Here are 7 sign that tell you are a big personal finance nerd!
1. Financial News is no Hocus-Pocus to You
You read in the newspapers (online of course) that interest rates are rising again. Other people quickly skip that article, you don’t. While driving to work you’re doing the mental math to calculate the impact of rising interest rates. What if my mortgage rate goes op 0,20%? What do I have to pay then? When the US Treasury yields go up, the dollar will be stronger. That impacts my dollar based investments, as they lose value in euro terms to a stronger dollar.
If you not only can read financial news, but also can’t let it go, you are a personal finance nerd.
2. Conversations About Rising Retirement Age Just Makes You Smile
When colleagues at the coffee machine complain that they have to work until 68 instead of 66, you can’t help but smile. No way on earth do you work until 68. What, no way you’ll work til 66. You will be financially free at 50, or 45, or 40!
The complaining people at the coffee machine blame the government. They are taking away years from their retirement, and they are victims. Nothing they can do, right? But all the while they do drive BMWs, take two expensive holidays a year, and buy the latest and greatest iPhone every year.
When you walk back to your desk you feel your phone buzzing in your pocket. It’s your e-banking app. Your salary is received in the bank. Without thinking you put 30/40/50/80% of it in your investment account and go back to work. You are definitely a personal finance nerd.
3. It’s Not About the Money, It’s About the Freedom
Do you know people that constantly complain about how they hate their jobs? The problem is, they’re stuck. They can’t leave and take a job that pays less but that they like better. Their high mortgage payments and expensive lifestyle forces them to take the dreaded but high paying jobs.
Financial independence isn’t a race to the largest bank balance. It’s a race to the largest freedom, happiness, independence. The bank balance is just a part of it. It gives you a passive income, so that you don’t have to take that job anymore. I guess a lot of personal finance nerds have jobs they like.
4. You Understand the Power of Compounding Interest
Einstein (allegedly) called this the 8th wonder of the world. Compounding interest, or interest that is earning interest. Say, you receive a 10% interest on a € 100 investment. This year, you will receive € 10. But next year, you will receive € 11 (10% on € 110). Your interest just started earning interest! And there is nothing you have to do about that!
Of course, saving is the most important part when you just start out. But just think of it. Interest that starts earning interest!
What you’d rather have? Every day, for one month, receive a thousand euros? Sounds interesting right? Or would you have 1 cent on day 1, 2 cents on day 2, 4 cents on day 3, 8 cents on day 4?
People choosing option 1 walk away with 30k after a month, not bad, but it’s linear growth. People opting for option two feel the power of exponential growth and bank a whopping 10 million! But I don’t have to explain that to you, as a personal finance nerd.
5. You Love Excel Spreadsheets
At work you’re the Spreadsheet Guy. At home you solve equations on everything. Taking holidays, buying a car. Nothing escapes your analytical skills!
Most people hate maths, let alone they know how Excel works. For you, building spreadsheets is a hobby. On for the financial administration, on for your FIRE-strategy, another one for analysing real estate investments. Because you;
6. Don’t Look at Homes to Live In, You Look At Home to Invest In
You can look for hours on the different real estate websites. Your partner does as well, but he/she falls in love with the first house they see. You don’t. You grab your calculator, find out the market rent, and do the mental math to calculate the approximate mortgage payments.
Then you decide, is this property worth investing in detail? Most aren’t, this on is. With hope, you open your Excel model and fill in the numbers. But whatever you try, the numbers don’t match. Your minimum required return on investment isn’t met. On to the next house!
7. You’d Rather Have 2 Euros Tomorrow Than 1 Today
A real personal finance nerd understands that money needs time to grow. You don’t need the money right now, so why be greedy when you can have more tomorrow? People that can delay gratification are more successful than others, and you are one of them!
8. You are Wildly Enthusiastic About Finance
Even though I’m a big personal finance nerd, I don’t know how to count to seven. That’s why you get an 8th reason here.
The other day I was running and my mind got into overdrive. I figured out a way to take out money from my house, while getting paid by the bank for doing that! When your mind goes into overdrive about these ideas as well, you definitely are a personal finance nerd!
Are you a personal finance nerd? And are you brave enough to share that with the world?