Aaron Tang has been writing under the pen name ‘Mr. Stingy’ for 6 years now, and ever since I was first introduced to his work, I’ve been a fan. He does a great job breaking down and explaining concepts, whether about life or money, both in his writing and the several times I’ve had him on BFM’s personal finance show Ringgit and Sense.
Last week I had the pleasure of having him kick off my personal show ‘In Conversation with’. We talked about lessons from 2020, his favourite resources, and how he balances his 9-5 job, his home life, and running Mr. Stingy. In today’s post I’ll get into Mr. Stingy’s 2 Key Lessons from 2020 (Minute 6:00-9:00 on IGTV)
Number 1: Life is unpredictable.
No one saw the pandemic, how much damage it would cause, or how widespread it would be. This has been the biggest demand disruption to the globe since World War 2. To this point, he noted the importance of emergency savings and specifically mentioned an anecdote about Bill Gates and Microsoft’s early days, how Gates always kept 12 months of company expenses on standby, at all times:
Without a doubt, Bill Gates is a genius. The Microsoft co-founder dropped out of college at age 19 because he believed a computer should be on every desk and in every home. You only put a lot of money and time into something when when you have relentless confidence in your abilities. But there was another side of Gates — quite the opposite of his unshakable confidence. From the day he started Microsoft, he insisted on always having enough cash in the bank to keep the company alive for 12 months with no revenue coming in. As a result, Gates erred on the side of caution.Excerpt from CNBC Make It (by Morgan Housel)
At the end of the day, the Emergency Buffer Fund is there to help protect us and cushion the impact from events that we don’t see coming — to help supplement, or even replace, lost income should something happen.
The general gold standard here seems to be 12 months of expenses, but that will take time. So as you make your way towards that goal, let me share something Licensed Financial Planner Rajen Devadason has told me – keep at least 2 months at minimum. Why? -Because one month (at super best) to secure a new job or income source, and another month before your new salary comes in.
Let me close off this point with this passage I wrote for Mr. Stingy’s blog:
“Specifically for 2021, focus on building your emergency buffer fund. It’s always exciting to talk about investing and assets, but what I’ve personally learnt from 2020 is the need to be prepared for the unexpected — to help ease my mind and sleep better at night. A year ago or so, things were very different and so were my priorities. We weren’t expecting rampant pay or job cuts, so while having a buffer fund wasn’t top of mind then, now it is. With some reprioritizing of existing assets, I’ve managed to reach 6 months of conservative expenses, but I’m aiming for 12. It’ll take me time, but for peace of mind, I feel it’ll be worth it.”Excerpt from 17 Influencers Share Their Best Money Tips For 2021
Number 2: Resilience and Optimism.
Aaron’s second lesson was about resilience and optimism, specifically saying: “People are very resilient, people will adapt. No doubt we will go through bad periods of time, and hopefully those who have more will help those who have less. People will struggle, there will be pain, but long term I’m optimistic”.
This might not be a key lesson for others who are generally more optimistic, but it’s a personal lesson for Aaron and is tied to the fact that he described himself as someone who comes from an “apocalyptic view”.
From my understanding, 2020 showed him real human stories of resilience and adaptation, and that while many are going through a very tough time right now, he believes in the long term we will recover, which might be a change of perspective for him from before the pandemic.
In my next post, I will get into Mr. Stingy’s top 5 resources for 2021. If you can’t wait for that post, you can watch my interview with him here (jump over to minute 12:30).