Personal finance for developers tip n1 : Why is learning how to manage your money important ?

In this blog post, I will try to convince you why learning how to manage your money is just as important (or maybe even more important) than learning the latest JavaScript framework (I love JavaScript :D don’t get me wrong).

Some very basics of Economics

Basically, as a developer when you start working :

• You have money coming in : Your salary or your day rate
• You have money coming out : Your expenses

What is left are your savings. These can be positive or negative. Most developers I've met only focus on increasing their income by finding a better job, learning the latest tech stack, working remotely with a foreign company while living in a low cost country. It's good, but that alone will not make you financially safe.

You need something that grows in value alone without requiring your time. It is capital.

Basically, there are two types of income :

• Active income : which does require your time and energy (working for a company, freelancing, etc)
• Passive income : which does not require your time. It is made by owning capital

If you only focus on the first one, you will always be limited by so many factors : number of hours you can work, your health, the job market, ... If you have also the second one, you can create a source of income that does not depend on your time or health.

Inflation

An important concept that governs the value of money we earn as developers is inflation. Inflation is the rate at which the general level of prices for goods and services is rising. This means that the money you earn today will buy less in the future if prices keep rising. For developers, this is important: if the salary you earn only increases by 2% per year but inflation is 4%, you are actually getting poorer in real terms, even if the number on your paycheck is higher. Without investing your savings into assets that grow faster than inflation, you are slowly losing your purchasing power year after year.

Personal story

At the beginning of my career, as any junior developer, my only focus was to be good at my job in order to move faster in my career. In my mind, I only had to get as good as possible in the latest frameworks in order to get better jobs and earn more money. I was not doing anything with the money I was earning, I was just saving it in my bank account. I thought that was enough to be financially safe. In a way, I was not completely wrong. Saving without investing is better than spending all your money. But it is not enough. I was losing money every year because of inflation.

The mindset shift came during covid. Inflation started rising a lot. Prices of food, fuel, and everyday expenses increased, and I could clearly see that the same amount of money did not buy as many things as before. That’s when it clicked: I had to do something with the money I was saving in order to protect it from losing value. I then started learning about personal finance and investing.

Why is investing important ?

Investing is important because your salary alone is not enough to build long-term financial security. As a developer, your income depends on your time, your health, and also, which many people tend to forget : the job market. If, for some reason, there is a problem in one of those three areas. On the other hand, if you invest your savings into assets that grow in value, you can create a source of passive income that does not depend on your time or health. It is also your best defense against inflation. Money sitting in a bank account slowly loses value over time as prices rise. By investing in productive assets — such as businesses, index funds, or real estate — you give your money the opportunity to grow faster than inflation and protect your purchasing power.

What can you do ?

The first step is to educate yourself about how money works in our world. There are many resources available online ... a book that completely changed my view is Fiat Standard by Dr Saifedean Ammous. The author also made so many interviews where he explains how money works in our world. The second step is to start small. You don't need to invest a lot of money to get started. Just put aside a small portion of your salary each month in order to invest it in something you understand.

Where to invest ?

Depending on where you live, there will be different options available to you. In many countries, you can invest through your local stock market, ETFs. Real estate is also an asset that I firmly believe in. Please do not chase trends or any influencer promising you to become rich in one day. Try to understand, even at a very basic level, what you are buying and why you are buying it.

Finally, think long term. Investing is not about getting rich quickly. It is about building resilience and freedom over 10, 20, or 30 years. The earlier you start, the more powerful compound growth becomes.