Less ego. More saving: A lesson in personal finance

I spent 50% of my first salary on a pair of Ferragamo shoes, and another 25% to treat my family on an expensive meal at a Japanese restaurant in Jakarta.

I was 23, fresh out of college, and had the coveted job of a management consultant that paid IDR 25 million a month. It was a lot of money back then and is still a lot of money today. My late mother who grew up in poverty, probably never thought that I could make that kind of money in a month.

I was on scholarship throughout college and I did not have a lot of savings to my name when I graduated. My family’s precarious financial situation did not give me the option to save money when I was younger. Our family was living paycheck-to-paycheck. Sometimes, my school made awkward calls to my mother for an outstanding tuition fee. Sometimes, our electricity was cut-off because of late payment.

Yet, somehow, when I did make money for the first time, my first instinct was to spend the money that I had and “fit in” with society, instead of saving. Buy nice things. Eat expensive meals. Be seen at certain places in Jakarta. It was like I was trying to be part of this invisible social club that only lets in people who possessed certain things. I wasn’t trying to impress anyone, I was simply trying to fit in.

I see this social pressure everywhere — normalizing disproportionate spending that is beyond most people’s earning power and normalizing credit card debt. Our social media normalizes drinking handcrafted coffee on daily basis, owning the latest handbags and watches that cost thousands of dollars, and going on first-class travels. Social media, influencers and retailers seem to conspire to create the illusion that we are not “normal” if we cannot afford a certain lifestyle.

I know Tokopedia interns who drink Starbucks coffee every single work day. Assuming a cup of Starbucks is 50K, that’s IDR 1.25 million a month just for Starbucks. That is a significant chunk of an intern’s salary gone just for coffee. That is not normal, and certainly not healthy for the long-run. But I also see how the interns felt that it was “normal” for people to be drinking Starbucks daily — they see so many people around them doing it.

In my second month of working, I met up with friends who told me that with my salary, I could buy a Chanel bag in 3 months (spending all my salary for the bag). Now looking back, it was the wrong kind of math to do. Because I should not be measuring my money in terms of Chanel bags or cars or Rolex watches.

Yes, money can buy us luxury goods and holidays, but money can buy us much more than that.

Yes, money can buy us luxury goods and holidays, but money can buy us much more than that. Money can also buy us a life-changing education, a much-needed health insurance, investments that will compound, and the seed capital for starting our own business. Money can buy us our future homes and help family members who are in need for emergency loan for their struggling business.

Thankfully, I met my husband at work. He taught me the value of frugality and that I did not need to keep up with other people’s lifestyle. He convinced me to get an MBA education, so I did not end up buying another Ferragamo shoes or a Chanel bag. I saved up most of my income for the following 2.5 years — used the money to buy GMAT book, prep courses, and paid for my living cost during MBA. I was able to enjoy some travel during MBA and graduate debt-free — thanks to my savings.

It is easy for me to save and be financially secure when I am content with myself and do not get pressured to buy the things that I don’t really need. I am not at all against buying high-quality things, I am just making a case for us to be spending way below our earnings and saving more for future options and meaningful spend.

It is easy for me to save and be financially secure when I am content with myself and do not get pressured to buy the things that I don’t really need.

As Morgan Housel wrote in The Psychology of Money: “Saving money is the gap between your ego and your income, and wealth is what you don’t see. So wealth is created by suppressing what you could buy today in order to have more stuff and more options in the future.”