Tag: Personal Growth

If you are reading this chances are you follow some rule of money management or you might just be getting started. Either way, chances are you have heard of the 50/30/20 rule. This dictates you should spend your paycheck as follows:

50% on needs (rent, healthcare, food, etc.)
30% on wants (gym, gaming, take-out, etc.)
20% should be saved

tax documents on the table — Photo by Nataliya Vaitkevich on Pexels.com

This rule was popularised by Senator Elizabeth Warren in her book “All Your Worth: The Ultimate Lifetime Money Plan”. It’s seen as a straightforward way to get started with your finances. I suggest it as a starting point to stop living Paycheck to Paycheck in this article.

On the other hand, I don’t believe we should deal with absolutes. If anything money is personal and decisions will depend on your unique circumstances. Let’s go through the 5 flaws I have identified and how you can bend the rules to fit your lifestyle.

Only 20%?

set of black opened envelope and cash dollars — Photo by Karolina Grabowska on Pexels.com

If you follow this rule to the letter, you are ultimately encouraged to live wastefully. If you earn more than a median income (UK: £29,900 /US: $31,133) chances is are you could be saving more. Of course, this is contingent on the cost of living in your area and the localized median income. But if you earning a high wage this percentage can easily be increased as you no longer need to allocate 50% to your housing situation.

This is a cautionary tale when it comes to lifestyle inflation. It could be tempting to “upgrade” your life with a new phone or even a new flat. Yet. what is the point of a 10% raise if you increase your living cost by 9%? Following the 50/30/20 rule blindly will only lead to a loss of opportunity.

Understanding this has helped me go from saving 15-20% of my income to consistently saving above 40%. These savings are spread between my Emergency Fund and my investment portfolio that is hosted with an 80/20 split on both Vanguard and Trading 212. (article).

What are your goals?

As you embark or travel along your financial journey you need to set targets. You might be saving for your first house or because you aspire to achieve Financial Independence. Either way, you need to decide on what your financial goals are.

black and white dartboard — Photo by Engin Akyurt on Pexels.com

Based on your financial situation 20% might be too high or too little. If you are having a hard time deciding on your target check out Brandon’s article “How much money is enough?”. He dives into the numbers and shares 8 ways of figuring out what your answer is. I’ve quickly come to the realization that if I want any chance to achieve my financial goals, I cannot save less than 30% monthly.

Additionally, if you have a high income, increasing your saving rate could help you achieve your goals faster. Of course, we all remain subject to compound interest and the time it takes to get the ball rolling.

Not as clear cut as it seems

When you read the rule at first it can seem very straightforward. Yet the 50/30/20 rule doesn’t account for the gray areas. The 6 pack of beer or the pack of crisps I bought aren’t essential. Yet I picked them up during my weekly shop. Doesn’t it qualify these items as needs?

assorted wine bottles — Photo by Chris F on Pexels.com

Additionally, it opens the categories to interpretation. If you are a smoker and it will give you an inclination to include your cigarettes as a need. Although it would cause withdrawal symptoms, we can hardly put cigarettes and housing in the same group.

50/30/20 rule still needs tracking

Although the rule is presented as a simple solution, it still requires that you track your expenses. It isn’t possible to know where your money goes otherwise. You can decide to follow the 50/30/20 rule but without clear tracking, you will have no idea if you are hitting your targets or not.

snow covered forest field — Photo by James Wheeler on Pexels.com

A good starting point here could be “paying yourself” first by investing/saving 20% on payday. This way you make the funds inaccessible and make sure you are progressing towards your goals. Automation makes your financial life a breeze. If you want to avoid the headaches that come with constant tracking Financial Minimalism is for you.

50/30/20 is a strain

As much as this rule could lead to wasteful expenses, it might not be possible on a minimum wage. We all have different circumstances and must adapt to them. How often do we hear gurus proclaiming “we can all be rich”. All you need to do is save $500 a month. That isn’t a realistic target for everyone and it’s ok.

I don't share the value of my portfolio for 1 reason!

It only matters to me!

We each are on our journey at different stages build your wealth up and focus on percentages!

There is no right time to be at 5 figures or 6… just be patient!
— Lionel – Cent by Cent 💷 (@cent_by_cent) March 11, 2021

Comparing yourself to others and following arbitrary rules isn’t necessary. I know life can feel hopeless and tough at certain times but there are no certainties. Even if right now all you can save is $10 per month. Well, you are better off than last month. Rinkydoo Finance has a great article to get you started when your pockets are empty.

Should you use the 50/30/20 rule?

There is no 1 size fits all solution. It’s a great starting point to frame your saving strategy. The problem is just like everything else you must take it with a grain of salt. The problem of generalizing financial tips is that all of us have different circumstances. What applies to me might not apply to you.

It’s why I urge you to question everything and do your own research to find what fits you.

Do you follow the 50/30/20 rule or have you adapted it to your lifestyle?

Are You Successful? 7 Definitions of Success

By Lionel Piguet

On January 21, 2021

In Financial Minimalism, Financial Thinking, Personal Growth

How do top performers define success?

Are you going to be a success? I wish I could guarantee it. The problem begins when I ask you, how you define success.

By the way… How do you define success?

I’ll be honest, I have no clue. Curious as I am — I couldn’t leave this question unanswered. From Personal Finance to life, in general, it’s an essential question. We measure ourselves comparably to the success of others. Although, ultimately it doesn’t matter we cannot stop ourselves.

So to be sure I had the best insight I had to look at the best for feedback. At the end of the day, we measure our own success. Yet finding pride from within can be challenging. I’m sure that whatever you believe is a success you will find yourself below!

1. If you're engaged it's a success

When asked about success Richard Branson answers

“My definition of success? The more you’re actively and practically engaged, the more successful you will feel.”

Mr Branson makes no mention of performance. In his eyes, success is a feeling – an emotional reaction. Although this quote might be difficult to apply to investing. It’s perfect when it comes to chasing Financial Independence. As we achieve FI the chase of success becomes an easy one. You have the time to throw yourself into engaging work, despite lower potential returns.

The book “Finding My Virginity” , an autobiography by Richard Branson, was eye-opening for me. Although, he has failed dozens of times and gotten back up. He started with nothing and has built the Virgin Empire by pursuing passion projects.

We can put it down to luck. But it opens the question: had business been less profitable would he have the same definition of success?

I feel close to this definition as motivation always runs high when I’m passionate. It certainly explains why “pro-bono” work feels rewarding.

2. Sacrifice is necessary

I didn’t expect to find “it’s easy” among the answers. Yet the way the Dalai Lama puts the value of success in perspective is mind-opening. It’s also a quote that is perfectly at its place on a FI/RE and Personal Finance blog.

“Judge your success by what you had to give up in order to get it.”

If you strive for Financial Freedom – you know the importance of lowering expenses and growing income. Achieving your yearly saving rate is a success in itself as it requires you to sacrifice some comfort.

I talk about the challenge of moving abroad in my article “Should I Live Abroad?”. My move abroad although at the cost of higher pay is in my eyes a success. Sacrificing the comfort from home for personal growth was the right call!

Take time to reflect on what you’ve given up on to reach your current position.

3. Success to the unyielding

Striking gold is tough. The likelihood of it being on the first throw is minuscule. You will fail. Not once probably, many times. How do you keep your drive? More importantly, how do you find your strength in failure?

Winston Churchill defines “Success is walking from failure to failure with no loss of enthusiasm.”

I’ll be honest here… If I had given up blogging at my first hiccup. There would be no article. What keeps me relentlessly motivated and wanting more is passion. And maybe, more importantly, the conviction that Cent by Cent will go somewhere.

Similarly when it comes to investing, “holding” is the only true strategy. Of course, rebalancing occasionally is important. But to reach the coveted million dollars the best tactic is consistent investing. Whether the market drops or rises you stay in the market. The technical term is Dollar Cost Averaging.

Keep your heart and hope high, success will accompany you. Do not let yourself be shot down and keep growing no matter what.

4. Eyes on the Prize

As an ambitious person, I tend to go from idea to idea. I get excited by many different projects, which end up leading to nothing. Expecting dumb luck or some kind of innate talent. Not realizing that concentrating my energy was the answer. Bruce Lee put it best when he said:

“The successful warrior is the average man, with laser-like focus.”

When it comes to investing, set your end goal and thrive for that. When saving feels pointless this month remember that you do it for tomorrow. Keeping a clear goal in mind and focusing all your efforts on it.

Of course, blind loyalty even to yourself is a Damocles sword. With strong focus comes emotional attachment. Sometimes accepting to take a loss is the best decision you can make. The high focus tends to make that difficult. As we saw with Winston Churchill accepting a failure can define your success!

I dive into this idea in my article “2020 Retrospective: 10 Important Lessons”

I’m not special but if I stay concentrated. I might just become successful.

5. Will it even matter?

“Try not to become a person of success, but rather try to become a person of value.”

This quote by Albert Einstein caught me by surprise. I was tunneling on success.

Society has taught me success is all that matters.

Yet, does it matter if I must betray my beliefs?

When making a big decision I always come back to this quote. I ask “what is the cost of this success?”.

From investing to lifestyle decisions, realize your values are what define you. Without them you are but a dragon hoarding money and accolades. Working aimlessly towards growth is an illusion.

The only true measure of your success is how much you grow towards your values. As a way to stay true to my values, I read the poem “If” by Rudyard Kipling weekly. Alternatively, I explore the idea of setting goals in line with my values in my article “Financial Goals: Why I was Wrong”.

6. Where to start?

Whether it comes to storytelling, launching a company, or buying a house. We all get started with an idea. Pablo Picasso tells us to take a step back:

“You have to have an idea of what you are going to do, but it should be a vague idea.”

This resonates strongly with me. Of course, having objectives is important. On the other hand, being too specific can feel limiting. When I set off to write a new article I decide on a general topic and let it take me. The more free reign I give myself the more creative I get.

Similarly when it comes to investments having rigid targets is taxing. I personally am aiming to save 5 digits this year. But I refuse to give myself an objective on returns. No one can control the market and when you are in it in the long run… one year’s returns is a drop in the ocean.

7. Success is accepting imperfection

Success won’t come easy. That’s a given. Success eludes many as they define it as reaching perfection. Perfectly mastering a skill, a perfect recipe or creation are but dreams.

Have no fear of perfection – you’ll never reach it.
Salvador Dali

I find this quote relaxing. It reminds me that although quality is important – perfection is fiction. When I started Cent by Cent, I would refuse to publish an article if it wasn’t perfect. It took me a month to understand I’ll always find flaws in my work. It’s better to publish and grow than to stagnate and wait for perfection.

The same goes with Personal Finance, I’ve accepted I’ll never rid myself of all unnecessary expenses. It’s impossible simply because sometimes “treating” yourself is a necessity. I try to keep my mistakes to a minimum but accept that I can’t completely avoid them.

So What is success?

No Idea…

Really None.. but isn’t that the beauty of it?

You are able to create your own definition of success. One thing that seems to be in common is to never back down. Whether it’s in life or in finance, hold your positions and give yourself the time to grow.

The biggest cause of failure is giving up. On the other hand, I try to remember to not be stubborn. Sometimes, giving up is the best thing you can do. As long as you grow from every endeavour whether it ends in success or failure doesn’t matter.

We must strive to create our own measure of success and to live according to our values!

I would love to hear what you define success as and how you apply it to your everyday life.

Should I live abroad? To Leave or Not To Leave

By Lionel Piguet

On January 7, 2021

In Financial Minimalism, Financial Thinking, Personal Growth

Should you live abroad?

How difficult could it be to go abroad?

People, do it all the time, don’t they?

I was confident when I decided to leave Switzerland. Living abroad was going to be a walk in the park. Although, I had always worked and lived by Lake Geneva. English and traveling had been a big part of my upbringing. On the other hand, it never felt like quite enough – I wasn’t fulfilled.

All my friends had gone abroad to study, learn a language, or on internships. 6 months here, 6 months there. Surprisingly, most of them have decided to drop their bags in Switzerland — it was my turn to go out and explore. Yes moving abroad meant turning my back on the infamous “Swiss Salaries” but I needed to do it.

Sometimes decisions have to be made despite FI/RE as mental wellbeing is paramount.

Just like every 22 years old, I was convinced I had everything under control! Once I found a great job opportunity in London, it was very straightforward, get there: find a flat and go to work. Friends, finances, and all the rest will just fall in place.

They will right?

Well… it wasn’t quite that easy. Let me share what I learned, hopefully, it’ll make your life easier.

Living abroad can feel extraterrestrial

Sounds obvious, doesn’t it. Of course, I expected a few things to differ. From the currency to the language or the cost of living. Somehow differences are hidden everywhere. Even within Europe, social expectations, work culture, and mindset are drastically different.

People were bonding in different ways. Where back home we tend to be straight to the point— in the UK people would take offense. Where working overtime was customary (and paid), it was now frowned upon or hidden in plain sight. It isn’t bad far from it. It just took some time to get accustomed. None of these things were deal breakers, I’m more than happy to be abroad. But when preparing or thinking about a move abroad take the time to research smaller things. It won’t always be plug and play. The learning curve can be steep at times but golly gee is it worth it.

For example, if you are looking to move abroad and are from the USA The Frugal Expat shares amazing insights on wealth from the other side of the world.

Banks, credit score, and more...

Oh, how naive I was…

Why did I expect everywhere to function like the Swiss system? I have no idea… most likely I was arrogant. Take it from me at least research how to open a bank account. Sounds straight forward right? Well, it wasn’t… I had to go to at least 10 banks before I could start the process. They didn’t understand how time-sensitive it was. I mean how was I supposed to receive my salary, pay rent, get a phone?

Once again this could have been avoided with a bit of research. Had I known which documents were needed for what — it might have been easier. I’d recommend researching the following:

How to open a bank account?
How to get a phone plan?
Public transportation or a car?
How does healthcare work?
Do you need to change your driving license?

The list goes on. But had I figured out the 5 above, my driving license wouldn’t have expired…

Look for financial opportunities for example in the UK you can open an ISA (a tax-free account) and opening a brokerage account tax-free is simple! Whenever you are making a move abroad take the time to look for opportunities. If you are in the UK learn how to start investing with Index Funds here. If you are in Switzerland check-out this article 2 Step Guide To Achieve $1,000,000 In Your Voluntary Retirement Account — Swiss Edition by Fast Track.

There are many more to find and countries all have their hidden tricks. Luckily you can find Personal Finance bloggers all over!

Building Trust Abroad

Leaving your support system behind for a city — you’d traveled to once is tricky. I expected building a new support system would be easy. Somehow knowing which supermarket to go to was already a challenge.

The problem, when you move abroad for work and not for studies, is people are at different stages of life. Some have a family, some have a favorite pub, or group, finally, the other new guys are also completely lost. Although, I quickly found circles to join building trust and true friendship took time.

Thankfully, I stuck through it. I got out of my comfort zone and got to know these lovely people. Since then I have formed a tight-knit group of friends and met a wonderful young lady. The rough start was definitely worth it. I’m now blessed to have true friends both in Switzerland and in London.

“No distance of place or lapse of time can lessen the friendship of those who are thoroughly persuaded of each other’s worth.” — Robert Southey

Homesickness is sneaky

6 months… they flew by — it hit all of a sudden. What in the world was happening? Everything had felt normal until that moment. This intense feeling of doubt and dread suddenly dawned upon me.

I might never live there again.

A crazy thought. The 1-way flight ticket should have made that obvious. I remember the Sunday 17th of February 2019 like yesterday. It suddenly all became real. I picked up the phone and called home. Hearing my mother’s voice was all I needed. I guess there is just something about rainy Sundays in Watford that makes you nostalgic.

Instead of letting the feeling control me — I let it flow.

I dug in what did it mean?

The sadness was not that I left, it was the realization I was creating a new home in the UK. A new identity, even though I grew up in Switzerland — I can exist elsewhere. Every time, I feel it since then, I take time to reflect and I look at my partner — it’s worth it. No doubt here! I’m happy, but I would lie if I said I didn’t miss the mountains.

“Maybe you had to leave in order to really miss a place; maybe you had to travel to figure out how beloved your starting point was.” — Jodi Picoult

The best decision of my life

Despite all of this, leaving home was the best decision of my life. Of course, staying would’ve been easier. On the other hand, going home now has a completely different flavor. I enjoy every moment with my family and friends tenfold. I have also created a support system and met the most wonderful person here.

The beauty of leaving is not knowing when I’ll return. The open ending means my life is up to me. I get to choose my direction, my purpose, and my passions. Although traveling for vacation feels liberating, nothing compares to packing your bags and leaving. A 1-way plane ticket feels and is entirely different. How could I regret being truly alive?

If you are contemplating making this decision. I couldn’t recommend it more. Get out of your comfort zone, travel, live elsewhere. You’ll never regret it.

What was your big decision financial or travel-related? What makes you feel alive?