Subscribe Feed (RSS)Spending money, or not..
October 31st, 2007 by eyal | Filed under Day Trading. |
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So as readers are probably aware I’ve been living solely off my trading results for the past couple of months. It’s been going well so far. One thing I noticed though is that despite the fact that I’m now making more than I did when I had a day job, I tend to spend less. Back when I was on a regular salary I used to buy stuff all the time, mostly toys, gadgets etc. I never thought much about shelling out that money on non-essentials. But these days I can hardly get myself to do that anymore. I even set myself some targets, if I reach this X amount then I’ll reward myself with a nice modest gift. That was in August. I then reached and exceeded that target in September, but wasn’t feeling too comfortable yet so didn’t get that reward. And then in October I reached and exceeded even September’s result. And I still find it hard to spend that money. OK it’s not like I’m living like a monk and depriving myself of any enjoyment but I’m a lot more prudent with my spending. It’s like the day job salary was monopoly money and trading profits are more real. The opposite of the ‘playing with house money’ syndrome, my account balance becomes something I try to defend and not see go lower. Which of course is not possible since I withdraw money monthly for my living expenses and also have “occasional” losses *gasp* ;-) and drawdowns like any trader. Anyways, maybe it’s just temporary and I’ll soon be able to enjoy some shopping :-)
Nice post, Eyal. I can certainly understand what you mean here. It sounds like you have much more pride in what you’re doing now than the day job.
Have you read Dr. Brett’s book Enhancing Trader Performance? There’s a section where he talks specifically about rewarding yourself with tangible things from your trading profits as a healthy thing. It sounds like you’re finding a good balance between that and overspending. ;-)
It makes lots of sense to me. When you had a day job, you made money both from the markets and from your labour. You didn’t have to have money to make money, by showing up to work you could support yourself. But in trading for a living, without a big enough account very few traders ccould survive, or in other words, you have to have the money to generate your income. Simply, it is more important than before.
I noticed something similar in the way I spend. Before I started to trade I didn’t really understood the concept of getting significant income from my savings and spent a lot of my monthly income. Why not? Why wait for tomorrow when you can spend it today? :-) Once I started trading, realizing the size of my account is crucial to the amount of money I get out of the markets, I started to spend less.
Dave - yes I read this book, quite a good one. It’s on my Top Reading list above - readers are advised to click there instead ;-) I think that’s why I set up this reward thing in the first place following his advice. Now I need advice on following my plan and not breaking my rules of.. buying things for myself :-) I guess part of the reason I didn’t take the day job money too seriously is because it came easy and my soul wasn’t in it.
Carlton - now that’s greed speaking, the greed for compounding :-) Which I experienced myself when trying to decide if I should withdraw money monthly or quarterly. I now do it monthly so the other few bucks earn a bit extra in the account. Also I think part of the reason I spend less is Thailand itself. When you see how much you can do with let’s say 50K baht here then spending it on a small gadget or whatever seems like awful waste.