A simple, easy to read book that I found extremely useful and valuable
I binge read this book in five hours. Never have I done such a thing for books of this genre. So, that definitely says that the book is relatable and not too preachy. The author in fact mentions that book was written for brevity and the readers should thank him. THANK YOU!
A few lessons that I really enjoyed:
ENOUGH should be the word brought to your financial planning.
Whats your enough wealth? When you start thinking about wealth and money, we all start with a magic number. Most of the time, we set the goal post based on your peers or a number that looks like a milestone.
When I first started working, 60k/year was a magic number for me. I thought 5k/month was a powerful number to attain as an engineer. So, when I switched jobs, I felt gratitude when the recruiter told me that I would make another 10k on top of that. My friend asked me on why I didn’t negotiate and I told him that I couldn’t possibly ask for more as I was grateful to cross my milestone. Somewhere along, that innocence and that gratitude gave way to greed. It also didn’t help that I was in the cut throat valley culture with never ending greed and ever rising house prices. I’ve seen a director colleague of mine who once told me that hitting 1M would make him happy. I’m not judging him by any means but I was pretty sure that 1 million was just another number for him and he wouldn’t be happy about that once he hit that goal. He would be seeing his colleagues making 5 million and would want to achieve that.
Leaving silicon valley helped me refocus on things that I care about: a balanced family life and an area of work that I find excited about. So, being careful with whats enough and not shifting the ballpark to another goal are important.
WEALTH IS EARNINGS MINUS EGO
This one rings very close to me because I lived in silicon valley for a decade and I can vouch that the valley is made of people with big egos and cut throat competition. The environment attracts people who demand nothing but best from themselves and others and also people who are extremely competitive. Its a dog eats dog culture and its a race in all things conceivable. While being competitive at work is excusable, but this competitiveness hits their social life styles and also into the lives of their kids. I had friends who would be bragging about their yard sizes, the exclusive flowers that bloom in their gardens, their hi-fi tech gadgetry, their fancy cars, their expensive homes and their fancy vacations. They try to outshine others.
But, these were the same people who have never max’ed their 401ks, took loans out of their retirement for fancier homes and can never afford to be out of work for more than a month. They always talk about the next big pay raise to save money and have not bothered to cut down their expenses. Being in their company had a reverse effect on me as I knew that I could never match their lifestyle and would almost go into at times extreme frugal life style to ensure I would be ok living a life when things don’t pan out my way.
Reasonable > Rationality
My mother always told me that life is about living and not obsessing our little details. She would encourage me to satisfy the little things in life and not brood about it. When it comes to life style and spending, I followed that. Of course, what’s little is entirely subjective. In my college days, I would think twice before spending anything over ten dollars. Now, that amount got extended to over hundred dollars. This amount may change to others, but the key is that we are not a walking and talking financial portfolios. We aim to increase our savings but not the expense of little pleasures of life. As a husband and a father, there is joy in taking a good family vacation. The joy of going with your kids to a Disney theme park or spending time eating a fancy dinner with your spouse cannot be postponed to retirement days. So, I want to save money, but not at the expense of losing little things. I also want to save money, but not at aiming to the best possible saver for the money I save. I make mistakes, I lose out on opportunities, but as long as I’m saving at a decent pace, I’m happy.
Compounding works (may be?)
Honestly, I don’t know it works or not, but it motivates to save early.
In my first job, I hated that I had to contribute money to this thing called 401-k, where I saw my money disappear into a fidelity account. I wanted to opt out, but my friend and my mentor pushed me to continue doing it. He talked to me all excited about saving money for the future and how it magically grows into a million dollars and I nodded my head without understanding anything only to let him stop. But, he meant good and he would check on me once in a while to ensure I was contributing regularly. In between, I saw atleast two major drops: one at the time of 2008 financial meltdown and another at the time of COVID. In both of these times, it dropped significantly, but I somehow remembered his words on compounding and didn’t convert to a money market account. It did seem to grow, but I don’t obsess too much on how much it grew. After all, I’m not trying to be a Warren Buffet.
Tails, you lose.
If we conceive life as a series of adventures, sometimes you lose. or probably you lose a lot of times and then you make one or two bets that make you succeed immensely. But, this means that you have to be willing to lose, a lot and then be still in the game. This is not about making stupid bets, but some reasonable bets. As I was typing this, I felt like I’m sounding like a gambler and may be I’m and I’ve no clue, but the reality is that many don’t. The key is on every gamble that you take, do you still have enough left in you to be in the game when you lose that. If you don’t, then you back out. If you do, then be in the game, because you have the possibility of making something big.
I’ve a friend who is pretty big into stocks. But, he always regrets about not realizing the fullest value of his investments. The other day, he told me about how could have been a millionaire, had he held onto his Tesla stock. Then I asked on how much money he put in the stock and the number he told me shocked me. No way, could he have weathered a storm and particularly the dip in the tesla stock with that level of money. No wonder he dropped out when the going got rough. I remarked the same to him and he asked me on what my philosophy was. Honestly, it changed a lot. Initially, it was making very less failed calls and as a result, I would think of investing as reducing losses (weird right? why should I invest in the first place?). So, I would only buy some stock and then feel happy looking at the light green numbers on my stocks and a bit annoyed when I would see the red numbers on other stocks. I would sell off my red stocks and never touch the green stocks. Of late, I don’t look at the individual numbers and obsess on the reds and greens. I only look at the cumulative gains and see whether there is any room for any investments that I could make it interesting.
May be life is like that? Stop obsessing on every little loss and setback and stop avoiding those. Instead, embrace the fuller picture and be happy for the cumulative gains you have made.
Wealth should you give control over your time.
This is the most profound lesson from the book for me. It really changed the way I measure success in my life.
Money and Wealth are not the same. Money is a mathematical number and the richest person in the planet is the person with the maximum money. That would be Elon Musk right now. But, who is the wealthiest person? Definitely, not Elon musk. Elon musk cannot take a week off as and when he pleases. Twitter would be even worse than it is today, Tesla stock would drop like a rock and we don’t know what would happen to Space X.
If you are successful, you will convert your money to wealth. You will save enough so that you can do things that you like. You can invest in areas that you want. You can experience true freedom. A lot of it is subjective, but this lesson touched me. I ask myself on whether I care about the tech job and the promotions it got me. I ask myself on whether working for fancy companies truly motivates me. Many a times, the answer is hell No and even though at times, it cringes about the fancy titles and the opportunities lost, this lesson nudges me back to doing things that I love and labor about. It also makes me not be a work horse all the time, as I have started seeing work as a way to fund the things I want to do, like funding this medium subscription or buying books or travelling.
Why did I use the image of the Pharaoh, you wonder?
I love history and particularly I love the ancient history. I was pretty fascinated about the pyramids, the mummies and the history behind all of this. It was exciting to learn that ancient egyptians believed that the kings and the royals believed that they would need all the things they had in life after death and they could carry those along with them. We have gone beyond that in the past six thousand years, but still, our attitude towards money seems to be stuck in ancient times. Our approach to money is not about maximizing the potential of life instead it seems to be about treating money as an eternal need and thereby assuming that we will need it beyond this life as well.
BTW, the most well known mummy that we know is not actually of a well known ruler back then. TutanKhamun was an obscure ruler whose mummy only survived for thousands of years because it was moved away into an obscure location at valley of kings to make room for the powerful and richer kings who came after him. And now, his sarcophagus is the face of Egyptian civilization!
