Mathematicians and Money Management
By Annalisa Crannell
This is a blog post about mathematics and money. To be a little more specific, it’s about mathematics, money, my life, and how those have all come together so that I’m writing this as I retire (“retire”, heh heh) at the age of 58.
I’ve always been a big fan of self-help and how-to books, and I’ve loved sharing the suggestions I’ve absorbed. I tell my friends, “When it comes to advice, I’m full of it!” The first article I ever published as a mathematician was an AMS Notices article titled “Applying for Jobs: Advice from the Front.” So I really appreciate the opportunity to write about an aspect of our careers that many mathematicians don’t get to talk about: personal finance, frugality (or its opposite), and how these can shape careers and our lives.
An important aside: One of the difficulties about writing about money is that this discussion exposes us in a way that, say, time management or research strategies don’t. At this point, therefore, I should say that I’m well aware that I have a lot of financial advantages that other people don’t have: I graduated from college and then grad school with no debt; I got a tenure-track job in a low-cost-of-living area right away; I have minimal medical expenses, a supportive spouse, and access to more streetside “Free” piles than many other people. We all have 24 hours in a day, but we don’t all have the same financial cushions buoying us up (or financial millstones dragging us down). Having said that, I will say that the importance of understanding money management has been all the more important for me during my leanest financial periods. The fewer options we have, the more important it is to know how to make those options count. [Aside over]
When I got my PhD and started my first job, I knew almost nothing about personal finance. I’d taken an economics class in college, but that had nothing to do with 401(k), 403(b), IRAs, mortgages, or other options that—all of a sudden—I was having to make decisions about, . . . so I went into my default mode and started taking book-after-book out of the library. I read “The Millionaire Next Door”, a groundbreaking piece of work at its time that showed that the people who look like millionaires seldom are, and people who are millionaires seldom look particularly wealthy. For me that broke the connection between income and wealth. I read a book with a fictional barber who dispensed financial advice, and a whole host of other books that I’ve now forgotten.
The book that made the biggest Impact on me, however, was a (then) recently published book called Your Money or Your Life. That book has a subtitle describing “transforming your relationship with money,” and for me that’s exactly what it did. In the three decades this book has been out, it’s garnered quite a cult following of “YMOYL” admirers, and still today for many personal finance (PF) bloggers, it makes their “Top N” book list for any N ≥ 2. (Another more recent book in the Top Two of many such PF bloggers is J.L. Collin’s Simple Path to Wealth. If you’re going to read any two books on personal finance, I’d recommend those two.) I’m not going to rehash all of YMOYL here, but I do want to summarize a bit of how my financial choices have made a bunch of fun-math things possible for me.
Raising dough
A way-too-short synopsis of my approach is this. I started by thinking hard about the values I hold dear and about my goals for my career and my life. I then began tracking the ways in which I spent my money, comparing what I did with those values and goals. By doing that, I slowly altered my spending, spending less money on things that didn’t matter so much to me (buying books in airports, eating at restaurants for convenience sake), and also more deliberately spending money on things that did matter (generosity, eating at restaurants with friends, adopting and rearing kids). Overall, my spending went down, and my savings increased.
The double whammy of having more money saved and a regular practice of spending less meant that I could take advantage of some really wonderful opportunities. One really obvious example is sabbaticals; another is early retirement. What has this looked like for me? Read on!
My institution, like many others, offers faculty who’ve put in five years of full-time teaching the chance to take a one-semester research sabbatical at full pay or a two-semester sabbatical at reduced pay. At F&M the two-semester sabbatical pay is a generous 75% of usual salary; at other places, it’s 50%. (As I mentioned, I’ve been fortunate). Many of my colleagues lament that they can’t afford the longer sabbatical, and such a lament makes a lot of sense: if you’re looking at a pay cut of, say, 50%, then suddenly cutting your expenses in half or finding grant funding to make up that difference is certainly not easy!
But if you’ve already learned to cut your spending by, say, 10% (a much more manageable number), then the savings you accrue over the five years leading up to sabbatical means you’ve put aside 50% of your salary, and that more than pays for the gap – indeed, because you’ve lowered your spending, your savings allow for extra travel and emergency cushions.
For me, my sabbaticals haven’t just been a break from committee work and grading, they’ve also been amazing chances to meet new people and surprise myself with new research directions. As one example, on my very first such sabbatical, I visited IUPUI to try to make progress on my chosen area of dynamical systems; while I was there I met Marc Frantz, and we started collaborating on a course on mathematics and art. That “side” project with Marc led to two different NSF grants, a long series of workshops with other cool mathematicians, a pair of books, many papers and talks, and humongous amounts of fun, not to mention a deeply cherished decades-long friendship.
Three things that mean a lot to me: my colleague, our first book, my son
That leads to my early “retirement”. Starting July 1, I’ll be an emeritus professor, and as I mentioned above, it’s happening as I turn 58. I’ll be giving up these things: a regular paycheck, employer-sponsored medical insurance, grading homework and exams, service on assessment committees, 8 a.m. classes . . . I’m sure there’s more to that list! But the trade-off is that I have more time to do the parts of being a math professor that I love: working on a book on the geometry of optical illusions, supervising undergrad research projects, giving talks and doing workshops, collaborating with colleagues from all over the US. In fact, I’ll get to spend my first year in Panama collaborating with FUNDAPROMAT. I’m beyond jazzed by that! And of course, I have approximately a gazillion personal projects lined up. When I come back from Panama, I want to learn to weld. (Any practiced welders out there, please get in touch!)
Again, it was learning one particular facet of money management that made this transition possible: it was when I realized through my readings early on that retirement is not about some switch clicking over when we hit a certain age or stage of career—as happens with tenure decision timing—but rather becomes possible when the amount we’ve saved can support our expenditures. (The rule of thumb I’ve been using is having investments that are 25 times my annual expenses; you can read the books I recommended for a bit more about where that rule comes from, and variations that others use).
Our societies and institutions offer a wide variety of important professional development opportunities. I’m glad that I (and many of my colleagues and friends) have gotten to learn more about time management, successful research strategies, effective teaching techniques, and more. We seldom include personal finance in the roster of such opportunities, but I hope that will begin to change. Knowing something about the mechanics of money management can make our lives richer in those non-monetary ways that matter to us most.
References
Collins, J. L. The Simple Path to Wealth : Your Road Map to Financial Independence and a Rich, Free Life. First ed., CreateSpace Independent Publishing Platform, 2016.
Crannell, Annalisa. “Applying for Jobs: Advice from the Front”, AMS Notices 39:6, p. 560–563 (July/August 1992). https://www.ams.org/notices/199207/199207FullIssue.pdf.
Robin, Vicki, and Joe Dominguez. Your money or your life: 9 steps to transforming your relationship with money and achieving financial independence: Fully revised and updated for 2018. Penguin, 2008.
Stanley, Thomas J. The millionaire next door: The surprising secrets of America's wealthy. Taylor Trade Publishing, 1996.
Annalisa Crannell is retiring after three decades at Franklin & Marshall. As she transitions into the next phase, she looks fondly back on the book she co edited with Curtis Bennett: “Starting Our Careers: A Collection of Essays and Advice on Professional Development from the Young Mathematicians’ Network”.