We never get an instruction manual about how money works. We never have to pass a test to get our Money License before we can take a new credit card for a drive. Most of what we learn about money comes from advertising or from other people who know as little as we do.
No wonder we make such basic mistakes. No wonder we feel disempowered and scared. No wonder so many of us just decide to stick our heads in the damn sand and just never deal with it.
I wrote this book, because so many of the people I spoke to told me that they wished someone would.
In this clear and engaging basic guide to managing your finances, Sam Beckbessinger covers topics from compound interest and inflation to “Your brain on money”, negotiating a raise, and particularly local South African phenomena like “black tax”.
The book includes exercises and “how-to’s”, doesn’t shy away from the psychology of money, and is empowering, humorous and helpful. The book you wish you’d had at 25, but is never too late to read.
Sam Beckbessinger is a writer, user-experience designer and entrepreneur who is on a quest to help the emerging middle class understand how to take charge of their finances. She is the cofounder of Phantom Design, a company that has helped to build bitcoin wallets, cryptocurrency exchanges, smart credit cards and more. She also lectures extensively on online culture, marketing and behavioural economics. Sam holds a BA Honours Degree from the University of Cape Town, studied Strategy Design at the Gordon Institute of Business Science and was a 2014 Mandela Washington Fellow at Yale University.
Q&A with author Sam Beckbessinger
What’s your financial background, and how did you get into the field?
I don’t have a background in finance; I have a background in talking to people and trying to make stuff easier for them. I’ve been working in user experience, research and design for about 10 years, and a lot of what I worked on focused on financial apps and tools. Over the years, I’ve done work for most of the banks, and local money management app 22Seven, which is part of Old Mutual. I co-founded Phantom Design, a fintech product design studio because I wanted to shake up this industry. I’m obsessed with making money management simpler, because finance bros like to make it all sound a lot more complicated than it is. Not having a background in finance helps, because my approach is a lot more human-centred. I don’t have any patience for the nonsense jargon or questionable money-making tactics that infect so much of the industry.
What made you particularly interested in personal finance and how people spend?
Money is about a lot more than money. It’s about your choices, and what kind of life you want to live. Being in control of your money means being an active steward of your own life.
In my early twenties, I had so many self-limiting narratives about money. I chose jobs I hated because I was terrified of being broke, and then I went and overspent and got into debt, to try to fill the hole of how miserable those jobs were making me, and so somehow I ended up poorer than I started when I took those supposedly lucrative jobs! Past-me was a dumbass.
Think about how much money you’re actually going to earn over the course of your lifetime. Really picture it. If you earn just R10 000 a month from age 25 to 65, getting just a 6% raise every year, that’s nearly R20-million. There’s a lot of big, audacious dreams you can turn into reality for R20-million. You have a lot more choices than you realise.
I want to help people take control of their spending, and put their money into the things they really care about, the things that matter to them. I want more people to live the lives they truly, fiercely want to live.
What prompted you to write How to manage your money?
I’ve spent a lot of the past decade talking to people about money, and so many of them told me that they wished a book like this existed: a no-nonsense, no-jargon, no-bullshit guide to the basic principles of money management for people in their twenties. No-one else seemed to be writing this book, so I did.
Also, I did it for the fame and riches.
What interests you most about the field?
Human brains are weird, yo. We like to think that we’re these rational creatures that make logical decisions all the time, but really we’re all just primates with pants on. Getting better with money is hard, just like quitting smoking or taking up exercise or any other kind of behaviour change. It’s not enough to understand what you should be doing. Actually figuring out how to trick your primate brain into doing that smart stuff is the tough part. I’m fascinated by behavioural science and helping to shape healthier cultural narratives around money and choices.
What’s the one thing that people across the board just can’t seem to get right when it comes to managing their money?
We delay saving, because it seems hard and we think now’s a bad time and we can’t really afford it and there will be plenty of time later and it will be easier when we’re older and earning more and and, and, and…we have a million excuses. But the thing about compound interest is that what matters most is time, so starting early is so important. Compare someone who saves for their retirement for just five years between age 25 and 30, with someone who starts saving at age 30 and saves all the way until they’re 65. Who ends up with more money? The person who started younger. You don’t have any time to waste.
Also, we’re not scared enough of debt, in this country. Debt will almost always grow faster than your investments, so while you’ve got debt, the smartest thing you can do is to get rid of it as fast as humanly possible.
What are your top five tips for getting your financial act together?
1. Automate everything, because human brains are no good at willpower. Just set up an automatic payment on payday to move money to your financial goals (whether it’s saving or debt repayments). That way, you don’t save what’s left after spending, you spend what’s left after saving (that’s a tip from Warren Buffet, and that guy is SMART). Aim to save 30% – it’s easier than you think.
2. Know what you really care about, and don’t piss money away on stuff that you don’t. I find it helpful to have one really chunky, audacious goal in mind that has a real price-tag attached to it. This helps when you’re trying to remind yourself why you’re NOT going to buy that new gizmo you don’t actually need, even though it’s shiny and on sale.
3. Put your day-to-day spending money in a separate bank account (I call it my fuckaround fund). Top it up once a week, and never spend more than you have in that account.
4. Free up money from the boring shit, not from the stuff you love. Don’t fret over every piece of avocado toast you order – rather find cheaper car insurance, or move to a lower-fee investment fund. Be frugal with the big stuff like housing and transport costs, not the small stuff that makes you happy.
5. Don’t waste money on cars unless you actually really love cars.
Also available as an eBook.