On personal finances…

The mental labelling applied to money
As Seth Godin wrote, money scales but emotions around money don’t. I agree with this, and I would even go far and attribute emotional or mental labelling (see emotional accounting) to certain ‘types’ of money (even though $1 is still $1). Money saved for emergencies is the money in your wallet to buy that coffee.

The clash with money happens when one’s ‘mental label’ clashes with another’s ‘mental label’ of money when a transaction is occuring or about to occur. For example, cash mentally labeled under ‘To Do List’ for Person A may be under the label of ‘The month’s groceries’ for Person B. A clash occurs because there is no common ground (unimportant vs important).

The emotions around money
It is interesting exploring the relationship between money and one’s feelings.

When I am feeling adventurous or optimistic, I am optimistic about my cashflow and this affects my spend. But my optimism may not always necessarily translate to being realistic.

When I am feeling in control, then I am in control of my money (or perhaps this is the other way around?). The complete opposite to this is the lack of control – this can go both ways of one’s cashflow – and it manifests itself in the feeling of being unable to control one’s life. Think: people who stick around jobs that they hate for the paycheck and those constantly seeking to borrow money.

I try to always be aware of this though, as I never want to be in a situation where I lose control of my cashflow.

Money placed in one’s personal and professional worth
The most common and obvious answer is around salary. That obtaining a raise is validation of one’s place in society and in the organisation. Freelancers face this as well when dealing with the subject of contracts and rates – either adjust the rate according to one’s living expense or adjust according to one’s worth of contribution to the organisation.

So, when I moved to London I either had to readjust my salary expectations or try to keep the level similar. I would go as far as to say to actually push for an increase and never go below the salary level that you had back home. Yes, ignore the naysayers. You took the risk because you know that you can do it – so you deserve it.

Difference between business and personal finance
This is a true story. I was recently talking to someone who is/was studying International Business. But first, let me talk about who they are and also their education. This person is learning various business concepts like learning all about financial systems and discussing the nature of globalisation and so on. This person is a member of an investment society at a London university. By graduation, they can claim international experience (the subjects taken at university, being an international student and so on) as well as a degree (I forgot if it was a Masters).

What a load of…

Because we were talking about personal finances. And as it turned out, the person hasn’t had positive cashflow three months. Yes, three months! Now they’ve had to move out of London.
Now that is some risky behaviour.

I am probably calling pot kettle black. I took risks as well, but it was measured and calculated. I had stages where I assessed my cashflow, not at the amount that I wanted to, but it was enough to get by (ok, so bit of a cringeworthy statement there, but I am not claiming to be a personal finance expert here).

But seriously. If you’re planning to move overseas, try to not be in a situation where the amount of money in your bank is equal to a cup of coffee after you buy that ticket back home.

Sorry if this post is a bit rambly.