The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.
If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.
Next in the series is FMF reader RJ. She answered my questions (in red below) as follows:
Please tell us a bit about yourself.
I'm a 21 year old British student studying languages, I'm currently on a teaching assistantship placement in Germany, I'm due to go back in September next year to finish my degree but I'm considering delaying this by a year.
I'm single with no pets and share a flat with someone who was already living here when I arrived. My parents and grandparents talked about money a lot to me when I was growing up and if I have any general questions I go to them first usually.
Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).
As I live alone (from my family) I support myself, my income is a stipend meant to cover my living expenses, it's €800 a month, but I don't have to pay tax and with a bit of maths I've been able to live within my means and even save some money. My job is only part time, but unfortunately I could only work another few hours a week without getting all my income taken away in tax. I was also the recipient of the ERASMUS grant (meant to encourage students to travel in the EU and study abroad) which I put straight into my savings account. I currently have around £8,000 in savings but also a largish student loan, I can't pay the loans back until I'm earning over £15k a year, but I hope to be able to do that after graduating. I have a single credit card with a £500 limit and use that for most purchases but pay it off every month.
My rent is currently €266 a month (all utilities included) and next year it will go up to €276, I pay about €10-€20 a month for my phone, depending on how much I use it, and cook food with my flatmate to keep the costs down, per month, I probably spend about €50 on food.
(By the way, sorry for the currency switches folks, living in 2 countries is hard!)
What are the current financial issues you're facing (saving, paying off debt, etc.)?
My current financial issues are my student loans, I can't yet pay them off but I'm saving as much as I can so I can aggressively pay them when I start. Thankfully the interest rate is very low (1%) so when I didn't need most of the loans in the first year I took it and put it all in savings. Unfortunately we had that thing called the financial crisis, but thanks to compound interest I'm not in the red on what I took.
What are your plans for the future. (retire early, build your career, etc.)?
My plans for the future include probably taking another year out of University, I won't be affected by the tripling of tuition fees at my institution and I don't know what I want to do after. I'm really enjoying my job right now and think I might like to go into teaching, but I'd like to try it for a second year to be really sure before I spend more time studying. I've also applied for a second job writing articles for a magazine aimed at teens learning English, it relates to my current job and degree program, and while it doesn't pay much I think the experience would be awesome.
I also recently started a website which I would like to turn into a side income stream, it's not going very well yet, but it's also only been running for about 2 weeks (patience is a virtue, but I want it right now!), my hope is that I will be able to use the income from this to replace my laptop when I graduate and perhaps buy some chocolate.
I think I would like to retire early, but I really have no idea. I know that my current aim is to find a job that I enjoy, and preferably one that pays the bills. I've got a lot of options right now so I'm doing my best to explore them before I make any choices. The last thing I want to do right now is a post-grad program only to realise it's in the wrong field and not what I want!
What's your best piece(s) of financial advice and/or your general philosophy on personal finances?
Spend less than you earn. My mother taught me this when my best friend who lived next door had 'everything' and I had 'nothing'. My best friend's mother was deeply in credit card debt and ended up divorced and having to move house.
My only other philosophy is be happy. While this isn't directly related to finance you shouldn't completely deprive yourself of things that do make you happy - in my case it's books. I buy a few from time to time (~1-2 a month) to read, but have made a point of looking for free books too. Saving money is all very well and good, but don't be miserly!
Hi RJ,
What type of job do you plan to get after you get your degree?
It is my experience that so many people in Europe are multi-lingual, especially the Belgians who learn both the French (Romance language) and Flemish (close to Dutch and a Germanic language) languages in addition to English. It is not uncommon to see Belgians pick up a few extra languages such as German, Spanish, Italian. With that type of talent pool out there, I wonder what types of jobs are best suited for people who do an education in languages.
Regards,
Mike
Posted by: Mike Hunt | December 13, 2011 at 01:54 AM
Mike's comment also reminds me that one language that can help further a whole host of other careers is Cantonese because of the massive amount of trade that we and other countries have with China. However, at least in the USA, there's no shortage of people that are native speakers as well as having degrees in a very useful business or politicallly related field.
Posted by: Old Limey | December 13, 2011 at 12:16 PM
Old Limey - looks like your information is "Old" as well! Mandarin, not Cantonese, is the Chinese language in demand for Chinese commerce these days. Just want to make sure you stay updated. :)
Posted by: P | December 13, 2011 at 01:47 PM
Mandarin certainly is the much more dominant language, however, Cantonese could be very useful. Guanghzhou, where the US Consulate is in China, is a Cantonese speaking area. Many of the special enterprise zone cities are in areas where Cantonese is spoken. So, while Mandarin is dominant, there are still millions of people that speak Cantonese. For example, there are 10,000,000 or more living in Guanghzhou.
Posted by: jim | December 13, 2011 at 09:30 PM
I can see that I was mistaken between Cantonese and Mandarin. Even in a small country like the UK many people (myself included) often find the variations of the King's English a little hard to understand. In fact we were watching a Netflix movie the other day and many of the main characters were Scottish and we had to turn on the subtitles to make sure we didn't miss anything. Other Netflix viewers are always complaining in their reviews that they can hardly understand some of the broad accents used in various parts of the country.
Posted by: Old Limey | December 13, 2011 at 10:17 PM
It's great that you are learning about money at such a young age, I suspect there are relatively few 21 year olds reading FMF. Very wise people learn from others' successes and mistakes and avoid the pain of learning from their own mistakes.
Congratulations on saving so much already- the habit of saving and living below your means will help you have a bright future.
I have two pieces of advise for you:
#1 Build your career – it is and will be your most valuable asset for many years to come
>I've got a lot of options right now so I'm doing my best to explore them before I make any choices. The last thing I want to do right now is a post-grad program only to realise it's in the wrong field and not what I want!
That is a very smart strategy - switching careers is very expensive and doing something you don't enjoy everyday will make you very unhappy. Once you do decide what you want to do I suggest you aim high- look for an ideal position. You may want to read The Magic of Thinking Big by David Schwartz for some motivation.
For example for teaching- I imagine that the compensation for teaching at one of the best schools in the country would be better than teaching at an average school. It is also likely to be a better environment and have more interesting coworkers. What would differentiate you from other candidates applying to teach at such a school? What if you asked some of the current faculty today to find out the best ways to prepare. I suspect they would be willing to assist someone enthusiastic enough to plan a few years ahead and would be favorably impressed by your effort.
#2 Learn how to invest for the long term- eventually you want your money to work for you instead of working for your money. Learn about the following topics: compound interest- the power of investing early and the importance of the rate of return. I have a few posts on my website covering these. Also learn about index funds, asset allocation and re-balancing, learn about tax sheltering- don't let taxes eat away your hard earned investment returns. That shouldn't take more than a week- then take some action- open a brokerage account and start investing. Even if it is a small amount each month, then increase the amount over time.
>I also recently started a website which I would like to turn into a side income stream, it's not going very well yet, but it's also only been running for about 2 weeks
>patience is a virtue, but I want it right now!
Two weeks isn't enough time for you to build success- you could stumble into it like a viral video or making a fad but those require a lot of luck. Similarly you can't expect 8000 pounds to turn into a million in a couple of months. You will need to learn patience because building success it takes much longer. If you enjoy running the site keep at it and look for ways you could improve it. Could you put a bit of money into very targeted Google search terms so that people who could benefit from your site are able to find it? What about seeking out links to your site from other related sites? Or writing guest posts?
If you put the work into it you can make your own luck.
-Rick Francis
Posted by: Rick Francis | December 13, 2011 at 10:41 PM
Jim, not to stray too off topic from personal finance, but I disagree about the usefulness of learning Cantonese (and I'm a bi-dialectal Chinese-American, Mandarin and Cantonese, and I have ample Cantonese pride). Even professional services firms in Hong Kong, where most people are bilingual in English and Cantonese, now look prefer Mandarin speakers when hiring from outside of Hong Kong. For all that we hear about the difficulty of learning Mandarin, Cantonese requires a substantially greater investment in time. There are more tones in Cantonese, and sounds that non-native speakers have extreme difficulty with -- they don't even exist in English. Given the choice, I would recommend learning Mandarin over Cantonese any day. Cantonese is a wonderful, warm and interesting language, but will not add to the average person's career development.
Old Limey, I always cite to the astonishingly diverse dialect pool in the United Kingdom when I try to put the diversity of Chinese dialects/sub-languages in context!
Posted by: P | December 13, 2011 at 11:35 PM
Hey folks, sorry I didn't reply sooner. I really don't know what type of job to get. Most things will probably require 1 year of post graduate training at the minimum so I have to do further training, I think I may go into teaching - I'm already qualified to teach English as a foreign language (it was a extra in my degree program) so I could do that for a few years to "test" myself. I also really enjoy writing (fiction and non-fiction), I've written a few novels now and a friend of a friend who's an agent says they have potential - this is by no means great encouragement but if I can publish a book or two that would be a nice secondary income!
I actually speak French and German as my primary foreign languages, as well as Spanish, Italian and even some Mandarin, I'd like to take learning Mandarin more seriously but it's not yet certain if I can do it as part of my degree at University. (I can get a certificate either way though.) Most jobs recommended to us are teaching, translation, interpreting and also politics.
Thanks to Rick for All the advice - the book is available in my local library in England so I'll check it out over Christmas. The website is as much for fun as anything else right now, but I am producing some books to sell so hopefully that will produce some income eventually.
Posted by: RJ | December 15, 2011 at 06:58 AM