R for Good Academy aims to teach how Data Science and Programming skills can enhance decision-making in finances, personal and career development, and overall quality of life. Currently, the main focus of the academy’s content revolves around data-driven personal finances. We are starting with a series of posts titled R for Good Personal Finances.
The R for Good Personal Finances series offers a comprehensive guide to monitoring, analysing, and planning personal finances, whether for an individual or an entire household. A key component of this framework is an accompanying R4GoodPersonalFinances R package. This open-source software is available for use anytime, anywhere, completely free of charge.
For whom is the R for Good Personal Finances academy?
This framework is designed for you if…
You are unsure about where to start with your personal finances. Uncertain about how to assess your financial situation or on what to base your financial decisions on. Unsure about ways to improve your finances to ensure they remain in good shape throughout your life and beyond.
You don’t want to worry about your family’s financial future, including your retirement, and whether you’ve been saving enough for it.
You want to have a long-term plan for your personal finances, starting now and continuing through your household’s entire lifespan.
You want to avoid making mistakes that can have significant, irreversible consequences on your personal finances.
You plan to retire comfortably—early, late, or just in time. Also, if you are considering FIRE as your goal (Financial Independence, Early Retirement).
You want to efficiently monitor and manage your household’s finances without spending too much time and effort.
You aim to find the right balance between spending and saving throughout your life.
You are looking for a general method to invest your savings in a simple, easy-to-follow, yet cost-effective and efficient way.
On one hand, you want to avoid excessive risks in your investments. On the other hand, you acknowledge that some risk is always present. Therefore, you take a reasonable amount of risk to improve your financial future.
You don’t have time to study financial topics yourself, but you still want to make sense of the plethora of mutually exclusive recommendations and social media noise.
You have tried traditional retirement planning software, but found it too complex or irrelevant to your country or personal financial situation. You seek a simple yet effective system to monitor and plan your personal finances throughout your life.
You are confused by different recommendations about how much to save or how to invest, and you wonder what academia has to say about it.
What will you learn?
After studying the R for Good Personal Finances material, you will be equipped to answer these questions on your own:
What are the top three ultimate, long-term risks in personal finances and how can they be mitigated?
What aspects of personal finances should or shouldn’t you optimize over your lifetime (time, wealth, spending, utility, portfolio success rate)? Do you know what the single, universal, ultimate goal in most people’s personal finances is?
How can you optimize your personal finances throughout your lifetime? How much do you currently spend, and how much should you be spending? Less? More? If more, how much more, and for what reasons? What is the optimal level of spending?
When should your retirement begin? Early, but not too early? Late, but not too late? Do you have enough savings? What should you do with them? Should you invest? If so, in what should you invest to balance the risks with your household’s risk aversion? How can you invest your savings in a way that is backed by academic research, relatively safe, and effective in the long term?
How could the outcomes change in different scenarios based on the decisions you make? How could you make informed decisions with your long-term goals in mind? What factors would be the most important, and which would not?
What are the common myths about personal finances, such as the 4% Safe Withdrawal Rate or the 10% saving rate? How should one navigate the numerous conflicting recommendations from popular authors, influencers, traditional media, social media, and even academia?
What skills will you gain?
There are three primary skill groups you will develop by studying the content at R for Good Personal Finances Academy:
You will be able to predict the best time to retire or achieve financial freedom. This means you won’t have to work for money anymore, although you can continue working if you choose to.
You will be able to estimate the optimal level of your spending, including both essential and non-essential expenses. This will help you understand how much you can afford to spend based on your personal financial situation.
With this framework, you will be able to invest your savings in an optimal or near-optimal manner. It will help you determine the best asset allocation for your specific situation, taking into account your personal or household’s risk aversion.
How I would be able to use those skills?
I will show you how to use our free and open-source R4GoodPersonalFinance R package that makes the whole process of managing personal finances much easier and more efficient. You will learn how to use this software dedicated to personal finance problems and perform simulations on your own, without being forced to share your sensitive financial data.
Once you learn to use our R package, you’ll be able to perform all calculations, generate reports, and run simulations on your data using your own computer. You can adjust the model’s assumptions to explore how different scenarios impact your personal finances. This will enable you to evaluate important financial decisions from a long-term perspective.
The package is designed as a comprehensive tool for monitoring and planning personal finances. Its features will be released gradually, starting with a focus on long-term financial planning.
For whom is the R4GoodPersonalFinances R package?
For those interested in acquiring new data science and programming skills while also learning to manage their personal finances.
For those who have more important tasks than constantly keeping track of their money yet are willing to regularly review their personal finance reports and simulations in an automated way. We review our finances monthly using our R package and recommend this as the standard approach.
For those who find traditional retirement planning or personal finance software too rigid, and want more customizable solution. Typical software might be too focused on a single country or limited in handling only one or two household members. With our software it doesn’t matter where you live or what your primary currency is. Whether you have savings or transactions in multiple foreign currencies, are single, or have a spouse or partner, this software can support you. It accommodates households of any size, with income and expense streams for each member, regardless of their age. You can use it with various retirement accounts, across diverse tax settings, and alongside different social security options.
For those who prefer to keep their financial data private, all analyses can be done locally on your computer or laptop. You will never have to share your bank or broker credentials.
For those who need to organize their expenses into multiple categories and types, occasionally there are significant expenses that occur infrequently, such as buying a car or a house. Additionally, you may have either no income or multiple income streams. Each cash flow stream can be initiated or changed by events related to any household member, such as age milestones, the start of retirement, or the beginning of Social Security benefits.
For those looking to run simulations quickly with reasonable default settings. You can start working immediately and always have the option to adjust parameters. Customize scenarios to meet your specific situations, needs, and goals.
For those who want to save time by automatically pulling data from our API (as currency exchange rates, bond values, ETF share prices, and metrics like CAPE). Please note that a future paid subscription might be required to cover our costs for this service.
For those who value transparency in the tools they use, we have open-sourced our package’s code. This allows you to review its internal workings or contribute to its development by enhancing its features. The package is available free of charge, indefinitely, under the MIT license. This license also permits use for commercial purposes. Please note that using this package is at your own risk; your decisions are independent, and finances and investments always carry some level of risk.
One might argue that this method is unsuitable for individuals with low incomes relative to their essential costs or for those heavily in debt, as they have little or no potential for savings. We believe this is not true. Even in such situations, it’s crucial to understand what needs to be done long-term. The features for monitoring household finances can be extremely helpful for gaining better control over personal finances.
Who might not find this academy suitable?
We believe this framework is quite universal and could serve people worldwide. However, we recognize that it may not be suitable for everyone.
It isn’t suitable for those unwilling to dedicate time and effort to understand their personal finances better and acquire basic data science and programming skills. However, even without delving into technical details, you can still gain a lot from understanding the high-level concepts. Over time, we plan to also provide a Graphical User Interface (GUI) overlay that will not require any direct interaction with the package code.
It’s not for active investors with complex portfolios. It’s unsuitable for those who invest in assets with completely unpredictable returns. It’s also not for people who need more than a mix of risky and safe asset classes in their portfolio.
