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Ilona Codes
Ilona Codes

Posted on • Originally published at

The Importance of Financial Independence For Software Developers

If you read this post, chances that you are a software developer who is seeking financial advice for smart money-saving or investment or early retirement.

📝 In this article:

1. Why is it for software developers first

2. The sad truth about the retirement

3. My finance knowledge so far

4. Mythos about the investments

5. What’s next?

💻 Why is it for software developers first

Because developers are lucky at some point, we are flexible. Moreover, developers love creating their own tools. So we can generate a passive income that could support us over time!

If we wish, we could:

  • Get a very high paying job

  • Work remotely and live in a city that is not that expensive and save more money

  • Develop side projects along with passive income

That’s why it’s necessary to achieve Financial Independence (FI) that can make your life better. At least, it can help us not continually thinking about paying bills, and we will stop live in a world of scarcity.

“Never depend on a single income, make an investment to create a second source."—Warren Buffett

🥺 The sad truth about the retirement

Years ago, I moved to Germany. Lately, I had to request a pension notice to get a german permanent residence permit. Looking at my pension notice at that time, I sadly realized that the small amount that my later pension should be at my 70 is not enough to live on — it will be enough to survive.

Since that day, I started…

  • Feeling anxious about the future, retirement, and old-age poverty

  • Thinking about wealth accumulation with securities

  • Learning how to invest money

  • Building passive side income

The retirement system in Germany seems like a scam to me. It means that the working generation pays with their social contributions to the pensions of the retired generation. If you want to learn more about the German retirement system that is similar to most European countries, check this link out.

In short, there are around 2 active workers per retiree in developed countries because of the relation between the low birth rate and the high aging population rate.

Along the time, this ratio, the number of active contributors per rentee supposedly is decreasing dramatically.

❗️ There is no guarantee that the retirement system will still maintain and pay off the same percentage of money according to the 2020 pension rate.

❗️There is no guarantee that it will be the same in 10-20-30-40 years when I get old-aged.

I am 100% sure I cannot rely on it.

📊 My finance knowledge so far

My personal starting shot for financial independence came in the last months after I got my permanent residence permit in Germany and quit my job to start working for myself.

Learning how to invest money might seem scary, especially if you get started when the market is experiencing a crash. Still, it’s easier than you think, and you can begin no matter how much you have saved before.

Here are my top-15 tips on how to free extra monthly cash from your dev-salary for investment.

What I have learned since then is enormous:

  • Read lots of books and articles on finance and investments

  • Listened to podcasts on financial independence topics

  • Watched many hours of videos

  • Took control over my finances: no credits, no consumer debts

  • Opened security accounts by different brokers and banks to start my investing journey

  • Developed my investment strategies for the index funds and single stock-buying

  • Even started taking a degree course at the one of the top-ranking business school 🤭

What am I learning now:

  • More about REITs

  • More about investing in active fonds

💭 Mythos about the investments

Myth #1 You should be a math genius

The truth is that you shouldn’t be one to be successful in the stock exchange market. It’s an absolute fallacy, and I am living proof of this. I know the maths, but I am not a math genius.

Myth #2 You should have significant capital to start

You can start even at 25$. Moreover, I would recommend you to start with a small amount of money to invest. First, to understand how the exchange market works, its dynamics. Secondly, to learn how to read key numbers, charts, and understand stock performance. So later, you can invest a more considerable amount of money more confidently.

Myth #3 You can do it only from a developed country

Completely wrong! As I mentioned before, I am originally from the East-European country, where there is no opportunity to open a security account for investment into the stocks of the developed countries at the national/country banks. There are still a few working international brokers in my home country that grant this opportunity for the residents.

Basically, you can start investing almost from anywhere!

🚀 What’s next?

I am still learning a lot about active and passive investments because my goal is to become financially independent:

I firmly believe, if you learned how to code, you could learn how to achieve financial independence.

Most developers have well-paid jobs, live free of debt, and can start investing today.

All of us have our dream-life, and it’s in our power to start to live it much earlier before the retirement comes along.

There is a lot of information about wealth building on the Internet, but minimum practical advice and strategies for doing that on the exchange market in real. There are not many step-by-step guides, e.g., on how to analyze specific stocks to make the right buy/hold/sell stock decision.

For that reason, I decided to post more about my financial independence learning journey: financial strategies I practice, the resources I learn from, scripts, and automated tools I implement to execute these strategies efficiently and manage my finances.

You are welcome to join me on this journey too via my weekly newsletter or RSS. Let us accumulate wealth and become financially independent together!

I remember myself when I began, I knew almost nothing about the finances! I was lucky to have saved money to start and experiment.

Disclaimer: I am not a Financial Manager, I am not an Expert in Finance. Through my articles, I will share how I am figuring this all out.

Live your best life, Ilona

Top comments (16)

nathguen profile image

It's crazy how similar your journey has been to my own..

I likewise lost confidence in the social security system as a means of retirement as I looked at long-term forecasts.

My first investment happened two years ago. $13,000 was sitting in our account, and we kept getting nervous that the markets would crash immediately after we invested it. We finally pulled the trigger and jumped into two of Vanguard's Admiral index funds.

It's been a surprisingly good windfall year, as the lockdown has made it so fully remote positions are the norm, so I'm seeing higher salaries available for lower cost of living areas.

We follow Mr. Money moustache, and FIRE generally.

kamranayub profile image
Kamran Ayub • Edited

This is excellent, I need to spend more time writing about finance for developers. I got turned onto FI over a year ago.

I highly recommend listening to podcast to learn more about personal finance topics.

If people are new to tracking their savings rate, I made a free app, a PWA actually that works offline you can use on your phone or other devices!

It helps you track your savings rate and contributions. For example, I can see how well I am doing with the overview and I can even hide exact numbers for sharing screenshots 😁


mdhesari profile image
Mohammad Fazel

So impressive post, actually what I was looking for!

We developers miss investing and as a result after years of working hard we still get nothing to do with money.

I would like to appreciate if you suggest books, blog posts or special videos for watching about investment and learning economics.


ilonacodes profile image
Ilona Codes

This! 💯

"We developers miss investing and as a result after years of working hard we still get nothing to do with money."

I am excited about finances and learning a metric ton about them every single day. I will gladly share informative materials and resources about this topic in my upcoming blog posts and newsletters:

phantas0s profile image
Matthieu Cneude • Edited

That's a good article. If you're interested in passive income, you should come by on the Indie Hackers community. Many developers and creator there try to go independent.

I'll follow your journey since I'm am expat developer in Berlin, too. Like many :D

fmaxx profile image
Maxim Firsov

My 5 cents:

  • Don't play on FOREX
  • Don't use brokers leverages.
  • Don't use complex financial actives at the beginning.
yuripredborskiy profile image
Yuri Predborskiy

"Myth #1 You should be a math genius"
I hope you're not working with leverage. I REALLY hope you're not using a leverage. By leverage I mean brokerage accounts that allow you to invest more money than your deposit would normally allow, and gain an ability to generate increased (proportionally to your leverage) income. The hidden side is it also emphasizes your potential loss and can easily wipe your account.
Source: 15 years of experience trading, investing and developing automation tools for FOREX (I started as a trader and got out as a software developer).

"You should have significant capital to start"
Let me rephrase it for you. If you don't have AT LEAST 10 million US dollars, you're not trading in FOREX. You're playing the "lets see who's the fool" game with "FOREX brokers". They are the companies giving you access to foreign exchange market with minimal fees.

How to tell they're ripping you off? Its easy. Small deposit, 30%+ income etc.
Your money will be gone in a single bad deal or a few "unlucky" ones.

"You can do it only from a developed country"
I'm from Ukraine and there is absolutely no way the government (laws, courts etc) protect you from shady "business". But hell yeah, you can do this from Ukraine! As in, you can "invest" money from Ukraine, just be ready for the moment your money's gone.

If you're looking for a little bit more stable investment:
Invest in yourself. Keep reading, watching, learning. It takes years to get it right.
You may consider investing in real estate in booming cities. Thanks to coronavirus you may be able to find a good deal or two - buying cheap apartments or houses in poor condition, getting them fixed and hopefully finding someone to rent them to. But could be affected by aforementioned coronavirus. The hard part is finding good deals on good property in good location and getting good financing. Then finding good contractors to do the repairs. Then finding good renters. And hiring accountant, lawyer etc. Its not a passive income, it's an active business.
You may want to consider investing in stocks. But I'm not an expert, so consult an expert before you do. The basic idea: invest in indexes instead of individual stocks. May be risky in the next few years, though.
Other than these two I can only recommend having a decent job.
If you love being on camera, you can monetize a youtube channel.
If you love writing, you may want to try blogging.
You can try making courses on programming or something, I hear they can make good income if done right.

Whatever you decide - take care and have a good time!

ilonacodes profile image
Ilona Codes

Thank you for the great write-up about problems with forex and trading with leverage.

I’m not even interested at this point in these. I’m intrigued the most and excited about the common stock, active funds, ETF, REITs, value investments, and so on. Long-term stuff—no trading or speculating.

I feel you and can understand your frustration. This answer will be useful for folks who want to try leveraged trading—they probably shouldn’t (unless they know exactly what they are doing, and also depends on the country).

yuripredborskiy profile image
Yuri Predborskiy

As long as you understand what you're doing, you should be fine.

I think I forgot to mention something: the fact you're calculating your future retirement is awesome. Working towards building your own future is even more awesome. I wish you success!

I'm working on the same thing, but I figured out I want to spread my investments into real estate and stocks. Having experience with leveraged speculation I highly recommend everyone to be extremely careful with that as the risk of losing lots of money very quickly is extremely high. One can work in FOREX successfully, but, according to statistics, that one is one percent of all people who try.
It is said to be easier with stocks, but as long as you use a high leverage, small volatility can lead to catastrophic results. At the same time, stocks should be fine with no leverage and long-term investments (probably). But under stocks I mean stock indexes or index funds since otherwise it is less of an investment and more of a job.

I am thinking of adding other types of investment outside of real estate and stocks at some point, but not right away. Real estate offers a similar leverage stocks do via mortgage, and, if used properly, it can increase your profits. But it will also amplify a bad deal, making it lose more money. The hard part about real estate - if you don't have a ton of cash, it may be hard to start. Although there are ways to start with $0.

If you ever get interested in real estate I recommend checking out bigger pockets podcasts, there's a ton of information. And then there's Samuel Leeds and his youtube videos, also very informative. The difference is Samuel works in UK, while Bigger Pockets members mostly operate in the US.

spiritupbro profile image

love this bookmarked

webdev_chen profile image
Uchena Miller

Developers are lucky. I believe in financial independence.
And in terms of living, a cheaper cost of living is the right choice; train your self, be discipline, manage your time and dont plan too much. It takes time but it's definitely not impossible. We developers are possible✊🏾

kvanrooyen profile image
Keagan Van Rooyen

Great post! I'm not a developer yet (well, it's not my job) but I am trying to get into finance and how I can use it to my benefit in the future.

sofiiasov profile image

Thanks for sharing this article discussing the importance of financial independence for software developers. It's an insightful topic that highlights the significance of managing personal finances and achieving financial stability in the software development field.

The article emphasizes how financial independence provides developers with more flexibility, the ability to pursue passion projects, and the freedom to make career decisions based on personal fulfillment rather than solely financial considerations. It's a valuable reminder for software developers to prioritize financial well-being alongside their technical skills.

In line with the topic of financial software development, I would like to share this guide about finance software development. It provides helpful insights and resources on financial software development, offering a comprehensive understanding of the subject. While the guide primarily focuses on the technical aspects of financial software development, it can also be beneficial for software developers looking to enhance their knowledge of financial systems and applications.

By exploring the guide, software developers can gain valuable insights into financial software development, which can further support their understanding of financial independence and its relevance to their career. It's an excellent resource to complement the discussion on financial independence for software developers.

Thank you for sharing the article, and I hope the provided guide proves helpful in expanding your knowledge on financial software development.

ilonacodes profile image
Ilona Codes

Thank you! Yes, you are moving in the right direction and with the right mindset 🚀

mdamaceno profile image
Marco Damaceno

I agree 100% with you! About the retirement, you described exactly how Brazilian retirement system is. It's a scam too.

karthiknayak98 profile image

Good one