, you often picture someone with a credit card problem or someone that needs to get ahold of their spending habits. Financial mismanagement can also look like setting up unrealistic goals. I have a personal example when it comes to trying to save more than I can afford. 

The commonly recommended percentage of savings is 20% of your income. If your income is relatively high, 20% can be a minuscule amount. You would still be left with a lot of disposable income after paying for necessities like housing, debt, gas, and food. Someone who is earning a lot and saving 20% can generally live comfortably in their day-to-day. 

Conversely, if you’re someone like me who doesn’t earn a high income, saving 20% can leave you with little disposable income after rent and necessities. Currently, I’m saving approximately 28% of my total income every month, leaving me with 40% of disposable income (rent takes up 25% of that pie). Now you might think 40% seems like a lot, but due to rising living costs and the fact that my income is relatively low– it t leaves me with just enough to feel “barely comfortable.” If I tried to save even more money, it would leave me feeling even more squeezed. For the past nine months, I’ve been pretty rigid with my saving goals— consistently saving above 20% of my income every month. Around a month or two ago, I started feeling a little demotivated because I was constantly feeling like I was living paycheck to paycheck. My disposable income every week was barely enough for me to do the things I wanted to do. I also was accumulating some credit card debt—not a large amount, but it was frustrating because I just wanted the balance to be $0.

This made me sit down and do another financial audit, and that’s how I came to these percentages. I noticed some chunk of money was being auto-deposited from my chequing to some investment accounts (this is not the same thing as savings). So my % of disposable income was decreasing. I also took a closer look at what my investment account looked like. One was a low-risk, high-interest tax-free saving account ( at a 4.45% interest rate). I decided to make that account a general savings/ emergency account since I knew it was better to leave my savings in a higher-interest account to build interest rather than leave it in my bank account with a minuscule interest rate of 0.001%. Once I dumped some money from my bank’s savings account into this tax-free investment account, I came to the realization I was no longer struggling financially. I was actually 2 months away from hitting my savings goal for the year. One month ahead of the planned schedule.

I cut back my savings every month by around $200– this would go into investments anyways. And I used my disposable income/ some of my savings to get rid of my credit card debt. It’s now at $0 (the best feeling for me is to be 100% debt-free). I also upgraded my credit card to a point-based rather than cash credit. These points allow you to purchase things like airline tickets.

I know now that as long as I stick to 28/25/40, I will be somewhat comfortable and happy. And I have an emergency savings “cushion” account as well as regular savings for travels and larger purchases. The point of building any habit, especially in finances, is to make it as brainless and easy as possible. Many people feel guilt for spending their disposable income on more luxurious things. Still, my perception is that if you work hard and you have a sound plan for saving and investing, you deserve to spend the disposable income you earn on whatever your heart desires. There’s a reason why it’s called “disposable.” If you overstress and overthink about finances on the day-to-day, you will make your existence miserable—and this comes from personal experience. The deprivation will drive you to make impulsive purchases later on anyways (kind of like dieting!).  I would say I work pretty hard for my money. If I had just focused on saving every penny, I wouldn’t be anywhere close to living the fulfilled life that I try to encourage.

If you want to learn how to build your own personal finance plan and how to come up with your own percentages, please check out my last finance post here.

Move from Impulse Purchases to Conscious Purchases

Impulse purchases can add up, and it can detract from your ability to buy what you REALLY want. I recommend sitting down one day and writing down a list of the things you really want to have in your life. You might surprise yourself when doing this exercise, that what you really want is not a new pair of kicks or high heels. 

I split my list down into 3 sections.

1. Essentials
   1. Check-in luggage— I value travel, and my carry-on is getting old af.
   2. Waterproof shoes (hello, Vancouver!)
2. Wants
   1. Strong wants
      1. Nicer, high-quality shoes
      2. HD Camera 
   2. Medium wants
      1. Airpod max, new phone..etc
   3. Weak wants
      1. Work slacks (shoes)
      2. Blog logo redesign

Besides every hypothetical purchase, I put down the price, and I tally it up. How do I “allow” myself to make these purchases? I take my anticipated year-end savings total and subtract it from my savings goal for the year. The leftover amount I can use to make these purchases.

[Anticipated year-end savings (+ bonuses) – Annual savings goal = Year end purchasing budget]

This is how you can level up your money mindset whilst still achieving all your financial goals.

On Debt: Feed Yourself First 

Your numbers are going to look different if you have debt. The most common types of debts are student loan debt, personal credit card debt, and mortgages. Even when you do feel stretched, it’s important to reserve some money for savings and your daily life— it’s called “filling your cup first” when you get paid. Filling your cup first provides some baseline security, in case something were to happen and you really need the money for something. If you have a large amount of debt, like above $10,000—you want to find the sweet spot of paying this debt off in a timely manner but still have a bit of money going into savings every month. The last thing you want is to finally pay off your debt, but have $0 in the bank.

Conclusion

Having a history of disordered eating and perfectionism, I know all too well the negative impact guilt plays on our mental well-being. Guilt and self-loathing tend to go hand in hand. It’s hard to get rid of the mechanisms of guilt, but we can be proactive in avoiding situations that will make us feel guilty over an outcome. That’s why setting up guidelines for yourself that I mentioned earlier is helpful. If you play within those grounds, guilt tends to creep up less, and you’re still able to hopefully make the purchases and go on the vacations you want. The bottom line is saving every nickel and dime isn’t going to make you any richer. In fact, it can actually inhibit you from making more money in the short and long run. If your standard of living is pretty low, it’s likely that your income will hover around the same place. If you have higher standards of living, you’re forced to create more income for yourself, and you’re more likely to reach higher income brackets faster in your career. You’re simply more driven. 

Personal finance doesn’t have to be complicated, it simply involves a little planning and self-reflection. For the longest time, I believed I was “bad” with money, and my parents thought I wasted too much money on “useless” things. Today, I know that is deeply untrue. I simply had not leveled up my money mindset enough, and I wasn’t making enough money to support my desires and lust for life. I’m not afraid to look forward to bigger purchases in the future and to spend money on the things I like and enjoy because I know I’m capable of achieving a higher standard of life. That to me, is part of happiness and freedom. Getting a little disciplined in my day-to-day, is worth the bigger things I get to do later.