Personal Finance: One Teacher's Story
I was hoping to post a video of the talk, but we ended up sitting in a circle and talking, so it would have included the audience.
Instead, I will post the slides and briefly go through the main points here.
I only had 25 minutes, so it was a bit of a whirlwind tour through the topic.
1. My background and interest in personal finance
I am not a professional and don't have any background in finance, but I have spent the last three to four years obsessively reading up on personal finance and putting it into practice. Hopefully I can now share some of that knowledge with others.
2. Formative events
There were three things that really got me interested in personal finance and financial independence:
* Losing my job in 2008
I was working in the prefectural office as an educational advisor when my position was eliminated suddenly. My family had five months to find a way to get by without a regular paycheck. I decided never to be in that position again.
* Getting (and wasting) an inheritance
I inherited some money in 2009, and completely mismanaged it away due to not having a financial process. The situation would be very different today.
* The earthquake, tsunami, and nuclear accident
We ended up evacuating out of Sendai and spending a month in Kanazawa in March 2011. At the time I wasn't sure if or when we'd be able to go home. The thought of leaving Japan suddenly raised questions of how we would support ourselves.
3. My goals
The purpose of personal finance is to allow you to meet your goals. My goals are to reduce or eliminate financial vulnerability and have the freedom to do what I want (the key here is that my wants are not particularly extravagant).
4. 7 Stages to Financial Independence
I shared my 7 Stages.
5. The basics
I went over the basics of personal finance: earn as much as possible, spend as little as possible, save and invest the difference. If you do this you'll be fine.
6. Income streams
Talked about income streams. Apparently the average US millionaire has seven sources of income. I say, the more the safer.
7. Fun exercise
I talked about the exercises from Your Money or Your Life: estimate how much you have ever earned and how much you have in assets, and weep over the difference. Yeah, not much fun at all but a great wake-up call.
8. Savings rate vs. years to retirement
Introduced this crucial concept, which has two main elements: saving more and spending less.
9. Where to get financial advice from
I believe wherever you get your advice from, you need to know enough to keep yourself safe. You can get this knowledge by reading one book (Millionaire Teacher). Well worth the couple of thousand yen and the few hours involved.
10. What to do with money
I recommend the following, in order:
* emergency fund -enough cash savings to bail you out of problems
* J401k if you have access
* Savings and P2P lending
You can learn about these options here on the site.
Windfalls can destroy you if you aren't ready for them. One of the worst things that can happen to someone is to get a bunch of money they didn't earn and don't know how to manage. The solution is to get your finances in order :)
Foreign residents in Japan are not covered by Japanese inheritance laws but rather by the inheritance laws of their country of nationality. In order to spare your loved ones horrific amounts of bureaucracy, make sure you have a Will.
Well, looking back, that was a huge amount of content in just 25 minutes. I hope the audience enjoyed it half as much as I did.
Please feel free to post questions, comments, or suggestions here or in the Forum. I'll be doing more workshops later in the year.