This post is part of the Feisty Finances Series, which strives to encourage greater financial independence in women, in the context of travel, so that they can take greater control over their lives and find the freedom to do everything they want. On Fridays, I come at you with articles about financial independence, and sometimes an interview with a real-life woman of financial independence, that will ideally spark discussions and even equip women with the tools, mindset and determination to make financial independence a reality.
Feisty Finances with Alice Chen
Success means sacrifice. It means hard work, usually at the expense of outings with friends and family. It means wanting ten things, but having the drive and focus to concentrate on bettering yourself in just one (or a few) of those things to seriously hone your skills in that department. It means accepting that you cannot do everything, yet having the motivation to work hard to do as much as you can nevertheless.
At least, that’s what I’ve been hearing about success and hard work nowadays.
Being financially independent requires that same kind of work ethic, just like anything else one wants to achieve and be good at. Sure, perhaps some people are born into wealth—but even the wealthiest person in the world can lose all their money if they don’t manage it carefully. And, let’s be honest, the wealthiest people are usually very smart, deft individuals, if maybe a little shrewd.
The problem is that high school usually fails to teach us the things that are actually important in life after graduation. Things like credit scores, mortgages, taxes, budgeting—those were never taught to me in high school, but would have been much appreciated! I’ve felt like I’ve had to wade through waist-deep mud in search of a tiny key to unlock the answers to my financial queries. Maybe if we had been taught in school to manage our finances better, whole nations would be less in debt. Just a thought.
I’m really bad at managing money, as I’m sure a lot of people used to instant gratification are too. We want things now, even if we don’t have the money to pay for it right then and there. So, we get into debt. Sometimes, we rationalize the purchase by saying that it will help us save or earn more money in the long run (case in point: education). But, the majority of our purchases are still ruled by want rather than need, or so I’ve observed.
I could really learn a thing or two from Alice.
She’s been financially independent since college.
This week, I’ll be discussing financial independence with the awesomelicious help of Alice Chen of Wherever I Want, a fellow travel blogger who has kindly provided an interview for this post about her own financial style. She shares her personal definition of financial independence, which I think perfectly highlights the fact that financial independence is a fluid concept with many nuances and factors to consider.
Financial independence is hard to define because I think it’s a spectrum rather than completely black or white. You can be a little bit financially independent if you can cover your monthly expenses without having to rely on someone else’s money, but you can also be very independent to the point where you don’t have to work anymore. Are you independent from others, or are you independent from work? That’s the real question.
That’s totally true. There are different degrees of financial independence. One person might be earning a six-figure salary, but be paying off an enormous mortgage and three children’s Ivy League educations. Would that person be more or less financially independent than an individual earning a quarter of their income after taxes, but who is debt-free and only has to support themselves? There are too many individual life circumstances to compare everyone’s situation on an equal scale, and it’s important to remember that there is no shame in having less or more money than other people. I’ve never really liked the concept of money, but given that we live in a capitalist society, this is what we have to work with. The only shame would be in knowing you have financial problems but not doing anything to try and change your situation for the better. Even if you feel you can’t do anything about it yourself, it’s good to try reaching out to someone else who can enable and empower you to.
There is hope for people who don’t have very much money in the first place. As we’ll see from Alice’s answer below, it’s not so much how much you have, but how you manage what you do have.
What kind of financial background do you come from?
My family wasn’t rich, but we didn’t have money problems. My parents were careful with money and knew how to save, and I think that’s a benefit of Chinese culture. My mom liked to spend on things that made her happy, and my dad was the kind of person that would save every last penny. I grew up knowing how to save – I’ve had a bank account probably before I was even in kindergarten. Saving was just what I did!
My own family dynamic was similar to Alice’s, in that my mom was not very careful with money, spending it more liberally than my dad did. It’s certainly not like this in all families, but my hypothesis is that because men have traditionally been the breadwinners of families, they understand firsthand the hard work that goes into making that money and therefore are more careful about parting with it. On the other hand, my mother, having been financially supported by my father since they married, kind of thinks that money just falls from trees. So, she spends money like it’s an open tap.
But women have revitalized the workforce like never before, and more and more women are choosing careers over their traditional child-bearing family roles, or choosing to have both. There are so many powerful working women today that are a beacon of hope for others. That’s why financial independence is so important for women: it goes hand in hand with other kinds of independence. On a survival level, financial independence allows women to escape situations they might otherwise be trapped in. Financial independence affords women choice. On a quality of life level, financial independence allows women to go after their true passions, afford education and new experiences, such as travel.
Such is how Alice uses her financial independence to travel the world.
How do you think your financial background has affected the way you spend when traveling?
I used to be extremely stingy with money. If there was a hostel that was cheap but had cold showers, I would probably choose it instead of one that was more comfortable but double the price. I walked and took public transportation as much as I could instead of taking a taxi. As I have made more money, I have started to be willing to spend more, but I think long and hard before spending on more luxurious things, even while traveling. I’m starting to learn that it’s okay to spend a little more for comfort.
That’s awesome, Alice! I really identify with that, because saving can be every bit as fun as spending. Sure, we might give up small daily sacrifices, be temporarily less comfortable than we could be, but in the long run, the extra savings really result in greater pleasures! Thinking long-term rather than short-term is crucial in managing finances. And, yes, when you start to earn more for yourself, there’s nothing wrong with splurging a little here and there, as long as there’s balance.
People always think that travels cost more than staying at home, but I find that it’s all relative to how much your cost of living ‘at home’ is in the first place. For example, I live in Toronto, Canada, where rent is infamous for being high. On a single month’s rent, I could enjoy countless days of scuba diving and an infinite amount of mango shakes in Thailand and Vietnam. As well, since I’m traveling, I’m more willing to put up with less comfortable accommodation because I know it’s temporary (but if I’m going to be returning to it every day for a year, then I’m going to want something I feel completely comfortable in). As with everything, managing finances comes with setting priorities and sticking to them. You’ll work hard for the things you really want in life.
Here’s how Alice saves her money for travel.
How do you think your financial background has affected the way you save for travel?
Knowing how to save and spend only what I had has been supremely useful. I started really traveling when I was in college, and I always am very careful about what I spend. Even when my income was about $500/month, which was not too bad when I was in college, I was still saving for the future. I applied for a ton of scholarships and that money, along with my savings, allowed me to travel to 10+ countries without having to ask for money from my parents or family. A couple ways I do it:
- Acorns: This is a super fantastic app that you can link your bank accounts and credit cards to. Acorns “rounds up” all your transactions to the nearest dollar and invests that sum. If you spend $4.34 on lunch, it will transfer $0.66 from your checking to your Acorns account for you to invest! It’s a great way to get started.
- Having a separate bank account: I separated my account for day-to-day expenses from the one that had funds for my travels.
- Frequent Flyer Miles: I learned how to earn and spend miles to get international flights for less than $25! These cut my travel costs in half.
How did you reach financial independence?
I only spend what I have. I am always looking for ways to earn and save more. That meant making sacrifices like finding a smaller apartment and ordering only one thing when going out with friends, but it also means I can choose when and how I work and have funds saved up for my future trips!
Amen to that, sistah. When the reward is freedom and choice, the sacrifices along the way are totally worth it.
The basic principle is spending less than you earn, and constantly looking for ways to earn. When I was in high school, I started freelance writing and editing through Fiverr and earning just $4 per assignment. Even though the sums were small, I earned enough to pay for the things I needed! I got several on-campus jobs in college, and those paid okay. It’s just always been about finding opportunities to earn money – and not spending more than I earn.
Yeah, it’s great to be resourceful and look for ways you can monetize your time. While the eventual ideal goal is to be able to work ‘smarter’, by earning more per hour instead of working more hours, most people have to go through that beginning stage to get some experience. I was no different, taking on a variety of odd jobs to scrape together a pittance. I think there’s a curve to this and, like we’ve addressed earlier, there’s a spectrum of financial independence. Some people can be financially independent living from paycheque to paycheque, and others are financially independent with a very comfortable cushion to fall on in emergencies. There are lots of factors that affect this, things out of our individual control, such as minimum wage rates implemented by different provinces and states, or other socioeconomic circumstances, but it isn’t helpful to lament the state of the world. There’s a better quote for this that I’m botching, but essentially the only thing within your control is how you react to the world, how you perceive your circumstances and act. And when you think about it, that’s empowering.
What can you do to be more financially independent?
Describe a time when you felt a lot of financial stress/burden. How did you eventually resolve that situation?
When I first started traveling, I was very careful with my money. When I was about to leave Peru, I didn’t want to leave any soles (Peruvian currency). I prepaid for my last bus ticket and hostel bed and left just a tiny bit of money to take with me on my last tour of Lake Titicaca, the main attraction in Puno, my last stop in Peru.
As it turned out, however, I ran into several unexpected expenses. I needed money for lunch and dinner, a boat tour, and a tax at the bus station that I didn’t anticipate. Because I didn’t have any more soles, I felt terrible! I couldn’t not pay for things that I needed, and had to transfer some money to a fellow traveler through the internet, and she exchanged some soles back to me. I learned it’s much better to have money left over than to come up short – and I won’t be cutting it that close again!
Close call, Alice! It definitely sucks when unexpected expenses arise and, from my own experience, I completely understand the stress that comes when you’re stuck in a situation where you need money while traveling that you don’t have, as I’m sure other travelers have felt too.
And I’ve felt that in my everyday life as well, the times when there have been too many bills to cover at the same time, the times I’ve gotten really close to wondering how I can ask my landlord for a couple extra days to pay rent. For a lot of people, cutting it close is a daily, perhaps even hourly, stress which can totally gnaw at their insides. Money does not make everyone’s problems go away, but it is true that up to a certain threshold, money does play a very central role on an individual’s psyche. Apparently, according to Forbes, all you need to be happy is $50, 000. Obviously, this number is dependent on cost of living and other factors, but essentially the article makes the point that up to $50, 000, people live under a cloud of financial stress that takes a toll on other aspects of their lives, while those above that number have time to think about other things besides money.
Poverty is a very nuanced, sensitive subject, and I’m highly aware that I, as well as lot of other commentators on the subject, usually come from a place of privilege. Even if we have felt the effects of poverty to some extent, there will always be other people who exist in completely unrelatable planes of poverty, that remind us to be grateful for what we already have, no matter how little we think that is.
Which is another thing to think about—what is the bare minimum we need to be happy? What are our REAL financial responsibilities (not the kinds that we put on ourselves to achieve out of societal pressure, for example)?
As always though, the road to financial independence is not a shame-and-blame game. It is meant to be empowering. And to end on that note, here is how Alice feels about her journey to financial independence.
How does financial independence make you feel?
I’m not quite at the level of complete financial independence yet, but what I do have is freedom. Only having to make enough to pay for food and housing frees up my funds and mind to pursue other things!
Brilliant, Alice! Priorities and sacrifices, the key ingredients for success.
About Alice Chen
The Amazing Woman Behind Wherever I Want
I write and vlog about travel tips to Make Anywhere Possible for the curious traveler. I focus on leveraging frequent flyer miles to get international flights as cheap as $25, and using the experiences of other travelers to craft your perfect itinerary! I also write guide of attractions and reviews of my own itineraries so that travelers to places I’ve been can spend their time soaking in the experience, not doing research.
This post is part of the Feisty Finances Series, which strives to encourage greater financial independence in women, in the context of travel, so that they can take greater control over their lives and find the freedom to do everything they want.