This is a post which my fiancé has written and I am reposting it here. I find this post Shark vs Piranha, to be very meaningful especially to people like me who often have small indulgence. So please enjoy this post and let me know what you think of it!
Recently the news on retrenchments all over the world, one can’t help but feel helpless and worried about prospects of tomorrow’s world. Thus, the journey to financial freedom is a long and tough with many speedbumps and roadblocks aiming to derail whatever financial goals we have.
One way to reach out towards our goals would be to watch out for these speedbumps and roadblocks, or what I would call them sharks and piranhas.
The concept of Sharks and Piranhas is nothing new, it was brought up by Dr Alexander Elder in his book “Trading for a living”. In which, it explains on identifying and paying attention to trading losses and transactions. Where trading losses are the “Sharks” and the “piranhas” are the small transactional loss such as commission and slippages.
Although the idea is brought up in a trading book, it can be applied to personal finance as well. We can apply the concept of sharks and piranhas to personal finance:
Much like the great white shark, with its visible fin (*plays jaws bgm*) and tendency to attack solo with a big bite wound. Sharks are visible and leave behind big wound bites. In finance, it can be referred to big transactions that are significant. These transactions do not happen often but they do contribute a large chunk toward our financial goals. Some shark’s transaction cannot be avoided such as new purchase to replace a faulty electronics, which can be overcome with budgeting.
A single piranha is a nuisance but a school of them is a threat. We should spend some time paying attention to our “Piranhas” transaction as they tend to be insignificant however its threat appears when it comes in waves.
Below is a table highlighting the differences between sharks and piranhas
Tracking and Budgeting
Many of us tend to have some minor indulgence habit, such as daily caffeine fix or sweet fix. I have a friend who needs his daily bubble tea fix which cost him approximately $4.90 a cup, which he will have it daily. The spending would result in $147 a month of bubble tea expenses. This kind of transactions are hard to monitor due to their frequency and insignificant amount. The trick would be to jot down such daily expenses as well using a budgeting app on your smartphone such as Ez Expense Manager, Wally. The beauty of the app is there are categories which you place your expenditure under. At the end of the day you get to know if most of the money goes to “food”, “family”, “beauty”, “utilities” etc. This way, we can identify and come up with remedy action to arrest unnecessary spendings.
be mindful of small micro transactions which happen often and yet slip through our mind
In summary, apart from large transaction, we should be mindful of small micro transactions which happen often and yet slip through our mind. Just like in nature itself, a piranhas attack might leave you bleeding allowing the shark to sniff out an opportunity to deliver a knockout blow to your financial goals.