Financial literacy for coders
Note: This article was just written one afternoon. No edits, no proofreading, so feel free to comment suggestions / changes.
Introduction
This week I started working full time at DocuSign. The salary for Data Scientists / Software Engineers is really good compared to other jobs. But it’s never going to be enough. You can never save enough money to be financially independent or wealthy. That’s where investing comes in. You invest in assets that grow while you sleep. You leverage the concept of compounding to increase your net worth.
Compounding is a game of time. It’s like growing a tree. It takes time, a lot of time before it can provide you with fruits and shade.
This means you need to start early. You don’t need a lot of money to start. Start with $100, or put a recurring investment of $10 dollars in the stock or index fund of your choice. Then there’s discipline. There’s control over your emotions when the stock you invested in dips 50%.
Sadly, nobody teaches all of this. You have to design your own curriculum and get up to speed. I have struggled with this for a long time. And then I would come for my Masters or get into something else and get out of touch. I was always in and out. I’ve also made a lot of mistakes while investing in India. But now I finally feel I’m at a place when I know what I am doing and I can advice others on how to get started.
Rich dad poor dad (The importance of investing)
This is by far the best book to understand the importance of financial education and investing. I can guarantee you will come out of this book a different person.
One of my favorite concepts from this book is “Pay yourself first.” This means that when you get your paycheck at the end of the month, you don’t spend on food, utilities and shopping and save what’s left. You decide and put aside a certain amount (say 20%) every month and then you work with the rest. This way you can consistently save and use money for investing.
The Psychology of money (The mindset of investing)
Knowing your numbers is probably less important than your mindset when you invest.
One up on Wall Street (The strategy for investing)
I’ve been looking for a book like this for years. I don’t know why I didn’t read this one before. This book simplifies investing and makes it accessible to everyone. If you have ever seen a stock screener, it looks like this.
And I don’t know about you but I am really intimidated by numbers. I just go blank when I see this. What am I supposed to do? What do these numbers mean?
That’s where this book comes in. It tells you to look around, and if you like eating in McDonalds, research it. (PS: Liking a company’s product is not a cue for investing). Then it tells you how to research a company, what are the kind of stocks you should keep in your portfolio and a lot of mindset tips as well.
Now this book is a little old. Some tips in the book include non-digital ways of getting the P/E ratio or using magazines to get the earnings of a company. But the concepts are still relevant. Peter Lynch has another book called Learn to Earn which is fairly recent which I am reading right now.
Another concept I learned from this book was, it’s not necessary that people who study finance are better at investing than you are. Like I’ve been stressing, it’s a combination of a lot of skills, and you might not have the number skills (you can learn them) but emotional discipline is as important if not more important.
What I am reading currently
4 hour workweek:
I’ve tried this book many times but never really connected with it. I believe timing is a big factor in reading. You should keep coming back to books that are on your reading list but you didn’t like them when you started them. I believe multiple sources of income are important for financial freedom. It’s also important
Learn to Earn
Because I loved One up so much I am going to try this one.
Recommended Websites:
Pro tip when reading books:
These are not articles turned to books, they will provide you with a lot of value. Eat them. Eat them many times.
Don’t read the introduction or the summary on GoodReads. Whenever I suggest books to someone and they read the summary on GoodReads and dismiss the book, I cannot believe they can miss out on something so amazing without even giving it a try. Start with chapter 1. This sounds simple and stupid but is really important
~happy learning
