I would like to share about my relationship with money and my personal financial journey.
I was born in 1976 in a country which was called USSR. Leonid Brezhnev, an over-aged party technocrat, was the general secretary of the communist party Politburo and by that definition – the leader of the country.
Although I lived in the capital city of Moscow, which gave me relative advantages in comparison to those who lived in other regions, the standard of living was pretty basic for everyone.
I had a happy childhood, but it wasn’t the kind of happiness that came from abundance. It was the happiness that came from being content with what you had and from not knowing any better. Everyone we knew, lived a similar modest life with little means. The elites – the diplomates, top party technocrats and army chiefs, actors and celebrities had access to luxuries. But there were an exception and my family was not connected to those circles.
I lived through the tail end of the 70ies and do not remember much from that time. But in the memories of the people, the 70ies was the decade of stability, confidence in the future and hope for better times.
As the 80s rolled on, it was more and more difficult to meet basic needs. The signs of the times were the queues. The queues inside the stores, outside, in the streets and around the block. People stood in the queues for everything – from shoes and clothes, cosmetics and handbags or even toilet paper.
Obtaining a decent furniture set made in Eastern Europe, one had to hunt for it for months. Immediate gratification was not a concept back then. Everything was “in deficit” – the concept ridiculed by many comics and satirists of the day. (Raikin, Zhvanetski, Kartzev and Ilchenko).
With the passage of time, people learned to grow social connections as means of gaining access to deficit products. The term “blat” was the buzz-word. (Allegedly as derivative from eng. Blood as an indication of nepotism).
You needed to have “blat” to be able to purchase a fitting school uniform without trying your luck by standing in queues for hours. Only “blat” could make you a happy owner of a chandelier made in Czechoslovakia or even a good piece of meat. Not that I remember having beef stakes when growing up, fried chicken was a common, obtainable protein.
My mom spent at least an hour on the phone every evening “hustling”, using her connections to find “the deficit”, connecting people, and exchanging information on certain supplies expected in certain locations.
People from regional Russia had it a lot harder. They had to plan 1-2 days shopping tours to Moscow, hoping to fill their bags and backpacks with the produce and groceries they could take back to their families.
None of my school friends had a motor vehicle in their family. Having a car was a luxury!
I remember a single episode in my childhood when my parents and I went out to a restaurant. I must have been around 5 years old. The event of eating out in a restaurant was so remarkable for that time that to this day I remember the name of the place, the fact that I had a chicken Kiev that night and that the waiter gave me a complimentary piece of chocolate.
As the economy was nearing its collapse in the late 80-ies, sourcing even regular groceries became a challenge. Sometimes I would have to visit 4 grocery stores in the neighborhood to find an available single carton of milk on the shelves.
It is not surprising in this context that when McDonald’s opened its first restaurant In Moscow in 1990, thousands of Muscovites curious about Western food culture queued for kilometers on grand opening (image source: Reddit).
1990 saw the introduction of food stamps and the arrival of humanitarian aid in the form of corn beef cans from abroad.
The same year, the monetary reform wiped off the little savings that my family had.
But more difficult years were to come. Once the Soviet Union collapsed, the new Russian economy struggled a great deal. We lived through a period of inflation of over 200% per year in 1992. Whatever your earnings were, you had to either spend them immediately to convert into goods or if by chance you had any capacity to save, you were to buy US dollars, which was the only form of saving.
In 1998, the government defaulted on its borrowing bonds, triggering the collapse of the banking system. All of my family’s savings which were built up through mid-90s, went with it.
When I think back of these living standards and economic conditions, I wonder how did people survive?
Would our current Western society cope with conditions like these today? Our society is struggling with inflation of 4% and interest rates at 6.5%.
I acknowledge of course that we cannot compare apples and oranges. The Russians learned to be resilient throughout the 20ies century, having lived through 2 revolutions, 2 world wars, a 30-year tyranny of Stalin, the famines that killed millions of people and repressions of freedom.
However, if we abstract from this gruelling historic context, my general observation over the last 40 years when comparing the living standards between more fortunate and less so countries, is:
“Economic challenges foster resilience and resourcefulness. Economic prosperity breeds financial complacency.”
When growing up, I didn’t have to ask many questions to understand the basics of money. I did not have to be taught to save for the rainy day – it was quite obvious that it was needed where possible. Being wise with money was a necessity, not a choice.
I didn’t obtain any formal education or guidance on finances until later in life, but going through these experiences influenced my attitude towards money. I learned to be cautious and reasonable. Of course, as a young adult, I spent money but I tried to save at least a little. My first full-time job in a small business after graduating from University and serving a conscription year in the army paid US$200 per month. I felt rich and free!
As I earned and saved a bit more, I started dabbling with investments in managed funds. These investments served me well, because when I moved to Australia in 2006, the $20,000 I had saved paid for most of my Masters degree. I earned the rest of my tuition and my living while working in 2 casual jobs and studying full-time, also achieving high distinctions.
We are fortunate to live in officially one of the most prosperous countries in the world. All conditions for doing well are available for everyone.
And yet, in my 13 years in the financial advice profession, I have seen a lot of people who struggle understanding basic concepts of money and finance, with their spending, saving, budgeting and paying off their debt. I have seen people make important financial decisions using a very skewed rationale or on the basis of a 5-minute conversation with another parent at a kids’ basketball game. Sometimes decisions are made on the basis of the most reliable source called “a bloke at the BBQ told me”. And quite often, they avoid making any decisions, being afraid to make a mistake.
This happens across the board – people with low means struggle to get out of the scarcity trap. Others, whom you and I would all call “wealthy”, struggle to have certainty whether they will have enough for themselves, for their families, and if their money will last long enough. They also worry about losing what they have and they have more to lose too.
Financial advice profession is responsible for creating biases and negative perceptions through the legacy of 2 decades of conflicts, which I had witnessed firsthand. But things have been changing. After 13 years in profession, I stand proud of what I do. I help people with a wide range of circumstances, from diverse backgrounds, stories, circumstances and all walks of life and build long-lasting, trusting relationships.
I work specifically with people in their late 50ies to 60ies to balance their two primary financial concerns:
- Proactively planning and managing their retirement to have confidence that their money will last;
- Providing care and quality of life for family members when entering residential Aged Care or using Home Care packages.
The key problem I solve for my clients is providing clear confidence about their and their family’s financial future.
Financial advice is not about investing in a share market or picking financial products, as many still think. It is about understanding the rules and regulations and applying these to your benefit using common sense and unbiased professional guidance.
My personal experience shows that you absolutely can get ahead.
You just need some discipline and perhaps some help from a professional who knows how, who has done it themselves, and who cares about you and your well-being.