Personal Finance Interview with Andrew on Simple Living for Mint.com
It might seem unusual that a person who's made a career in personal finance writes a blog titled Money is Not Important, Until There's Not Enough, but just read Andrew's philosophies and advice on money management, and you, too might start rethinking your own bank account.
"A lot of people will glamorize being 'young and poor,' but the truth is that scraping to get by is not a fun way to live. You may not have many possessions, but it's by circumstance, not choice," he says. "On the other hand, too much money can come with its own set of problems."
The sweet spot, according to Andrew, is when you don't have to think about each and every purchase you make, but you also aren't neglecting the most important areas of your life in an effort to earn more money.
We recently checked in with the psychology major who works in personal wealth management, to get his take on the best way to save money, the one finance book everyone should read and his favorite finance trivia.
Can you tell us about Money is not Important? When and why did you start your blog?
I started the blog around September 2010. It began as just an outlet for me to share the basic personal finance knowledge I had been gaining in the financial services industry. As I worked on it, I started to become fascinated with the way people thought about and interacted with money. It was amazing to me that it could make some people act so irrationally. I studied psychology in college, and I started to realize that the two went hand-in-hand. A person could not put himself or herself on the path to financial freedom without addressing the way that money affected him or her emotionally. In addition to basic advice about IRAs and such, the blog started to morph into my own philosophies about how I thought people should think about money.
Who should be reading it?
When I started the blog, I decided to host it on the Tumblr platform. A large part of that decision had to do with the fact that Tumblr's demographic was mostly high school and college aged. This was right after the financial world had started to fall apart, and kids in that age group were going to have it rough as they entered the real world. I wasn't too far removed from college at the time, so I thought I could find a way to give them a basic understanding of money in a way that would keep their attention. In addition to standard blog posts, I interspersed art, inspirational quotes and funny things that all had a money theme. The formula worked and the blog now has over 187,000 followers -- most of who are in the 18-29 age range.
Why is it so important to you to share about your finance experiences?
Before I started the blog, I was reading a lot of personal finance books. One thing I noticed, however, was that the majority of these books were written by people in their 40s, 50s and 60s. There weren't a lot of authors speaking directly to high school- and college-aged kids in a way that would keep their attention. So, I thought I would try to fill that void with the blog.
It sounds as if you started writing your blog right at the start of the financial crisis ... what do you think has changed about how people manage their money since you started writing? What's stayed the same?
The interesting thing about a financial crisis is that most people will react in the exact opposite way that they should throughout the entire process. The DOW hit an all-time high in October of 2007, which should have been a signal to start taking gains off the table and becoming more conservative. After all, the name of the game is to buy low and sell high. However, news like that makes people think that they are missing out, so more money piles in. In 2008, everything started to unravel.
Some liquidated their positions early, but many simply rode way too far down with the market and then decided to sell and become more conservative. They decided that they wouldn't invest as aggressively going forward, and they missed out on huge gains as the market recovered. It was actually a perfect time to invest aggressively, but the psychological damage had already been done.
What have been some of your favorite clever ways to save and earn more money?
The best thing you can do for your savings account is to automate the contributions to it. If you rely on yourself to remember to sock extra cash away, you're much less likely to accumulate as much. You have to find the barriers to saving and remove them, even if that barrier is yourself. We all know the wonders of compounding, so the more you're able to save and invest, the faster it will grow over time.
You like to share interesting and unexpected facts about money and how we spend it. What's been the most intriguing thing you've come across recently?
I loved the study from Princeton researchers who found that happiness tends to level off at an annual salary of $75,000. It goes hand-in-hand with what my blog is all about.
What personal finance books do you think everyone should read?
I think one of the best personal finance books someone could read is "I Will Teach You To Be Rich" by Ramit Sethi. Its name is kind of hokey, and Ramit will be the first to admit that, but it is by far the most practical approach to saving, spending, and investing that I've seen.
How has blogging about finance affected how you look at your own money?
When you blog about personal finance, people tend to think that you've done everything perfectly when it comes to money. However, that couldn't be further from the truth. I've made several mistakes and missed opportunities along the way. For instance, my wife and I once made an emotional decision to buy a car right after my alma mater lost a rivalry football game. We ended up hating the car and spent years unraveling the financial mess it created.
Blogging about finance has helped me many times. The act of having an idea and constructing a post to share it with thousands of people tends to encourage me to analyze my own finance situation more often.
You have a psychology degree and work at a financial firm specializing in personal wealth management - how do these two areas go hand in hand?
On the surface, you'd think "how does a person with a psychology degree end up working at a financial firm?" But, money generates a lot of emotion. Having a background that taught me the reasons why people tend to do what they do has helped me in a lot of situations at work. You have to help people find their core motivation for earning and saving money, and a psychology degree is perfect for that.
Follow Andrew on Twitter.