Money Talk: Zak Dychtwald, author of Young China and founder of Young China Group
In this new series we talk money with a diverse range of professionals and entrepreneurs from around the world. From Zak Dychtwald, the founder of consultancy Young China Group, to Emilie Bellet of UK-based investing community Vestpod, they’ve got unique experiences and views to share.
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Zak Dychtwald, 29, describes himself as a “world-traveller, writer, consultant, and public speaker”. He has travelled extensively and loves to explore what makes people and cultures tick.
As the founder of Young China Group, a think tank focused on China’s identity and how its millennials - or “the restless generation” - will change the world, he’s made a career out of it.
He first moved to China after graduating from Columbia University, New York, in 2012. He now spends a third of the year in China. His book, Young China: How the Restless Generation Will Change Their Country and the World, came out in 2018.
What did your parents teach you about money?
My parents taught me that being wealthy doesn’t make you a good person, and that being a good person matters most. Also, you shouldn’t use wealth to make yourself feel good or others feel bad. As cheesy as these two might sound, they’ve actually been really helpful. Both when I was pretty broke and now as more financial opportunities are presenting themselves.
They didn’t talk so much about hands-on financial management, and I wish they had. I think that generation wanted to protect their kids from the conversations about cash - particularly as their parents, who grew up in the Depression, were far more consumed by financial anxiety.
What was your first paid job?
Between the ages of 16 and 18 I was a swim coach for the local team, teaching 3-12-year-old kids.
Have you ever struggled financially?
My first year in China was a tough year financially, living on less than US$1k (£770) per month. But it was also the year I learned about managing money. I kept track of every 1 RMB (11p) I spent and was budgeting US$5 (£3.85) for three square meals per day.
Have you ever taught yourself about finance?
There are really easily accessible and digestible resources on YouTube and Reddit, as goofy as that sounds. That’s where I taught myself the basics of budgeting. I use the 50/30/20 rule to guide my spending. (The 50/20/30 rule was coined by Elizabeth Warren, an American senator and bankruptcy expert. The idea is to split your earnings so that 50% goes on things you need, 30% on things you want, and 20% on repaying debts and saving for the future).
For investment, I’ve tried to seek out people who are smart on the issue and ask. This could be my best friend’s parents, a former professor, or even peers who are now investors or analysts in the industry.
Do you save into a pension?
Yes. When I heard Einstein promoted compound interest as “the eighth wonder of the world”, (saying: “He who understand it, earns it. He who doesn’t, pays it”), I listened closely.
What is the best financial decision you ever made?
When I graduated I made the choice to be short-term broke with the potential for a longer term payback, be it financially or in the currency of personal fulfilment.
That meant skipping out on the consulting and finance job fervour that consumed my university senior year and leaping into moving to China. It was a seemingly financially disastrous decision.
I invested time, energy, and my limited resources into understanding the culture and becoming fluent in Mandarin. Then I wrote a book, which is also not exactly an accountant-sanctioned activity.
I saw that aside from these things having personal and potentially societal value, they had the potential to turn into real financial value as well. But it meant around five years of friends and family constantly asking me: “When are you going to get a real job?”.
What is the worst financial decision you ever made?
I overstayed a visa in China by 58 days. It cost me US$2.5k (around £1.9k) in fees at a time when I was making less than a thousand bucks a month and was budgeting obsessively. I had to borrow from a friend to pay it off, and I still get a jolt of fear every time I go through customs.
Do you own a property?
I don’t. I think it makes sense if you’re committed to a city and want to live in your investment. I’ve moved apartments some 20 times in the last decade.
What’s your top financial priority?
My personal tastes are pretty simple, so I don’t think much about myself beyond the basics.
For the longer term, I want to be able to earn and save enough that I can provide the same educational opportunities for my children as I had. That’s my benchmark.
What’s your plan B?
Playing Mahjong in rural Szechuan. Or a PhD in culture and cognition. That’s plan C.
>> Follow Zak on Twitter @zakdychtwald or visit youngchinagroup.com.
View the original article on MoneyLens. MoneyLens is a website aimed at helping millennials manage their money.
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