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January 7, 2024 admin

Panduan Untuk Pemain Slot Profesional

Dunia slot online kian populer sebagai bentuk hiburan di era digital ini, menarik jutaan pemain yang berkeinginan menguji keberuntungan mereka. Walaupun keasyikan bermain slot online sudah diketahui banyak orang, tidak semua pemain memahami cara mengoptimalkan peluang kemenangan mereka. Artikel ini akan mengungkap beberapa strategi jitu yang dapat membantu Anda tidak hanya menikmati permainan, tetapi juga meningkatkan kemungkinan untuk menang.

Memilih Platform Slot Online yang Kredibel

Langkah utama menuju kesuksesan di slot online adalah selektif dalam memilih platform. Pastikan bahwa situs yang Anda pilih memiliki lisensi yang sah dan reputasi yang solid. Situs harus menggunakan sistem pengacak nomor yang telah terverifikasi keadilannya, dan hindari platform yang terlalu banyak menawarkan promosi yang tidak realistis.

Mengenal Variasi Permainan Slot

Dengan berbagai jenis slot yang tersedia, pemahaman mendalam tentang setiap jenis permainan sangat penting. Setiap slot memiliki aturan, tema, dan potensi kemenangan yang berbeda. Luangkan waktu untuk memahami cara kerja masing-masing slot, dan kembangkan strategi bermain yang sesuai dengan karakteristik permainan tersebut.

Pengelolaan Keuangan yang Cermat

Pemain slot profesional tahu pentingnya pengelolaan keuangan yang ketat. Tentukan batas anggaran harian atau mingguan dan teguh pada batas tersebut. Bermain slot harus selalu dipandang sebagai hiburan, bukan sebagai cara untuk menghasilkan uang. Jangan tergoda untuk mengejar kekalahan, karena ini bisa membawa pada kerugian lebih besar.

Memaksimalkan Bonus dan Promosi

Situs slot online sering menawarkan bonus dan promosi yang menarik sebagai bagian dari strategi pemasaran mereka. Gunakan keuntungan ini untuk memperluas durasi permainan Anda atau untuk mencoba strategi baru tanpa risiko kehilangan modal besar. Selalu baca dengan teliti syarat dan ketentuan yang berlaku untuk bonus tersebut agar Anda bisa memanfaatkannya secara optimal.

Praktek di Mode Demo

Sebelum terjun ke permainan dengan uang asli, manfaatkan mode demo yang ditawarkan oleh banyak situs slot. Mode ini memungkinkan Anda untuk berlatih dan memperoleh pemahaman yang lebih baik tentang dinamika dan pola permainan tanpa risiko kehilangan uang. Ini adalah cara yang baik untuk menguji strategi dan meningkatkan kepercayaan diri Anda.

FAQ

T: Apakah ada metode pasti untuk memenangkan slot online?

A: Tidak, slot online beroperasi dengan sistem pengacak nomor yang memastikan setiap hasil adalah acak. Namun, dengan pemahaman yang baik tentang aturan dan pengelolaan keuangan yang efektif, Anda dapat meningkatkan peluang Anda.

 

T: Bisakah saya benar-benar mengalahkan mesin slot online?

A: Karena mesin slot beroperasi pada prinsip keacakan, tidak mungkin untuk secara konsisten “mengalahkan” mesin slot. Fokuslah pada strategi bermain yang bijak dan pengelolaan modal yang efisien untuk memaksimalkan peluang Anda.

 

Dengan mengedepankan pemahaman yang mendalam tentang permainan, mengelola keuangan dengan bijak, dan memanfaatkan setiap bonus dan promosi, Anda bisa melangkah lebih jauh dalam dunia slot online. Ikuti panduan ini untuk mengembangkan kemampuan Anda sebagai pemain slot dan nikmati setiap sesi permainan dengan lebih bijak dan menguntungkan.

December 30, 2023 admin

Strategies Used by Professional Players Slot Online

Professional online slot players rely on more than just luck; they employ proven strategies and tactics to excel in their games. In this article, we delve into the top tactics used by professional slot players, and answer common questions about online slot gaming strategies.

1. Strategic Planning Before Playing

Before diving into a game, professional slot players always devise a clear plan. They set specific limits for wins and acceptable losses, helping them stay in control and avoid getting carried away. With a well-thought-out plan, players can manage their bankrolls more wisely.

2. Choosing Slots with High RTP

One of the best tactics that professional slot players use is selecting machines with a high Return to Player (RTP). RTP represents the percentage of the bet amount that a slot pays back to players over time. Professionals focus on high RTP slots to increase their chances of winning big.

3. Leveraging Bonuses and Promotions

Smart utilization of bonuses and promotions offered by online casinos is another tactic employed by professional slot players. They thoroughly research and choose casinos that offer the most beneficial bonuses and promotions. Free spins or deposit bonuses can significantly boost their chances of winning and extend their playtime.

4. Playing with Discipline

Discipline is key when playing slots online. Professional players do not chase losses by increasing their bets; instead, they stick to their pre-set game plans. They also know when to stop, even during a winning streak. By adhering to their win/loss limits, they can take time to analyze their game outcomes critically.

5. Analyzing Patterns and Odds

Professional slot players always analyze game patterns and odds before starting to play. They study how symbols on the reels spin and identify frequently occurring patterns. By understanding these patterns and the odds of each symbol combination, players can spot potentially profitable spins.

FAQ:

Do professional online slot players always win?

No, even though the tactics and strategies used by professional slot players enhance their winning chances, there is still a luck factor involved. Professionals manage risks and implement strategies that have proven to yield better outcomes, but there are no guarantees of winning every time.

Are there other tips for increasing online slot winning chances?

Besides the tactics mentioned above, players are advised to set time limits and choose slots with engaging bonus games. Understanding the game rules before playing is crucial to grasp how often winning combinations occur and the chances of winning.

Can one predict when a slot machine will hit a big jackpot?

Slot machines operate on a Random Number Generator (RNG), meaning outcomes are based on randomly generated numbers. There is no sure way to predict when a machine will deliver a big jackpot. However, players can improve their chances by selecting high RTP machines and betting the maximum on each spin.

In conclusion, professional online slot players use specific strategies and tactics to enhance their game odds. They plan strategically, seek out high RTP machines, take advantage of bonuses, play with discipline, and analyze game patterns. While winning isn’t guaranteed, adopting these tactics can significantly improve a player’s chances of winning big in online slots.

December 17, 2023 admin

Panduan Berbagai Jenis Poker Bagi Pemula

Panduan Bermain Berbagi Jenis Poker

Poker merupakan salah satu permainan kasino yang sangat terkenal, menggabungkan elemen keahlian dan keberuntungan untuk meraih kemenangan. Setiap pemain dalam poker berusaha untuk menguasai taruhan yang terkumpul di meja, dengan tujuan yang sama pada setiap jenis permainannya. Namun, terdapat beberapa variasi dalam permainan ini yang penting untuk dipahami oleh pemula.

Ada tiga jenis utama dalam poker: kartu komunitas, stud, dan draw. Kebanyakan variasi poker masuk ke dalam ketiga kategori ini.

Variasi Texas Hold’em

Texas Hold’em adalah variasi paling populer dari poker. Permainan ini terdiri dari berbagai versi tergantung pada batas taruhan yang ditetapkan. Pada versi klasiknya, pemain menerima dua kartu pribadi dan lima kartu komunitas yang dibagikan dalam empat ronde taruhan. Selama ronde-ronde ini, pemain harus menggunakan kartu-kartu mereka seefektif mungkin untuk memenangkan taruhan di meja.

Variasi Poker Omaha

Omaha Poker, serupa dengan Texas Hold’em dalam beberapa aturan, memiliki tiga variasi utama:

  • Omaha 5 Kartu
  • Omaha Tinggi/Rendah
  • Omaha Hai

Perbedaan utama dengan Texas Hold’em adalah setiap pemain mendapatkan empat kartu hole, bukan dua.

Variasi Draw Poker

Pada variasi draw poker, pemain memiliki kesempatan untuk mengganti kartu-kartu mereka di setiap putaran, sehingga dinamakan draw poker. Dua variasi utama adalah:

  • 2-7 Triple Draw
  • 5 Kartu Draw

Variasi Stud Poker

Stud poker banyak dimainkan dalam turnamen nasional dan internasional dan berbeda dari variasi kartu komunitas lainnya. Dalam stud poker, beberapa kartu dibagikan menghadap ke atas dan beberapa menghadap ke bawah, dengan ronde pertaruhan di akhir setiap babak. Dua variasi populer adalah:

  • 5 Kartu Stud
  • 7 Kartu Stud

Poker Cina Wajah Terbuka

Sebagai jenis yang lebih baru, Poker Cina Wajah Terbuka berbeda dari poker tradisional. Pemain menarik kartu dari dek dan berusaha menyusun tangan terbaik. Di akhir permainan, poin dihitung dan pemain dengan poin terbanyak adalah pemenang. Variasi dalam poker Cina termasuk:

  • Backhand
  • Turbo
  • Tangan Tengah
  • Tangan Depan
  • Dek Ganda
  • Poker Nanas

Badugi

Badugi adalah bentuk draw poker yang menggunakan sistem peringkat untuk menentukan pemain dengan tangan terbaik. Sederhana dalam aturannya, seringkali dimainkan di ruang poker online dan dalam turnamen.

Poker Dek Pendek

Mirip dengan Texas Hold’em tetapi dimainkan dengan 36 kartu, menjadikannya populer dalam turnamen dan permainan uang. Sistem peringkat dalam poker dek pendek berbeda, menambah variasi dalam permainan.

Poker menawarkan beragam jenis dan variasi yang menarik bagi pemain dari semua tingkat keahlian. Bagi pemula, memahami variasi yang ada dapat meningkatkan pengalaman bermain dan strategi dalam jangka panjang.

December 9, 2023 admin

Unleashing the Thunder: A Deep Dive into the Zeus Slot Demo Experience

Slot games have long captivated the hearts of casino goers, offering both high stakes and high thrills. As developers aim to create more engaging and thematic experiences, ancient Greece—with its epic tales and deities—has emerged as a popular motif. Among the myriad of games inspired by this era, the Zeus slot game has garnered particular attention, combining rich mythology with dynamic gameplay. This article delves into the Zeus slot demo, highlighting how it offers players a portal into the legendary world of ancient Greece.

Zeus: The Mythical Sovereign

In the annals of Greek mythology, Zeus reigns supreme as the monarch of gods, presiding over Mount Olympus. Known as the god of the sky and thunder, his emblem is the formidable thunderbolt. Zeus is often depicted as both mighty and wise, a ruler whose decisions influence both the natural world and human affairs, making him a central figure in numerous mythical narratives.

Exploring the Zeus Slot Demo

The Zeus slot demo encapsulates the essence of ancient Greece and its divine tales. Crafted by a renowned software developer, this game offers players a visually immersive experience, complete with striking graphics, engaging soundscapes, and fluid gameplay. Featuring five reels and multiple paylines, it allows players to tailor their betting tactics to their own strategies.

Visuals and Design

The aesthetics of the Zeus slot demo are nothing short of stunning. Set against a backdrop of Mount Olympus, the game features classical architecture, ethereal clouds, and a serene blue sky. The reels are adorned with symbols iconic to Greek mythology, such as Zeus himself, Pegasus, Hercules, and classical temples, each rendered with impressive attention to detail and high-quality graphics that enhance the overall gaming experience.

Gameplay Mechanics and Features

Even beginners will find the Zeus slot demo approachable, thanks to its straightforward mechanics. Players aim to align symbols across the reels to score wins. The game is enriched with several bonus features, including free spins, multipliers, and a gamble option, all designed to amplify the excitement and increase potential winnings.

Sound and Ambiance

The auditory elements of the Zeus slot demo greatly contribute to its immersive quality. The soundtrack, with its majestic and classical tones, evokes the grandeur of ancient Greece, while sound effects like thunder add a layer of anticipation and thrill. This synergy of sound, visuals, and gameplay effectively transports players to the mythic era of Greek gods.

FAQs:

Q: Can I play the Zeus slot demo without making a deposit?

A: Absolutely! The Zeus slot demo is available for free, allowing players to immerse themselves in the game without any financial commitment.

 

Q: Is the Zeus slot demo mobile-friendly?

A: Yes, the game is fully optimized for mobile devices, enabling players to enjoy their adventure on the go.

 

Q: What strategies can increase my chances of winning in the Zeus slot demo?

A: While slot outcomes are determined by a random number generator, effective bankroll management and setting sensible betting limits can enhance your overall gaming experience and potentially extend your play time.

Conclusion:

The Zeus slot demo offers more than just a game; it provides a mythological adventure that captivates with its detailed world-building and dynamic features. Whether you’re new to slots or a seasoned enthusiast, this game promises not just a chance to win, but an opportunity to experience the myth and power of ancient Greece’s most revered deity. Dive into the divine gameplay and let Zeus lead you to legendary wins!

May 6, 2023 admin

Alasan Mengapa Slot Asia Menjadi Permainan Favorit

Asia, yang dikenal sebagai benua dengan populasi terbanyak di dunia, menunjukkan keunikan dalam berbagai aspek budayanya. Salah satu kegemaran yang terlihat merentang lintas negara di Asia adalah permainan slot. Fenomena Slot Asia tidak hanya merambah luas, tapi juga memberikan dampak signifikan terhadap industri perjudian di kawasan ini.

Apa yang membuat slot begitu populer di Asia? Poin utama yang menjawab pertanyaan ini adalah sifat permainan slot yang mudah dan ekonomis sebagai sarana hiburan. Banyak warga Asia melihat slot sebagai cara berhibur yang seru dengan biaya yang tidak terlalu besar. Tanpa memerlukan strategi kompleks, slot menjadi pilihan yang terbuka bagi semua kalangan, dari pemula hingga para profesional. Variasi tema dan desain yang kreatif dalam permainan slot juga menjadi magnet bagi mereka yang menghargai seni dan estetika.

Pengaruh teknologi juga sangat kentara dalam popularitas slot di Asia. Negara-negara seperti Jepang, Korea Selatan, dan China, yang dikenal sebagai pionir inovasi, telah membawa dampak besar dalam evolusi permainan slot. Slot menjadi lebih interaktif dan visual yang menarik berkat perkembangan teknologi ini. Keberadaan slot online yang dapat diakses via smartphone memudahkan para pemain untuk terlibat kapan saja dan dari mana saja, menjawab kebutuhan masyarakat modern yang dinamis.

Kultur perjudian yang sudah melekat kuat juga turut berperan dalam popularitas slot. Di beberapa tempat seperti Macau, Singapura, dan Filipina, kasino telah menjadi bagian integral dari kehidupan sosial dan ekonomi. Meskipun ada risiko kecanduan, banyak yang menganggap perjudian, khususnya slot, sebagai bentuk hiburan yang aman. Hal ini menjadikan slot sebagai alternatif yang menarik bagi banyak pengunjung kasino di Asia.

Pertanyaan Umum (FAQ)

Legalitas Slot di Asia: Regulasi perjudian berbeda-beda di setiap negara Asia. Beberapa negara, seperti Malaysia dan Indonesia, menyatakan perjudian sebagai ilegal, sementara lainnya seperti Singapura dan Macau, mendukung industri perjudian yang legal.

Strategi Bermain Slot: Walaupun slot mayoritas bergantung pada keberuntungan, beberapa teknik dapat membantu meningkatkan peluang menang. Namun, pada dasarnya, pemain tidak bisa mengontrol hasil akhir secara langsung.

Persentase Pembayaran Slot: Tingkat pembayaran atau ‘Return to Player’ (RTP) di slot bervariasi tergantung pada kasino dan jenis permainannya. Biasanya, RTP berkisar antara 90% hingga 97%.

Perbedaan Slot Online dan Fisik: Slot online menawarkan lebih banyak variasi dalam tema dan fitur bonus dibandingkan slot fisik. Namun, beberapa pemain masih memilih kasino fisik untuk pengalaman yang lebih ‘nyata’ dan interaktif.

Kesimpulan: Dengan keberagaman budaya, kemajuan teknologi, dan budaya perjudian yang mendalam, slot telah berkembang menjadi fenomena penting di Asia. Baik Anda penggemar perjudian atau tidak, peran slot dalam industri hiburan dan perjudian Asia tidak dapat diabaikan.

October 4, 2022 admin

Basic Components and Features of a Transparent Virtual Data Room

In recent years, standard data integration methods have increasingly failed due to new and more complex challenges. Transparent data room service provides a more flexible and resilient approach to data integration, minimizing complexity by automating processes, workflows, and pipelines.

The Most Important Aspect of Transparent Data Room

Security breaches can have various manifestations: from spam and computer viruses to electronic interference. Very often, unauthorized penetration occurs for mechanical reasons. One of the main problems that become apparent in the initial stages of risk assessment is determining what information is valuable to the enterprise. Managers often have no idea what can happen if the information is missing, if unauthorized changes are made, or if information disappears.

Information security with the transparent data room provider that can be easily set up with https://www.youmobile.org/blogs/entry/How-to-Set-up-a-VDR-Easily-for-a-Beginner is your confidence in the reliability of your resource. By using online data room software for proper validation, you can apply this tool for a variety of business purposes. So you may need sections like:

  • Administrative check.
  • Legal, financial analysis, or due diligence.
  • Tax audit or asset verification etc.

One of the most important aspects of the VDR is integrity. It stipulates, for example, that when information is downloaded (written) or sent to any location and then read or received back, it must be exactly as it was at the time it was sent or downloaded. Sometimes, for a greater guarantee of information security, the company may need to send the same information to two different places, that is, create a backup copy of the information. After all, the qualitative approach has a quantitative component, with the result that existing methods use the best features of both approaches.

The VDR streamlines the due diligence process and is a highly efficient method of exchanging critical business information for due diligence electronically through a highly secure online clearinghouse that can be accessed over the Internet. Through the use of cutting-edge technology, dedicated customer service and continuous improvement and development are implemented. Important issues of concern may include the company’s financial, legal, labor, tax, IT, environment, and market/commercial situation. Other areas include intellectual property, real and personal property, liability insurance and coverage, debt instrument analysis, employee benefits, and labor matters.

Which Are the Basic Components of Transparent VDR?

  1. 24/7 support is a must for VDR operators. However, remember to distinguish between general training and troubleshooting services and an all-inclusive service. The latter is what you should choose if you want really reliable protection for your documents.
  2. Integration, enrichment, and transformation of data with the VDR covers all types of data, including unstructured and streaming, from local, cloud, and external sources. Data orchestration adds value to insights by reducing the complexity and associated costs of data integration.
  3. Sync across devices, and privacy settings, and manage site permissions such as location or camera access.
    Monitoring of multiple performance indicators and implementation of principles for continuous improvement.
  4. Learning how to properly store important information. In general terms, the corporate strategy and business plan are studied. Competition is also analyzed.
  5. Everything related to the company is studied, i.e., products and services, customers, suppliers, business organization, commercial structure, and marketing procedures.
  6. Ii is one of the most proven, as well as successful developments that was created so that it was reliably confronted with information and operational work with customers.
November 30, 2021 admin

Multi-sided data protection as the main capability of Data Room providers

The problem of protecting corporate data is not new, and it means that there are ways to improve the situation. One of them is using Virtual Data Room for secure business operations.

 

Digital Data Room for protecting corporate information

Information security is one of the most pressing issues of our digital age. Modern information security systems must meet the demands of modern business in an increasing number of information security threats emanating from the corporate network itself. Modern security systems should not protect individual elements of the network, but the information in the form of information resources and flows, regardless of the place and time of their occurrence.

 

To ensure reliable protection of corporate data resources the most advanced and promising information security technologies must be implemented in the information security system. One of such technologies is Virtual Data Room. In modern conditions, the establishment of detailed rules for the use of electronic document management, as well as the procedure for electronic documents is an extremely important element of internal regulations of the company. A proven method of regulating the process of access to company information, which is important, is the formalization of the procedure and method of access to it. All these issues may be resolved by using the Data Room service.

 

The main threats at the corporate level are:

 

  • use of another person’s access rights;
  • unauthorized modification or copying of data;
  • change (replacement) of software;
  • ill-considered methods and procedures that allow the mixing of confidential and ordinary data in one document or storage location;
  • connection to cable networks without taking protection measures;
  • introduction of incorrect data by cybercriminals;
  • creation of “loopholes” in the system;
  • theft of information, software, and equipment;
  • failure of protection systems;
  • providing access to classified data to third parties;
  • data destruction as a result of disconnection of overvoltage in the power supply network;
  • computer virus infections.

Principles of data protection in the Data Room

The entire data protection procedure is based on confidentiality, integrity, and accessibility. Confidentiality belongs to the so-called hidden function of factual data or information and is one of the strictest requirements of information security. In the case of cloud computing, data is stored in data centers, where data security and privacy are even more important. The integrity of the data in any form does not play a significant role in guaranteeing unauthorized deletion, alteration, or damage. Data availability means that users can use the data by exploiting the potential of cloud technologies.

 

Data Room multi-sided protection model

Data Room providers allow users to create a user-friendly portal that provides secure access to the corporate network, e-mail, and web applications. A certificate-based authentication system and smart device negotiation mechanism ensure that individual users only have access to a specific set of applications – just as if they were at their work computer. With this comprehensive approach, network administrators can centrally set security and application access policies, and end-users can quickly and securely access the network without the need for multiple authorizations.

 

The advantages of the Data Room security system are:

 

  • operation in passive mode with a copy of traffic (SPAN) does not affect the operation of databases;
  • control of local accesses to the server using agent software;
  • does not exceed the peak load of 5% for local customer requests;
  • blocking of unwanted actions of database users is carried out in the active mode due to the firewall;
  • scanning and testing for vulnerabilities to detect unblocked accounts, uninstalled patches, accounts with simple passwords, the activity of system accounts of other applications, attacks the selection of accounts or table names.
August 2, 2021 admin

Growing our wealth while paying expenses and not having a job

Decumulation is the technical term for spending down one’s assets. It’s the opposite of the accumulation phase of building up those assets. So typically it’s the point at which you transition from your job income that is both paying your living expenses and allowing you to save money, to where your savings now need to pay for your living expenses. Your net worth slowly declines as you spend the money you saved. It’s a stark transition and it’s psychologically difficult.

 

I don’t really like the idea of starting to spend down my pool of savings at a relatively young age. After all the whole point of investing is that your money makes you more money over time, not less. But if we’re pulling too much from the golden goose, we could end up in trouble.

 

This is why our plan calls for our net worth to grow in early retirement, even as we spend money while not having jobs. This is possible because of the magic of investing.

 

The idea for this post was triggered by other FIRE bloggers who have also been sharing their plans on how they will pay for living expenses once they stop working. The current (as of end of June) is below.

 

Anchor: Physician On Fire: Our Drawdown Plan in Early Retirement
Link 1: The Retirement Manifesto: Our Retirement Investment Drawdown Strategy
Link 2: OthalaFehu: Retirement Master Plan
Link 3: Plan.Invest.Escape: Drawdown vs. Wealth Preservation in Early Retirement
Link 4: Freedom Is Groovy: The Groovy Drawdown Strategy
Link 5: The Green Swan: The Nastiest, Hardest Problem In Finance: Decumulation
Link 6: My Curiosity Lab: Show Me The Money: My Retirement Drawdown Plan
Link 7: Cracking Retirement: Our Drawdown Strategy
Link 8: The Financial Journeyman: Early Retirement Portfolio & Plan
Link 9: Retire By 40: Our Unusual Early Retirement Withdrawal Strategy

 

Link 10: Early Retirement Now: The ERN Family Early Retirement Capital Preservation Plan

 

I wasn’t planning to join in as we have some specific items that won’t be relevant to most readers. However, given the diversity of plans being shared, I thought maybe it would be helpful so I thought I’d add my plans for converting savings into income. I won’t show up on the official list because I’m not on Twitter which seems to be how these are all being linked but I still wanted to add to the contributions here.

 

I should note that I’m not actually retired at this point yet but I’ve spent a lot of time mapping this out and am confident that what I share here is what I’ll actually do. The biggest wildcard is whether my wife or I earn additional money that is not in the plan. I think this is reasonably likely but my plan is built without this in mind to reduce stress. Any income will simply be extra and require a lower withdrawal from our savings (or allow higher spending) so I’m sure I’ll be able to adjust our plan if it happens.

 

I’m relatively conservative with the amount of withdrawals I’m planning. Part of this is because my wife and I will retire in our 40’s with young kids and will be using our savings to pay for expenses for many decades. Part of it is because I like to invest aggressively (nothing too crazy though) and need to have some downside financial protection for my family. It’s maybe a bit ironic, but I’m building a bigger financial cushion so that I can take more risk in investing. I fully expect this to pay off in better returns but if it goes south, we’ll still be fine.

 

So, let’s get to it. Where will our spending money come from? I have a few different sources of savings that I will use. The pie chart below shows the main buckets, indicating the % of our annual spending that will come from each source.

 

Bucket 1 – Pension

My wife and I are fortunate to have a nice combined pension from our workplaces. Beyond the fact that we have a pension at all, the great thing about these is that we can take these pensions at any time. There is no restriction to wait until some later age. The value continues to increase if we defer these after leaving work but recent IRS rules have reduced the rate at which these build in value during deferral by 25% so deferral is less attractive now.

 

More importantly, I’m willing to give up some future return in order to give a nice floor of income during the critical “sequence of returns risk” years. Our pensions are not indexed to inflation so it will be most beneficial during this early retirement time. Later on, the real value will decline a lot due to inflation.

 

Another factor is long-term risk to the company. I’m not too worried about this as we work for a large, stable company and the government will step in and cover a good portion of smaller pension benefits like ours if a firm goes bankrupt. Still, it’s a much bigger risk to plan on a pension that you won’t start taking for 20 years, versus one that can give you real money now while the company is doing well. Since I don’t have control of my pension like I do my personal investments, I’d rather use this for spending money and take less from my taxable accounts, allowing them to grow more.

 

Overall, this will cover about 40% of our annual spending at the start, which is a huge benefit.

 

Bucket 2 – Dividends

Another big bucket is dividends from our taxable account. I’m planning on a 2% dividend rate (the current market dividend in the US that you get with a market index fund). We have consciously saved a lot in our taxable account so we have access to this money long before age 59.5. It will account for at least 1/3 of our investable net worth by the time we stop working.

 

Dividends will shift from being reinvested to being disbursed to us for spending once we stop earning an income. This will provide around 30% of our spending depending on how much we end up adding to our taxable account before our incomes stop. One really nice thing about dividends is the tax advantage that I’ll describe later.

 

I am not a proponent of investing just for dividends (e.g. dividend aristocrats) so this dividend amount is just the overall dividend yield for the core index funds that we have, which currently is running at about 2%.

 

Bucket 3 – Deferred Salary

Another bucket is a small amount of deferred salary. I qualified for this due to my position at work and plan to put enough money in that it will cover 15% of our spending for 15 years post-work. This gets us near the age where we’ll be able to access our retirement accounts. The benefit of salary deferral is that you can elect not to take some of your salary during high income tax years and have it paid out after you stop working and are in a lower tax bracket.

 

The only reason I didn’t take more advantage of this option is that it’s a non-qualified plan, meaning that it’s pretty low on the list of creditors for the company and the money here is simply a voluntary IOU from the company instead of a paycheck. It’s a promise to pay you later in lieu of paying you now.

 

If the company faces financial difficulties (or simply decides they don’t want to pay), this money can disappear. In addition, once you set up how the money will be paid, there isn’t much you can do to change this. So while the tax advantages were significant, I still limited what we put in to under 10% of our total savings.

 

Bucket 4 – Sale of Stocks

I expect buckets 1-3 to cover at least 85% of our annual spending and maybe 100% depending on where our actual spending lines out after we settle in to our new lifestyle post-retirement. Any shortfall will be relatively minor and will be covered by selling some stock investments each year.

 

The amount will be 1% or less of our taxable account. Combined with the 2% dividend, this is a total 3% withdrawal rate from our taxable account, which is quite conservative. We will not be touching any of our retirement account assets so our total withdrawal rate is lower than this.

 

What we’re not doing – using our “retirement” accounts

As many others have written about (MadFIentist covers this well for example) there are many options for getting money out of your retirement accounts early including the rule 72t and traditional to Roth IRA conversions but I don’t plan to use these.

 

I don’t like the 72t rule of substantially equal periodic withdrawals because I lose too much freedom to make adjustments and I like freedom. I don’t want to regret getting locked into this if we end up making some money I’m not planning for or find ourselves spending less than we thought.

 

TAXES

I may take advantage of the traditional to Roth conversion option at some point but it’s a bit of a hassle to manage and I try to keep things simple. I’ll decide on this later. There is no rush since we don’t need to do this to generate any spending money. It would only be to lock in a low 15% tax rate but I need to fully model the effect of a higher AGI on health care subsidies and our overall taxes before deciding this is worthwhile.

 

Note that while dividends (qualified) and capital gains are taxed at 0% if you’re in the 15% tax bracket, they still count in your AGI calculation. In other words, our taxable income will be our AGI – qualified dividends – capital gains so while our taxable income will be quite low, our AGI will still be relatively high.

 

If our AGI exceeds about $75,000, then we will be taxed at 15% on our dividends and capital gains, instead of 0%. Since around half our spending money will come from dividends and capital gains, I like the idea of getting this at 0%. It’s not such a big deal if we exceed this since it’s only the amount above $75,000 that is taxed at 15% but it’s still nice to be at zero.

 

Overall, based on the standard deductions for a family of four, and the preferred tax treatment of dividends and capital gains, our taxable income will be low and our overall tax rate will be below 5%, while still allowing for a relatively high level of annual spending.

 

This is why it’s worth the complication of optimizing your withdrawal strategy. Taxes make a big difference. They are the government equivalent of actively managed fund fees. When it comes to our withdrawal strategy, we should focus just as much on reducing taxes as we spent trying to minimize investment fees by using index funds instead of actively managed funds. Over long periods, this tax optimization makes a huge difference.

 

That’s our main plan

So with these three buckets, a good portion (maybe all) of our planned spending is already covered. If we need a bit more, either for non-recurring expenses like a car replacement, new roof, home improvement, or for higher expenses than we planned (e.g. health care costing more), we can sell some of our stock investments.

 

We have tracked our expenses carefully over the last ten years, so we know our costs well. We’ll save a lot of money on daycare after at least one of us retires, but health care costs will be higher. I’m estimating a pretty high health care cost just in case Obamacare disappears but most likely our expenses will end up being about 10% lower than we plan. On the other hand, we might be having so much fun doing things that some costs go up so estimating slightly higher expenses is not a bad plan.

 

We also plan to move and most locations we are considering will be lower cost areas than we currently live in so expenses are likely to drop by around 10% but there are a lot of variables so I’m not counting on this. Our plan calls for purchasing an equivalent cost house somewhere else, plus enough cash to cover selling our house and moving in the first year of retirement.

 

So we have a number of changes that are planned and many that are still uncertain so it makes it harder to nail down fully. But we’ve built a financially conservative plan that we are comfortable with. We also plan to work another year or two and might even keep going beyond that. After all, we’re pretty happy already. Regardless, we’ll be in even better financial shape when we do pull the plug.

 

As a last detail, I have a life insurance policy I want to get out of (the subject of another post on professional financial planners and why I now do things myself). However, I have about $80,000 in gains that will be taxed at my regular income tax rate when I surrender the policy so I am waiting until the year after retirement when income is very low (prior to starting deferred salary and pensions) to do this. This money will then roll into our taxable account and is already part of the dividend and capital gains buckets I described earlier in our plan.

 

What we’re not counting as “buckets” we can use for spending money

I’m not counting some assets in our net worth (i.e. part of our safe withdrawal rate numbers) because I don’t plan on using them as income sources.

 

We are not counting the kids 529 plans. This should cover a good portion and maybe all of their education costs. If not, we’ll cover any gap from our retirement savings since we should have enough. They will still need to be reasonable on their college choices. An ROI analysis is already a common discussion in our household so this won’t be a shock when we do the same thing with college.

 

I’m also not discussing home equity. Our house is paid off but I’m not planning on using any of this equity to fund our living expenses. It’s possible we get some equity out in a move and add this to our investments but that is uncertain at this point so our current plan is build around buying a house at an equivalent price point.

 

One of the big advantages of having a house paid for, is that our income needs are lower. We don’t need to liquidate more investments to pay the mortage. Being below an AGI of $75,000 means our dividends and capital gains are tax free and our overall tax rate is very low (not to mention any health care subsidies which are based on your AGI). This is largely possible becuase we don’t have to pay for a mortgage. I would rather have a very low tax rate than a high one with a small mortgage interest deduction.

 

Can we be even more conservative?

You can see that we are pretty conservative already. We don’t count the 529 plans or home equity. We won’t touch our tax-sheltered retirement accounts at all. And we’ll have a 3% or less withdrawal rate from our taxable account.

 

Investment Hedges

In terms of investment modeling, everyone knows that forecast returns for US stocks is low for the next decade because they have gone up so much (although what’s forgotten is that even if it turns out to be true, the average return over the next 30 years should still be quite nice). Of course when everyone knows something will happen, there is a tendency for it not to happen!

 

Even so, as I’ve mentioned before, I have a lot more allocated to emerging markets because of relative valuations so my expected returns are higher. But no one can predict this stuff well so despite this, my plan is built to be successful even with a terrible market return compared to history. I fully expect things to turn out much better than planned though!

 

From an investment and withdrawal rate perspective, if stock prices do not increase at all, ever, inflation runs at 2%, and all we get is the 2% dividend yield, our net worth still only declines about 25% by the time we hit age 60 (40% on an inflation-adjusted basis). So with even this incredibly pessimistic (and extremely unlikely) scenario we still preserve most of our savings while having no job and living a nice lifestyle during the rest of our 40’s and our 50’s.

 

This scenario is not going to happen but it’s certainly comforting to do the thought exercise with such a long-term financial depression and realize that we will still manage just fine. Note that if such a scenario does happen, the world would destabilize and the only option will be to build a bunker and hoard canned good and guns. It’s not something I’m planning around because if we do this, there is a high probability we’d feel like idiots in a few years.

 

Annual Spending Flexibility

I include our spending increasing at 1-2% rate per year on average in our base plan. This will be at or slightly below my 2% inflation estimate but many studies show that spending doesn’t actually rise with inflation in retirement, even early retirement (it rises at about half the inflation rate which makes a big difference over time).

 

This is a major degree of flexibility we all have. If you combine this flexibility with the 4% (or 3%) withdrawal rule, you basically have a bullet-proof plan. If there is a stretch of poor market returns, we will either (1) decrease spending or (2) keep it flat and not increase spending with inflation. This makes a big difference over several years.

 

If things go well, we will most likely increase spending with inflation even if we could afford to spend even more. If anything, we’d make larger one-time purchases compared to making more permanent lifestyle spending increases.

 

Social Security Will Be A Bonus

We are also not counting any social security. It’s a ways off and a lot could change but despite the financial challenges, I still expect we’ll receive at least 75% of the promised benefits (at 75%, the system is solvent).

 

Earning Money in “Retirement”

I also expect we’ll end up doing something that earns us money. But I don’t know what this will be at this point. I doubt it will be blogging Regardless, I don’t want the stress of needing even a small income to make our plan work so we’re not counting on it.

 

Not Done Working Yet

Finally this is based on current numbers but we’re still working at this point and saving a lot so we’ll have even more cushion when we do actually stop work. We have not decided when that is at this point since we generally like our jobs still.

 

As I write this, I’m ready to retire now! Actually, the main reason we’re not is because we still like working at this point. It’s not a financially driven decision as you might expect from what I describe here.

 

But I don’t have a pension or deferred salary – this won’t help me!

I realize we have some opportunities like a pension and deferred salary that are only accessible to a few but hopefully the details here will still help you think about your own plan.

 

How we’re optimizing our sources of income to minimize taxes is something that anyone can do because of the tax advantages of dividends and capital gains.

 

A small amount of side income, coupled with dividends and capital gains, would allow anyone to do the same thing we’re doing. Just substitute our pension and deferred salary amounts with a part-time passion job income.

 

Or use the traditional to Roth IRA conversions to generate some “income” to supplement your investments (just make sure you understand the details like the 5 year hold period).

 

Many people have some rental income from real estate investments which would also be treated similar to any income/pension/deferred salary.

 

A high dividend strategy also takes advantage of the tax benefits of investments I list here. Many people target higher dividend paying stocks or funds to take advantage of this. Just be careful about fees. And valuations since many people have piled into high dividend investments in the search for yield in today’s low-yield world……most of them aren’t cheap right now.

 

I also have a different view on housing because I want to minimize my cash flow needs so that I don’t need to take more from my investments and increase the taxes I pay. Many others like carrying a mortgage due the low interest rates but just remember that you’ll need to draw a lot more from your investments to pay that large mortgage. Make sure you factor the extra taxes this will trigger against any advantage you expect.

 

I’m also uncomfortable using margin a mortgage to invest in the market at these valuations. I like the safe return of paying off a mortgage even at today’s low rates.

 

Regardless, I hope you can find a tidbit or two that helps you think about your own personalized plan.

 

As always, I wish you success in your own FI journey.

August 2, 2021 admin

One of the best reasons to pursue early financial independence

There are many benefits to becoming financially independent (FI).

 

Duh, you say?

 

Well, yes, it’s pretty obvious that the freedom of not being dependent on a job to pay for your lifestyle is pretty great for a lot of reasons.  You can find top 10 and other such lists of these reasons on the internet with a quick search.

 

But these lists tend to be matter-of-fact and obvious.

 

If you’re FI, you can quit your job if you don’t like it!  Really?  Maybe I have higher standards for my readers but I’m guessing 100% of you have figured that one out already!

 

What is underlying all these lists is that FI gives you options.  And why does this matter?   It’s not just because options are inherently good.  In fact, there is compelling research that shows choice can sometimes be bad.  We covered some of this in a previous article.

 

So if it’s not just that choice is good, why does having options matter so much?

 

Change

 

Change is the reason having options matters so much.  This is worth thinking about carefully and really internalizing.  You may find it really helps your motivation if you’re struggling in your FI journey.

 

Change also seems obvious, just like choice is generally good. Everyone knows that things change right?  But we need to go a bit deeper and really understand how our lives might change with time.

 

Even though it seems obvious, we don’t seem able to grasp or predict future change well at all, especially if it’s in the distant future.  We may be better at planning for the future compared to every other animal on the planet, but most of us still aren’t very good at it.

 

And predicting the future?  No one gets that right.  That’s worth remembering.

 

So becoming FI gives you options.  That’s a big worthwhile reason to pursue it.

 

So are you motivated now?

 

Can I stop writing?  Are you fired up to pursue FI yet?  You’ll have more options in the future if you do.

 

Is this not cheerleading enough?  Does this not make you want to change your financial habits right now?

 

Hmmmm…….maybe I need to work a little harder then.

 

Knowing is not Feeling

 

Some financial firms are experimenting with digital aging of client photos.  What they found is that when you can actually see yourself as old, it becomes more real in your mind (and heart) and you save more for retirement!  Amazing!

 

Knowing intellectually you’ll get old is not the same as truly internalizing a future you that is dependent on the choices you make today.  Truly internalizing drives an emotional response that drives motivation.  This is lacking from a purely intellectual realization.

 

Let’s walk through some of the reasons the “future you” may value financial independence more than you predict right now.  Since we are bad at predicting, it’s useful to use evidence to see what actually happens as people age and change.

 

Maybe you’ll decide to bump up your savings instead of spending more money now (which would be mission accomplished from my view!).

 

Do you like your job?

 

If you’re in the first 10 years of working a “real” job, chances are you like it.  It’s of course not perfect.  You can relate and laugh at a Dilbert strip just like the older employees in the office.  You still have to deal with office politics, longer hours than you’d like to work, less time for fun and other things than you would like.  Not enough money.  Not enough recognition.  Not enough development opportunities.  And so on.

 

But overall, I bet you like your work.  And more importantly, I bet you think you’ll always like your work about the same amount as you do now, especially if you are only saving 15% of your income.  Because you’d be saving more if you didn’t!

 

You probably use the tired arguments against saving more like “you’re only young once”, or “what if I’m hit by a bus tomorrow?”, or “what’s the point of living like a student my whole life?”.  There is a bit of truth to this.  You are only young once and you should find a balance that allows you to enjoy life.  But the future you will also want to “live life” just as much if not more.  I don’t think we fully realize this when we are young.

 

There is a very good chance that your feelings toward your job/industry/career will change over time.  Unfortunately, those feelings usually go just one direction…….down.

 

People in jobs for a long time will often talk about how the industry has changed for the worse since they have been working.  In some cases that is true, but I suspect that more of the change has been a change in themselves.  Work is just not as much fun, for them, as it used to be.  The new employees coming in probably feel more like you did when you started and are more positive.

 

So if you always thought you’d be working (and enjoying it) until a traditional retirement age and so only saved 5-15% of your income, but then find in your 40’s that you are liking your job less and less.  Too bad.  You don’t have many options.  You’re many years away from good options.

 

You could change jobs in the same industry but you’ll likely just end up with a similar job that doesn’t excite you anymore.

 

You could try to make a career change to something very different that you’d enjoy more.  Maybe you can take the risk but you’re likely facing a significant pay cut (after all, what expertise can you offer?) and you don’t have enough saved to make the numbers work if you’ve been living off most of your current salary.  If you had more saved, you’d have the option (even if you’re not fully FI yet).

 

You certainly don’t have the option of stopping work altogether.

 

This is worth really thinking about.  It is very common.  Don’t just take my word for it.  Talk to some people.  I think you’ll find most of the younger people like working.  But many of the older workers don’t like it as much and dream of retirement (but realize they are far away financially still).

 

To be fair, some people love their jobs for a very long time.  Especially where the job is less money-oriented and there are other fulfilling aspects to the work.  But the data is not encouraging.  70% of employees are disengaged at work.  I have not seen age/experience studied in detail but I would guess that engagement declines over time for most workers.

 

Since it’s very difficult to accurately predict whether you will still love your job in 10-20 years, and since it’s very common for people to lose satisfaction with their work over time, I think it’s worth saving more of your money for yourself (i.e. the future you) to have some options.  It’s very likely you’ll have a very good use for the money.

 

On top of that, it will have grown nicely due to compound interest (if you invest in things like stocks) so it will be worth a lot more (even inflation adjusted)!

 

I spent a bit more on this example because work is such a big part of our lives and the source of our savings and it’s one of the areas we seem to do a terrible job predicting the future.

 

Having options for work in the future while you are still relatively young is a huge motivator for me.  I still like my job (although less than I did when I was younger) and am still working but I can tell you that being FI has made a huge difference.  I would not be as happy with my job if I felt financially trapped.

 

I do not have any regrets for saving aggressively, or feel like I made big lifestyle sacrifices.  At the time, I sometimes did feel the pain of saving a lot of my income.  But I have to work hard to remember that.  The current me is super-happy that the prior me made the choice to save instead of spend.  If anything, despite the fact that we are FI, I would have saved even more when I was younger, and reached FI sooner.  It would have made the years with really little kids much less financially stressful for one.

 

Now that you see where I’m going here, let me briefly cover a few other major changes that are highly likely to happen to you.  Again, you will realize these intellectually.  But give these some deep thought as well.  Truly visualize yourself and your priorities after some of these changes happen in your life.  Having more financial flexibility can help your happiness through any of these changes as well.

 

Do you have kids?

 

If you don’t, you might.  Despite the fact that more and more people are choosing not to have children (a perfectly valid choice BTW is that’s what you want), statistically you are still likely to end up with kids, even if you don’t think so now.

 

Kids will change your lifestyle and your desires a lot.  These changes will have a financial component to them.  It’s a full article to cover this in detail so I’ll just mention the big one, because it ties to the first section on your feelings towards work.

 

Kids will make your career feel less fulfilling.

 

You will want to spend more time with your family and less time at work.  

 

Unfortunately kids are expensive.  They don’t have to be as expensive as many people , but they will still cost money.  If you aren’t in a good financial situation, this will be very stressful.  This is too bad since it should be a happy time.

 

My wife and I were in a really good financial situation when we had kids.  This was largely because we consciously waited to have kids to save more and get more established in our careers.  But I still remember the financial and job-stress because we chose the extra long-term financial obligations of becoming parents.  I’m really glad we weren’t in worse financial shape and it would have been nice to be in a better financial position.

 

This is the point where your aggressive savings can give you very fulfilling options.

 

One spouse can quit and stay home.  If you’ve been saving a lot of your income, then you can figure out how to live on one income (plus you should have a nice amount of savings built up if you’ve been saving at least one of your incomes).

 

Even having enough to go part-time is a huge luxury that many can’t afford because they have been spending too much of their income.

 

As the kids get older, you’ll want the ability to say no at work for important family events, kids activities, taking care of a sick child, etc if you need to.

 

But if you spent too much money “living life” when you were young, you might feel obligated (even if you don’t truly need to) to be the one saying yes to the extra projects at work and working long hours because you can’t afford to be fired.

 

If you are FI, you don’t have this stress and can make balanced choices.  Ironically, this usually doesn’t cause you any career harm but when you need the money badly, it’s too nerve-wracking to bluff.

 

So being financially able to work less (or not at all) and spend more time with your family, especially with younger kids, is a great use of your money.  Those that aren’t there yet don’t realize this.  Buying a new car, going to Starbucks everyday, and enjoying expensive dinners are much less fulfilling uses of money when you look back on your memories.  The future you will regret that you did this if they are short on money.

 

Do you like to travel?

 

A job will restrict your allowable time for travel, even if you travel cheaply.  Believe me, you’ll still want to travel when you’re older.  Surveys show the desire to travel really only drops off when you’re in your 70’s.  Take some cheap trips now, with your limited vacation, if you love travel.  Cut back on other things to save aggressively and you’ll have a lot more time and money to travel in the not-too-distance future.  You’ll still be at an age you really enjoy it and if you’re FI, you’ll be able to with a great deal of freedom.

 

Will your interests change?

 

When I was young, I loved cars, expensive sports equipment (I spent a lot on skis and ski trips), and fancy houses.  Luckily I was financially prudent and didn’t stretch to build a dream house, or get a super-fancy car, among other things.  Now I like different things and the “sacrifice” I felt by not getting these things has long-faded (and it wasn’t a particularly long-lasting pain either).

 

Luckily at the time, I wanted savings even more than I wanted those huge material purchases.  I knew I would want that money later even if I wasn’t sure what I would want it for.  It’s extremely likely that you will be the same.  The future you, even if you can’t quite fully envision him/her in your mind, will still be you.  But you will be different.  You will have some similar desires and some new ones.  Some of what you want badly right now, will be unimportant to you later.  But you will still have strong desires when you are older.

 

So spend a bit on yourself now.  Enjoy the journey and this phase of your life. But make sure you are setting aside a lot for the future you.  I’m quite certain you’ll have very good uses for it.  You will want the money and the options it provides as your life changes.  As a huge bonus, since you invested it, you’ll have a lot more money than you saved too!

 

Hopefully this helps you find a dose of motivation in your own FI journey.  If so, then this was definitely worth writing.

 

I’d love to hear any examples from the readers.  For those with some more life experience, did you find something to spend money that you didn’t predict when you were in your 20’s?  Anyone regret saving money when they were younger?  I’d love to hear from your experience!

May 12, 2021 admin

Inspiration for This Blog

Why does someone start blogging about financial independence?  Most people seem to start blogging because they become so immersed in their goal of financial independence that it becomes a big focus of their lives.  They constantly think about it and naturally gravitate to writing in the FIRE (financial independence, retire early) community.  In some cases, this evolves into a side business based on this passion.  In my case, it was a bit different.  I didn’t start blogging until my wife and I had already reached FI (financial independence).  So why did I decide to start a blog?

As you can probably figure out from the photo, it’s my kids.  I have two young boys and I am very passionate about teaching them as much as I can.  This includes just about every topic but one of the most important is to teach them about money.  Our society in the US does a really, really poor job in teaching our children and citizens about money.  For international readers, I don’t have a good understanding of how personal finance is taught in other countries – I’d love to hear from you in the comments on how things are different in other countries.

In the US at least (and likely most places), our relationship with money is very complex.  In many ways it’s a taboo topic, particularly given the high degree of income and wealth inequality.  It’s simply considered something you don’t talk much about with others.  In fact, it’s more common than not that our kids don’t know our incomes, how much our house cost, or even the monthly utility bill.  We know they are likely going to tell their friends at school and this makes most people uncomfortable.  Money is a sensitive topic.  At the heart of it, we humans are extremely social animals and we benchmark ourselves vs others whether we admit it or not.  Money is one of the biggest benchmarks many people use to determine where they stand in the social pecking order.

Someone with more money than us makes us envious.  On the positive side, it can help motivate us.  On the negative side it can make us feel bad about ourselves.  On the other hand, if we have more money than someone else, we can feel gratitude.  Or we can feel superior or feel pity for someone with less money.

When some people gain money, they feel like they don’t deserve it.  This is common with people who were taught money is the cause of many problems in the world.  Rich people are bad and money is evil.  This is a very common viewpoint and can be very limiting.  It’s the scarcity mindset.  The “impostor” syndrome at work where you feel like you don’t deserve the amount of money you make comes from this underlying bias.

When others gain money, they feel like they were cheated and should have received more.  Even when they have a lot (think Wall Street bonus time).  This is also a form of the scarcity mindset.

It seems that we have a hard time finding a healthy balance with money.  A place where we feel gratitude and a sense of abundance around what we have.  But we also feel like it’s okay that we have it.  Where we recognize and appreciate all the help we had along the way but also recognize that we played a key part in any success that we had.  It’s where the money we earn through investments or an active wage income, is money we feel we earned.  Where the amount we’re charging for our time and effort is related to the value we bring others (and the supply and demand for what we provide) if it’s an active job.  And where the value of borrowing our capital is worth the return we earn in the case of passive investing.

It’s interesting that an unhealthy mindset around money seems to be a lot more common than a healthy one.

Money by itself is neither a good or bad thing.  But it can help generate good feelings and bad feelings.  It all has to do with how we think about it.  Money is just money.  It’s just a medium of exchange that we use to trade for others things (because direct bartering is very inefficient).  But the thoughts and feelings that arise when it comes to money are powerful and complicated so most people simply try to avoid the messiness that comes with talking, or even thinking, about money at more than a superficial level.  However, if you truly want to master yourself and have a healthy psychological relationship with money, you need to tackle this topic.

I already write rather long posts (likely much too long for most readers) so I won’t try to tackle this topic in-depth but I can say that because of the sensitivity and complexity around money and human psychology, this topic is not addressed in our schools, or homes, much at all.  In school, you will find only the academic or mathematical aspects.  Basic economics.  Supply and demand.  How compound interest works.  How inflation works.  How to calculate net present value or mortgage interest payments.  What 401K accounts are.  All matter-of-fact financial aspects.  And important to learn.  The problem is that personal mastery of money is psychological, not mathematical.  The math is easy.  The correct thinking (which by the way directly drives your emotions) about money is the hard part.  That is harder and messier to teach and so it gets completely neglected.

So back to my inspiration for this blog.  I am passionate about teaching my kids all I have learned through my own life and from others about money, as well as happiness and human psychology.  Our schools do not teach this effectively so it’s up to us parents to teach our children.  So in my case, I started writing things down.

After I had written about 30 pages and realized I had a lot more to write, the idea of starting a blog popped up.  This would allow me to capture key ideas in a more succinct format.  It would also allow me to share with a much wider audience than my kids and the idea of helping others was very appealing.  So I started this blog.

How I’m teaching my kids about money

I talk pretty openly with my kids about money topics (not absolute income and wealth numbers but everything else).  Spending.  Saving.  Investing.  How advertising influences you.  Even if those topics are over their head at this point, the repeated exposure helps.  How money is lost (spent) and grown (investing).  How income is based on supply and demand and the value you bring to others.  How education is a key enabler for your ability to provide value to others.  How much things cost.

My wife and I talk about this in terms of our own jobs, savings, and investing choices.  We discuss our spending choices and why we decide some choices are worth spending the money (ranging from small to large spending amounts) and other things, even (especially?) low cost things, are not worth our money.  I believe this is having a very positive affect.

We are also trying to balance key lessons of frugality while not creating a scarcity mindset in them.  They certainly don’t live a deprived life but it’s still easy to fall into a scarcity mindset with money depending on how you talk and act about money.  Instead of focusing on limits we focus our language and actions on value.  So we try not to say “we can’t afford that” when they ask why we can’t or don’t buy something.  We instead say that we could buy it but that we would rather keep our money because that purchase is worth less to us than keeping the money for something we want more.  Conversely, they sometimes ask why we buy something expensive when they see how much it costs and we explain why we feel it’s worth the money even if it’s a large expense.  Overall we try to drive spending conversations around personal value for money.  This also weaves into discussions of not wasting money (e.g. leaving the door open with the air conditioning on).

They already own investments

I started them investing early (age 4).  This is working surprisingly well.  They don’t fully understand it but they are picking up more of the details than I would have expected at this age.  The way I set this up is a simple spreadsheet where I explained that if they put their money into this investment, their money would then generate more money for them.  I gave them a very generous investment return so they can actually see enough financial benefit in a short time.  Essentially their investment is their weekly allowance.

On the spreadsheet, they can clearly see the amount their investment earns them per week, and how that amount grows noticeably every week.  They also see how spending reduces the amount they will earn per week, or how an addition (e.g. birthday gift) will boost this amount.  Every few weeks, they randomly ask me to pull up the spreadsheet so they can “check their investments”.  They really like to see the progress their investments are making.  Interestingly, when they see the bigger amounts, it doesn’t make them want to spend it.  They just want to leave it alone to keep growing.

If they want to spend some of their money, I let them do it but we talk about how much less they will then earn per week and how long it will take their investments to make back that money.  I’ve been happy that they often don’t want to waste their investment money but at the same time, if they really want something, they will spend the money without regret (or put it on their wish list for an upcoming birthday or Christmas).  I almost always make them wait at least a few days before they can decide to buy something unless it is only a few dollars.  If they still want something badly after a few days, we’ll go get it.  You can see the Pokemon card purchase in the spreadsheet last month for example.  They are learning a number of important lessons here, including delayed gratification (which has been highly correlated to both success in life).

In fact, I expected them to want to spend more of their “investments” than they have.  Maybe they understood what a good a return they are getting (it’s a 1% per week return)!  I also think not having regular TV and all the advertisements really helps limit their desires as well.  Overall, it’s been a great experiment in teaching.

My wife and I will continue to experiment with teaching our kids to supplement what they learn in school.  Luckily, with the internet, there is no shortage of content so we can learn about any topic we want pretty easily.  I expect the next generation to be a lot smarter about a lot of things, including money, than my generation.  I’ve certainly learned a lot, and continue to learn, with the amazing access to knowledge that we have in today’s world.

So that’s the heart of my motivation to start writing and eventually start blogging about financial independence and adjacent topics of happiness and psychology.  It was all centered around the desire to give my kids a good foundation of knowledge and life lessons in important areas that are neglected in our formal education system.  The blog was a way to reach a broader audience in order to both learn more myself, but also to help out others.  I’ve learned a lot in starting a blog and hopefully for those reading, you’ve gained some benefit as well.

So what is your motivation to achieve financial independence?  For any bloggers who are reading, what is the reason you started blogging?  Did anyone come into this community from a strange path?  Anyone from outside the US like to share how personal finance is taught to children in their country?  Please share your thoughts!