Finance for Developers: A Concise Tutorial

Morgan+Drexen+Financial+solution.jpgWe developers like to think that we are the “smart masses” and better than everybody else. However a lot of us have trouble in balancing our accounts, controlling our money, or even have accumulated rather big balances in our credit cards. Because most of us aren’t experts in finance. Some may (like most people) tend to over-simplify things that they don’t know much about.

To put things into perspective, just look at your non-techie colleagues that downloads funny-funny applications from who-knows-where, forwards them in e-mail attachments, and get shocked when their computers became so malware-infested that it barely works any longer. They are unaware of the risks entailed by running scripts and applications from questionable sources and accumulate these “debt” over time and got shocked when the weight of malware finally collapse their computers. Similarly as finance muggles, we often can’t see the dangers lurking around bank loans and use our credit cards to pay for that nice two week holiday trip to the other side of the world – a trip that we can’t immediately repay in full .

Observing stuff from the internet, talking with a few of my colleagues and perhaps some internal voice to do good to the world, inspires me to write a tutorial that teaches the basics of finance for software engineers. The tutorial will be meant for engineers that are not working in finance doing financial apps – but for casual run-of-the-mill Joe and Jane Code Monkey that can easily churn out login screens in Ruby or PHP but having trouble with their credit card balances. The choice of words will probably suit developers more, but I suppose just about anyone with a technical background should find it an easy read.

Who am I to do this?

I’ve been working in megacorps as a software engineer for quite some time now and I’m sadly surprised that the topic of money management and personal finance is rather foreign to many software developers. These are the supposedly “smarter-than-average” bunch of people but many haven’t secured their finances yet. They are still living month-to-month despite having an above-average salary and little safety net that they can fallback to.

Another point is that after working for about five years in Singapore, I’ve managed to secure about eight years’ worth of financial independence, barring any calamities, force majeure or children. That is the theoretical length of time I can maintain my current lifestyle with no cutbacks even if I don’t have a salaried job. The same amount of money could probably last me sixteen years if I move back to Indonesia, attributed to the lower living costs there. If the financial setbacks of 2009 and subsequent stagnation didn’t happen, that number could probably be about 50% higher. Granted I’ve been blessed by God (or The Universe, depends on which line of faith are you in) for these good luck and I’m expressing my gratitude by sharing the “secrets” that got me up to this point.

Why am I doing this tutorial thingy?

  • As a refresher of stuff that I learn back in business school. As what they say, “use it or lose it”, I have a business degree (in fact, a masters) but I haven’t been putting it to good use. Hopefully this is a step in the right direction.
  • As my gratitude for the graces that I have received so far. Like one famous quote, “Give and it will be given to you”, this will be my gift to the world.

How am I going to deliver this tutorial?

This will be a series of blog posts interspersed into my regular stream of articles as I have time to write it, which is one post about every other week or so. You can find my draft outline of the tutorial below:

Finance for Developers – Syllabus

  1. The Basics
    1. Money – what it is and why is it precious.
    2. Time Value of Money – or people’s need for instant gratification.
    3. Inflation – or the decay of money.
    4. Risk-free rate – how to make money doing nothing.
    5. All your interest rates belongs to us – how those rates relate to each other.
    6. Money isn’t the only currency – why money doesn’t really matter (sometimes).
  2. Personal Finance
    1. The Most Fundamental Rule of Money Management.
    2. Debt – what is good debt and bad debt.
    3. Insurance – what and which ones should you get.
    4. Investments, Risk Profile, and Diversification.
    5. Employee Stock Purchase Programs – should you join?
  3. Moving Forward  – How much of these you need to worry about in a daily basis.

The above outline is just a plan – and will likely change as I learn more from your inputs and other information that may arrive. I’ll tag all of these posts with “Finance for Developers” and thus you can find all of the posts in this topic. At the end of the tutorial I’ll write a closing post with a link back to all the materials written.

Now it’s your turn: what do you think of this tutorial? Is there anything else that I should cover? Or perhaps I shouldn’t do this altogether? You can write a comment here or contact me directly to have your say.

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