A few months back we went to see the movie The Big Short. The movie paints a picture of the events leading up to the economic meltdown of 2008 in which millions of people lost their jobs, houses, and security. Before the meltdown, people were given mortgages even though they couldn’t afford them and banks were making big money on this.
Once the movie was finished, Mr DN and I started talking about what we had seen. Mr DN asked if we would be any better off later on in life if we ended up losing all our future wealth (we are only at the very beginning of the process) in the stock market. With this, he meant that for the past year and a half we have put a huge effort into learning more about good habits, saving and creating wealth. He was just asking if all the effort we have and will put in the future to pursue this idea of financial independence, is truly worth it.
I thought about the question for a while and came to a conclusion that even if we did lose all our wealth, we would be better off with all the habits we have created. We know how to avoid excessive debt, we know how to live way below our means and we have been learning to be content with our spending level.
Furthermore, we have learnt that we don’t have to impress people with stuff (clothes, cars, houses etc.) because we are the only ones that actually live with the consequences of our choices. In addition, during this process of becoming more aware of our finances, we have learnt to be more creative and resourceful. We know how to make many things ourselves and that is handy if we can’t pay anyone for services. This made me realize that there has been a major shift in my attitude towards money and for once in my life, I’m not worried about money!
How the worry took over me
I’ve always been worried about money. Growing up, my family never had a lot of excess money but I also moved on my own very young, to be more exact I was 15 turning 16. My family had moved to a tiny town from the Capital city of Finland during my early teenage years and I wanted to move back to the big city once I started high school.
I begged my parents for a permission to move and finally my dad said I could do it with one condition: I had to provide for myself. Probably that was my parents’ way of saying that it might not be a smart idea for a such a young girl to move on her own, but I took the challenge and got a job.
A few of my sisters lived in the capital city and they took me in as their roommate. For the first year of high school, my parents paid for my school books and my sisters didn’t charge me rent but after that, I paid for all my expenses. I got a job as a babysitter and I was paid 4 euros (6 AUD or 4,5 USD) an hour. I got a student benefit monthly which was 20 euros and just my school books cost 100 euros every six weeks.
I definitely learned quickly that I need to work hard in order to keep the roof over my head and food in my belly. Knowing this, I guess you could say that I was not a typical teenager. While my classmates were thinking about a weekend shopping spree, I was thinking about how I would have enough money to buy food and pay for my bus card.
Although my salary increased with time, this period in my life left an anxiety about money. More often than not I was worried about money and I wasn’t sure if I had enough of it. I was too proud to ask for help from my parents or anyone else instead, I just decided to get by and work. Because of this experience, I learnt to be careful with my money.
Married and still a low income
Fast forward some years (quite a few), Mr DN and I got married. We paid for our wedding in cash and managed to get by although we faced some typical financial hurdles many multicultural couples face. For the first few years, we were both working part-time and studying. We were getting by and even saving money on our low income. We mainly saved for short-term goals such as travels.
A year and a half ago we moved to a new city due to Mr DN’s graduate school. We faced a situation in which I couldn’t find anything else but casual work and Mr DN was studying full time. We got by that Autumn with some savings although it took me quite a few months to find full-time employment. During that time I had plenty of free time but I was quite anxious about money so I couldn’t really enjoy the time I had in my hands.
Working on financial habits
The year finished and I finally found a full-time job. At the same time, we started working on our financial habits even more and set up a goal of saving up 30 percent of our income towards our move to Australia. In addition, we started saving for a small emergency fund (we had an unemployment insurance at that time so a small emergency fund was enough).
Then life threw a curveball, less than a year after starting my new job, I was put on part-time forced leave. But something was different this time, I wasn’t anxious.
Because we had been working on our financial habits and had a bit of a financial buffer, we knew that we would get by even with a lower income. We had a humble emergency fund, we were living way below our means and we had gotten appropriate insurance to cover me in times of unemployment.
Those choices that we made gave me the possibility of not looking for extra work during my five months of forced leave. Instead, for once, I was able to enjoy the increased amount of time off. I had the chance to launch this blog and learn about writing, I submitted my time-consuming visa application and I was able to start preparing for our move to Australia in different ways. Most importantly I had time rest and enjoy learning once again. In the end, we didn’t end up using any of our emergency fund and continued to stay in our goal of saving roughly 30 percent of our income towards our move.
In the movie The Big Short, people were living beyond their means. When the financial crisis hit and interests rates went up, many had no other choice but to leave their homes. I think life throws curve balls at all of us and the best way to deal with those is to prepare for them. If our expenses and income are similar, we are only one paycheck away from trouble. If instead we learn to live below our means and put money aside, we can still find ways to manage although life doesn’t go exactly the way we plan. Good financial habits have definitely given me more peace of mind because I know that we can get by even when unexpected things happen.
That being said, I’m not implying that we are perfect and that we have everything together. What I’m saying is that the small changes we have made in our financial habits and the fact that we are planning for our future has helped me to see that we will manage. When things happen, I know that because we have excess money each month, we don’t have to resort to credit or short-term loans just to get by.