I often write on Quora.com, where I am the most viewed writer on financial matters, with over 250.9 million views in recent years.
In the answers below I focused on:
- I was asked “how do I start saving without compromising with the standard of life”? I offer plenty of tips in response to this question.
- What are the main causes of people getting into debt? Is it bad education, habits or mindset?
- What are the benefits of living in a third world country? Considering some people even define third world as meaning a country that is not completely developed (such as mid-income countries), I offer many positive aspects associated with living in developing or even very poor countries.
- Is there really a way to get easy money? How can we take advantage of any luck which is afforded to us?
- What subjects do people get more interested in once they retire?
Some of the links and videos referred to might only be available on the original answers.
If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me, email (firstname.lastname@example.org) or use the WhatsApp function below.
How do I start saving without compromising with the standard of life?
Firstly, I would write down all your outgoings for the last three months on an Excel sheet or pen and paper, after looking at your internet banking or receipts.
If you do that, you will be amazed how much gets wasted. It is a similar technique to what nutritionists suggest people should do if they are going on a diet.
It is easy to see how much gets wasted if you look at it like that.
Apart from that I would
- Think about if you really need things. Lockdown has been great for this. Suddenly people realized they could save on commuting costs and live an even better standard of living. Many people do things out of habit, even if those things aren’t enjoyable and cost a lot of money.
- Only spend a percentage of any pay rises. Most people earn more in their 30s, 40 and 50s than 20s. Spending more overtime, but not increasing how much you spend in line with those increases, can be a good way to save more.
- Use cash more than cards. Yes, cash is dirty, but many studies show people spend up to 5% less because they think about purchases harder in a subconscious way.
- Get rid of certain people from your life. Often peer pressure results in spending money on things you don’t like or enjoy
- Don’t spend money impressing people you don’t even like to para phase the fight club quote below:
6. Emigrate or move to a lower cost place in your home city or country. This way you can spend less and have a better quality of life.
7. Don’t care too much about brand names
8. Following on from the 7th point, many studies have shown that people are subconsciously influenced by price. If two groups of people go to the same restaurant, and one group is charged three times more, they will actually report higher degrees of satisfaction than the group who has been charged less for the same meal! That is assuming they haven’t been told that the other group got it for a cheaper price. One fun way of understanding our own bias’ is to do blind tasting – for example blind wine or cheese tasting. Many people swear they could tell the difference between brands they like, when in reality they can’t.
9. Automate your savings and investments so that you put money aside one day after you are paid, rather than at the end of the month. Studies have shown people can put away up to three times as much with this method.
How do people get into debt?
There are good and bad reasons to go into debt. It isn’t true that all debt is bad.
Almost every successful company in the world has used debt to fund expansion.
Likewise, most successful professional real estate investors have used leverage to improve gains.
Yet it is riskier, and most debt is bad. Countless people pay 16% or more per year on credit cards.
In some countries those rates haven’t even fallen in recent times, despite lower interest rates:
People tend to get into debt by:
- Failing to budget.
- Spending as they go along, which means that credit cards are the only alternative during those lean times.
- Sometimes assuming that property is the only good thing to invest in, which means getting the biggest possible mortgage available and then struggling for decades.
- Unexpected events like divorce or bad health. This is partly linked to failing to prepare for lean times though.
- Not being well-matched with a dating partner. If somebody marries another person who is financially irresponsible it can start to affect both parties.
- Addictions and vices. These things can often get worse after events like ill health and divorce.
- Funding a business purely on debt.
- There are those occasions when people really can’t help it. In other words, they have planned and been financial responsible, but life still happens.
- Childhood habits. The controversial Marshmallow test has shown that kids who can wait for two treats do better in life compared to those who just want it all now!
Regardless of that test, I have noticed a commonality. You could give millions to some people, and they would always find a way of spending it, like most lottery winners.
You could give millions to others, and they would save it. A third group of people would invest it to further compound it.
The point is, it is difficult to change people habits, especially after a certain age.
The biggest root cause of the worst kinds of commercial debt like credit cards, as has been mentioned below by some other people, is often lack of financial education and not preparing for the worst case scenario.
Combined with the obsession with putting money in illiquid assets like property, and you have an issue.
You can’t easily, and quickly, sell 1% of your home if you have a cash emergency, for a good price.
Failing to teach financial education at school is a huge issue. Welfare as well has changed the incentives.
In many societies people are taught early on that they could starve if they fail to get a job and save.
In many countries now, you don’t need to save to avoid the worst case due to the welfare system.
In fact, you can be penalized for saving in the welfare system. Let’s take two people who have earned the same amount of money.
The first person spends as they go along, and the second person saves and invests.
The second person often can’t get any welfare support, whilst the first person can in many countries.
I am hopeful new trends like the popularity of budgeting apps will change this situation.
What are the benefits of living in a third world country?
Firstly, it depends on what you mean by third world. Historically, it had a Cold War meaning.
Recently it has meant a poor country or even a developing country. Some people now define countries which are mid-income as third world, if they are coming from a rich place.
This has resulted in many people thinking that all developing countries are poor, dirty etc.
Yet this is what Kuala Lumpur’s metro/subway/MRT looks like:
This is what Mexico City can look like:
To be sure, these are mid-income places, but the point is, you can live in life at a fraction of the cost you are used to, and with most of the first world pleasures, in such destinations.
Therefore, you see an incredible number of business owners and other location-independent people living in places like Thailand, Malaysia and various Latin American countries.
If you can earn a decent income globally, then why not have some experiences and live more cheaply?
You can pay less taxes and general costs, and have a better quality of life, and still save and invest more.
That means you can do more things – be it early retire or semi retire early, or just have more experiences in general.
In terms of the truly poor countries of this world, which is closer to the original meaning of the third world expression, there are still benefits.
- Experience new cultures which are probably very different to your own
- Really make a difference. If you are an NGO worker or business owner in some of the poorest countries in the world, you can physically see the difference you are making.
- You can also see very quick development. Imagine being an expat in Shanghai for 30 years and seeing the changes as China moved from being very poor to mid-income. Or imagine being an expat in a place like Japan, Korea or Taiwan. They have gone from dirty poor to rich in about three generations. I know people who arrived in their 20s and are still around at 65.
- You can learn more things. That includes appreciating the good and bad about your own country, and host country.
A final benefit of all emigration, is that people who do it are taking massive action and risks.
That can benefit you in many ways in life.
The following questions were asked on the adamfayed.com Quora space
How do I get easy money?
There are many forms of “easy” money, otherwise everybody would do it. However, one easy way to make more money is to take advantage of luck.
We all receive good, and bad, luck in our lives. Even many average earners are now getting relatively big inheritances, or at least half decent ones.
Investing that inheritance in the market is an example of taking advantage of luck. Let me give you a simple example.
If somebody received a $100,000 in the early 1990s, and just tracked a market like the S&P500 or Dow Jones, they would now have about $1.5m, if they also reinvested dividends, during a period of low inflation as well in the developed world at least.
The person who just spent the money would have zero. Likewise, in business, most private business owners go through a period where they outperform (every dog has its day and all of that). Few take full advantage. Most get complacent.
Also, I would leverage time. It is five times easier to get wealthy investing by doing it for longer.
Getting wealthy by investing a few hundred in your 20s for decades, is much easier than doing $3,000 a month from 55, due to compounding.
What are the subjects you are most interested in now that you are retired?
I will let somebody else ask this considering I am not retired.
What I will say is that within my network most become more interested in kids/grandkids, travel and hobbies they once had and failed to keep practicing like instruments.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 250.9 million answers views on Quora.com and a widely sold book on Amazon
In the answer below , taken from my online Quora.com answers, I spoke about the following issues and topics:
- Is home ownership the key to wealth accumulation? Or is the situation more complex? I look at a home like Switzerland, which has the highest wealth per capita on many measures, yet has low home ownership, to illustrate a wider point.
- Is ESG and sustainable investing just a trend? What can we learn from the trend towards technology and how it it related to ESG?
- Does it really make sense to only invest $100 a month? I suggest why it is, provided you can find the right investment platform.
- How common is social mobility in the UK, given the class-related nature of the society?
- What are the best jobs if you want to become a multi-millionaire, or is that the wrong way of framing the question?
To read more click on the link below