What teens need to know about Financial Independence Retire Early (FIRE) and Emergency Funds.

Updated: May 9

Kriti: [00:00:00] Hey guys, welcome to WhyFI Matters. So, for those of you who follow us on social media, you might notice that we use the hashtag, # don't live in your parents' basement. And I kind of thought of the slogan or tagline because it creates this image in my mind of independence, precisely Financial Independence (FI).

And that's really what the podcast revolves around and sort of expanding your knowledge, investing in yourself and being money savvy. So today we're going to take a deep dive into the words financial independence and talk about the importance of it and the benefits. So I'm super excited to invite Shang Saavedra of "Save My Cents" on the podcast today.

She is a real example of someone who's achieved Financial Independence (FI) by the age of 31. She's work optional and has a seven figure net worth. And she's built a massive Instagram following of 49,000 followers. And on Instagram, she shares advice on achieving FI and living money savvy, where she says wealth is a mindset. Shang has been seen in Forbes, Yahoo Finance, USA Today among many other publications. And I'm super excited to learn more about her journey, learn about emergency funds, and how she got to be financially independent. So I hope you enjoy the interview.

Hi, Shang! Thank you so much for coming on WhyFI Matters today. I'm super excited to have you on the show and talk to you about the FIRE movement and what financial independence is.

So thank you for coming.

Shang: [00:01:52] And so excited to be here. Thank you.

Kriti: [00:01:54] So you're able to achieve financial independent and retire early by 31 years of age, if I'm correct. So this is really big deal for me, at least. And so can you tell us about the backstory and what you were like as a child and as a teen in high school?

Shang: [00:02:18] Yeah. I think what really led to a lot of the success in my twenties is this very, very big drive of work ethic and just hustling and being as good as you can at at whatever you know, God has given you to do. So, I was lucky to be born with, you know, good brain, a love of numbers, a love of learning.

And I was a total nerd, in my teenage years. I studied a lot, tried to do my best at school, tried to get straight A's. Wasn't really in all of that interesting for person to hang around with, to be honest, cause I just put all of that time into studying. But what it did teach me is the ability to really, really focus on a goal and not let other things, other teenage things like shopping or boyfriends distracts me. I didn't have a boyfriend in high school. And, my other love was piano. I played piano competitively. And I think that experience also taught me to be a little bit more on the emotional side. No, don't try to see everything as black and white, be a little bit more artistic and creative.

Kriti: [00:03:28] I love the piano analogy. Any musician will feel emotion when they plan, they can, I guess, add it to different aspects of their life. And I think it might've balanced you well from this math side, which is really, you know, black and white. There's no an answer to every problem. So I think that's really interesting.

And you said that you were very focused with the goal. Would this mean that your outcome oriented? And did you sort of say, "Hey, when I'm older, I'm going to be financially independent."

Shang: [00:04:04] Yeah. And I'll talk a little bit later about how that is not necessarily the healthiest mindset to have. But when you're young, you have all these lofty goals and they do encourage people to dream big.

And at that time, my goal wasn't necessarily financial independence. Those words didn't mean anything to me, but my goal was to be as successful a person, as possible in whatever I did. So when I was younger, I thought maybe it would be the, will be the world's best pianist or be the world's best doctor.

I didn't know what I wanted to do. The closer and closer I got to college. The more I realized I was likely to end up in business. So, that kind of narrowed to be a leader at a corporate company one day.

Kriti: [00:04:51] So could you talk to us more about your family life when you were a child and was money something that was talked about openly and where your parent transparent, because there's a big issue in terms of transparency and finances and parents shielding it.

Shang: [00:05:11] Yeah, my parents are Chinese. I'm Asian-American I identify more American than I do as Asian. But, my parents brought me up in a very traditional Chinese manner, in which money is not a taboo subject. It's open. In the U S, it's a taboo right. In my family. It's like, you'll talk about it. Everybody's money business is everybody else's money, business. And gossiped about who in the family owed a debt or who does family isn't doing well at work. Everybody knew all that, but my parents were also extremely frugal. They're immigrants. They worked very, very hard for the money. I see both of my parents. Doing everything you can to save money, to get a good deal. My dad likes to negotiate bills. My mom coupons all the time and, they showed me, especially my dad show me. How he balanced a household budget. So I learned about this concept of budgeting at a very young age. And to me it just felt normal. It felt like it's something that should be doing. Exactly!

Kriti: [00:06:13] There are people who are able to talk about money with their parents and their family, but they're not, they may not necessarily apply what they've learned to their adult life. But you clearly did. And can you tell us some of the things that you learned from you say your father about budgeting and how you were able to really apply this right off the bat?

Shang: [00:06:37] Yeah. The one thing that I learned from budgeting was how important it was to track every dollar, every cent of how I was spending. So that is the, the tracking part of it budget. And then the second piece is making sure that you spend less than you earn. And, that means keeping track of. The money that you have in your bank account as you spend.

And obviously I was already on a credit card at that time. My parents had to authorize user, but it meant that also you don't see the money leaving your bank account when you spend on a credit card. And my dad taught me, even though that's the case, you still have to track against the money in the bank.

And I think that's a really important concept is understanding that spending is taking away from my bank account. And then I developed on that concept the older that I got.

Kriti: [00:07:29] Right. I'm really interested because you say, you know, as a teen you're, you weren't into shopping. Nowadays, are you the same way? can you tell us about how this mindset has either changed or continued.

Shang: [00:07:45] I do love fashion, and I have an appreciation for the beauty that is in a good design. So, if you were to see my home, you'd see that I have really nicely designed furniture. And I do like on occasion to buy designer bags and shoes and things like that.

But I try to balance that against seeing my money and my time as a resource. And say, do you want, I want to spend so much of my time and my money on that, or is it as something else that I value? It growing up, I just never valued shopping as much as I valued being academically successful. And I think that's why I just wasn't all that focus. And even these days, You might find me buying clothing, but I hate the amount of time that I have to spend to find like clothing that fit. So the act of shopping itself is actually very, very annoying to me because I find my time they're too valuable, too valuable to spend on shopping.

Kriti: [00:08:45] Could you tell us more about Save my cents? So, I kind of discovered you, I guess through Instagram. Can you talk to us about your entrepreneurial journey?

Shang: [00:08:55] And thank you so much for finding out about me on Instagram. I started, with the username, "save my cents". All one word. If you're listening to this, please follow me. And, I started and I said, I remember saying to myself, I have no idea how Instagram works. I'm too old for this. I'm not that old. I'm 35, but I'm like, I'm too old for Instagram. I can't figure this out, but I'm going to just figure it out. I had already been coaching people in finance at that time in personal finance, I was teaching people how to set a budget, how to save money, how to think about retirement.

So I was like, that's a very small audience. I was helping maybe 10 families a year. Why don't I take what I think, teaching them, codify it and then share it online. So that many, many more people get benefit. At first, for like half a year, maybe nine months, I literally felt like I was screaming into the void. Like I had maybe 600 followers, 300 hundred of them were my actual real life friends. And I was like, yeah, no, one's watching this. And it just so happened that overtime, I started connecting with other people in Instagram, in the same space and we started sharing each other's content and my content evolved over time.

It's getting prettier, it's getting better. I'm still working on it. I don't have that much time. and that's sorta how it grew and it grew acid and I expected it would.

Kriti: [00:10:15] Yeah, you have a lot of followers, but I think what's really great is how you kept with it. Like you didn't care if it's, "Hey, it's only a couple of friends who are following me". I think that's a really. Big sign of an entrepreneurial mindset because you've stuck with it and you've created this kind of mini empire and you're one of the biggest people in the sort of personal finance community on Instagram. So I think that's true. Cool.

Shang: [00:10:41] Thank you.

Kriti: [00:10:41] So, WhyFI Matters, it stands for "Why financial independence matters"?

I think financial literacy is a pillar. If you're financially literate, you can achieve financial independence. I think this is where a lot of your Save my Cents and everything you do comes into play. And then it's also about understanding how the world works in terms of economics, and understanding your role as a consumer in society. And just learning about it, expanding your mind on these topics and also having a sense of an entrepreneurial mindset.

Shang: [00:11:18] Yeah.

Kriti: [00:11:18] So what is financial independence to you?

Shang: [00:11:24] Yeah. Financial independence to me means that money is no longer on the top of mind of your worries and that you feel like there's freedom when it comes to finances. It doesn't mean that you have to be able to retire at age 31. That's like, I recognize that my position is a very exceptional position.

Most people go through life hoping that they can afford life and also afford life when they retire. And that's great, but I want people who feel like they have financial independence to be like, Hey, I have a plan. I know I have a goal. I have a plan and I'm working to get there and I'm trusting in that plan in that process.

And that's, that's really it. The last thing I want to hear from people after having learned about what I teach is "Shang, I don't know where my money went". That's the scary thing. I have no idea what my money would "I can't believe I spend a $1000 on Amazon". I would love for you to instead say, "Hey, I know that I spent X amount last year on this because I planned for it" or because "this is what the money was intended for".

Kriti: [00:12:34] I think a big, you have a big emphasis on planning. But, I feel like we all get wrapped up in our lives. A lot of people don't even know what financial independence is. They don't even think about "Oh, I'm actually not going to probably work when I'm 80 years old", you know. I feel like psychologically, there is something that you have to sort of change. What are your thoughts on this?

Shang: [00:12:59] When I was in college and also parts of high school , as a part of my volunteering, I went to elderly homes where we sang carols, play piano and hung out with the elderly. Doing that when I was really young, really allow me to see, gosh, that's not the life that I want when I'm old. As much as possible. I recognize you reached a certain point where you do need a lot of help in an elderly home. It's a good place. But, how do you see what end of life looks like made me realize, I need to be prepared for that because my body's never going to be as healthy as it is when I'm younger. And so having, having that recognition is important. And then second, knowing the facts, the median American is going to live to age 79. That's a pretty long life. Given that I've only started working since I was age 21. So that's what 14, 15 years of working. I still got a long time ago and I'd rather be prepared than not because not being prepared super scary.

Kriti: [00:14:04] That's a great point!

Can you talk more about the difference between financial independence, so just like FI and then there's also the FIRE movement, which is financial independence retire early. So, are you just FI? So you haven't retired per se yet.

Shang: [00:14:23] I call myself work optional. I can retire. I chose not to, for many reasons, partially because I would be too bored, not doing anything. I do enjoy my job. And, I also think that, this FIRE, financial independence retire early is more about optionality. You can have the ability to retire early, but it doesn't mean that you have to. Like, no, one's going to tell me what to do with my life. And I think that FIRE to me means if my son or my family needs me, I don't have to feel bad or a feel chained to my job. To freeze. Yeah.

And the way to my husband and I got here, was it wasn't we didn't know about this concept called FIRE when we got married. We got married and he said, what if we just chose to live off of the lower of our two incomes for the rest of our lives to take the pressure off of trying to juggle family and work.

What if our parents thought old to T take the pressure off of. Do we need to move to take care of them? And what about the job and just not, not be part of that rat race. But it doesn't mean you're saving and investing a huge amount of money in a very, very short period of time. My husband and I both already brought six figures of wealth into the marriage and we need to get a work workout to seven figures. But it wasn't with that beautiful optionality in mind. It was never about, Oh, I hate my job. I want to retire. It's if our family needs me, we have the optionality to me.

Kriti: [00:16:01] So, you say that you're financially independent, but how do you like know that you're financially independent? Is there a certain number because everyone's life is different. If I live in New York, it's not the same as if I live in Chicago. The standard of living is like different, you know? So, what is the sort of number that say, "Hey, I've achieved FI".