Hey friends,

This week’s post is about spending money wisely. Money is one of the most important yet most misunderstood topics in life. School doesn’t teach you much about money, so here are a few important lessons about spending. I hope you benefit from this and as always, thank you for reading 🤍

I have a significant amount of readers who are not subscribed, just to note I only send 1 email per week packed with value. You’re free to read it in your own time and you won’t miss out on any special posts!

What's Inside:

• 💰 Money Talks: Understanding Financial Literacy
• 🩺 Medical School Update
• ✏️ Insights - Podcasts, Books, Amazon finds & other cool things

Money Talks: Understanding Financial Literacy

Financial Literacy

Financial literacy refers to the understanding and knowledge of how money works, including basic financial concepts such as budgeting, saving, investing, and managing debt. It's about having the skills and knowledge to make informed and effective decisions about personal finances.

This is not exclusively for bankers and accountants. Everyone needs financial literacy to survive and live a good life. Let me also be clear, while I do not advocate for a life of materialism, I acknowledge that life is significantly easier if you have more money, therefore I strive to make the most of mine, and you should too.

Second Order Consequences

Consequences are the immediate effects that occur after making a decision. If I buy a coffee, the immediate consequence is I lose $3, but I get a warm drink in return. Nothing major.

Second-order consequences are the effects that happen as a ripple effect further down the line from your initial decision. Regularly buying a coffee might not seem like a lot at the moment, but gradually over time the accumulation of these daily coffee expenses increases.

While individually they might not seem significant, in the long run, they add up to a considerable amount of money spent solely on coffee. This continuous spending on coffee might start affecting your monthly budget, reducing the amount of money you could save or invest for more significant goals, like a vacation, buying a car, or saving for retirement.

Obviously, that’s an extreme example but the principle applies to many things in life. How many unnecessary purchases have you made that didn’t feel significant at the time, but later on started to add up?

The message is not to stop buying coffee, I still do, but to think about second order consequences when making purchases.

Opportunity Cost

Opportunity cost is like weighing your options to see what you give up when you make a choice. It's what you miss out on or sacrifice by choosing one thing over another. Essentially, it's the value of the next best alternative that you didn't choose.

Let's say you have $50, and you're deciding between buying a new video game for $50 or going to an event that also costs $50.

If you choose to buy the video game, the opportunity cost would be the enjoyment and experience you could have had at the event. In this case, the opportunity cost of buying the video game is missing out on the concert experience.

Conversely, if you decide to go to the event, the opportunity cost would be the fun and entertainment you could have had from playing the video game. So, the cost of going to the event is giving up the enjoyment you could have had from the video game.

In simple terms, opportunity cost is what you forgo or give up when you choose one option over another with your money.

When you spend money pause to ask yourself first, what else could I do with this amount? Is this the best way to spend?

We just had Black Friday and Cyber Monday, soon we will have Boxing Day sales where people go overboard with spending in the fear that they’ll miss out on a deal. January rolls around and no one has any money left. This time of year is crucial to think about opportunity cost.

Purchase List

I have a purchase list on my Notion. If I need to buy something expensive, it goes into the list. I let it sit there for a few weeks and see if it crosses my mind again. If I notice the need for such item in my life, then I end up buying it. If I realise I can live without it, I won’t buy it.

This method has saved me so much money from impulse purchases. It also lets me keep track of how much I’m spending on ‘fun things’. I try to spend less than 15% of my earnings on ‘fun stuff’. The rest I save for investing and other purposes.

This list helps with sales too. If I have an item on my list which is reduced on sale, that’s an actual saving as I was planning to purchase it. Whereas if you are shopping and see an item for the first time which says ‘On sale’ you’re not making a saving. You just psychologically think you are because it’s apparently cheaper. Had you not seen that item today, you would have lived your life without it.

The Value of a Purchase

Understanding value is important when spending money.

If you buy a new pair of shoes and they cost you $150, the price may seem high, but chances are they will be of good quality and design. You are also likely to wear these shoes for several hours a day, every day for some months or years.

When you extrapolate the value you will get from a purchase you can make more sense of the price. Here are some expensive purchases I have made which bring a tremendous return on value, justifying the price. Please note, I recommend spending WITHIN YOUR BUDGET. The numbers below might not apply to everyone but are good examples of value.

​OnCloud Shoes $175: I hate spending so much on shoes, but I keep these clean, wear them frequently, they’re unbelievably comfy and I love them.

​EmberMug $190: This temperature-controlled mug is very expensive for a mug, but I use it twice a day. My drinks never go cold. I enjoy sipping my coffee for over 4 hours while it stays warm. This mug will last me years so it’s worth the price.

​Sony WH-1000XM3 $375: I bought these in 2018. I still have them and they work fine. I use them everywhere. Studying, planes, the gym and while walking. Over the 5 years of use, I have received value far greater than the $375 investment.

Since I discovered Matt D’Avella on YouTube I have been heavily invested in minimalism. I don’t buy new clothes, I don’t go to sales, I only buy things that I NEED and VALUE. Occasionally I treat myself too.

Live Within Your Means

This is possibly the most important part of this newsletter.

Usually, as a person’s salary increases, they upgrade everything in life.

New car. Bigger house (& mortgage). More holidays. More expensive clothes. More outings.

The result?

You finish each month with the same amount as before. This is what keeps people living paycheck to paycheck.

More than half of Americans earning over $100,000 a year are living paycheck to paycheck, according to new research. A survey by Barron's found that 51 percent of people with an annual salary over $100,000 run out of money on a month-to-month basis.

Making money is one thing, spending it wisely is a whole other thing.

People will say ‘I’d rather be broke by 30 with lots of memories than rich with nothing to look back on.’ This is a classic line from people who make poor financial decisions.

You can live a life of abundance and joy without spending a lot, all while preparing for the future. If you spend wisely, invest and save strategically, over time you will become wealthy and when you do, you can upgrade your lifestyle without creating financial stress. That is only possible with financial literacy, patience and a detachment from the material world.

I will leave you with a famous quote about money and a final reminder, money doesn’t buy you happiness, it just solves money-problems.

🩺 Medical School Update

I’m coming up to the end of my 4th block in clinical rotations. Honestly, it’s been a very eye-opening time.

I have seen elderly patients whose children refuse to take care of them. This is a huge contrast to the eastern side of the world where it’s unheard of for elderly family members to be left alone. I’ve been on the stroke ward and we have an acronym called LANS - Lives Alone No Support. That’s common for stroke patients, some of whom are over 80 years of age.

In other news, it’s been pretty great doing real doctor work, seeing patients and having an actual impact on people’s lives. That being said, I still think the hospital is a bit depressing. The lighting isn’t nice, there aren’t many windows and the amount of beeping noises is insane. I think this has put me off all specialties that operate in a hospital. Psychiatry still stands out as a method to impact lives, and help people while being in a nice environment, maybe my clinic one day.

I don’t have any exams until June but I’m deep into ‘exam mode’ which is good. I crossed the 100 day streak on Anki and I’m so used to just studying every day, small but consistent amounts.

Alhamdulillah, it’s going well. 4th year is nowhere near as bad as people made it out to be. Plenty of free time, self directed learning, real experience and overall pretty fun.

PS. If you read this far, you’re the type of person who should subscribe.

✏️Insights

🎙️ Podcast

I have spent the last few taking notes on podcasts. I share all of my recommendations on Instagram and I will be releasing access to my podcast notes soon!

🎥 Movie

I watched the new Wonka movie this week and it was incredible. If you have a younger sibling I’m sure they’ll like it. 10/10.

🛒 Amazon Finds

Click this link to view my Amazon storefront. Here I share my favourite books, tech and household items purchases. As a minimalist, I am very careful how I spend my money and I ensure that every item brings me some sort of value or utility. I often get asked about the decor in my bedroom - you can find most of it over here.