Posted: 07 Apr 2008 03:31 AM CDT
Flickr photo by mappi1322.
Instant noodles and financial freedom
One of the three core pillars that supports the framework for financial freedom is living within your means. This means different things to different people. Some young people ask in forums how they can save for the future and yet not compromise on their living in terms of lifestyle spending. It is indeed a challenge to juggle between living and spending for now verus denying self and saving for tomorrow.
You may think that to live within your means is to become extremely frugal and thrifty. That helps you save money but can make you sick because if you take it to the logical extreme, it could be eating instant noodles everyday. Cheap but not satisfying and definitely not nourishing. Achieving financial freedom by working on the “living within your means” part means spending on things that are important to you that is more of a need and less than a want.
Wants are UNLIMITED. Needs are limited.
The difference between a need and a want
I have come to realise that in order to have some degree of control over your spending, you need to be very clear about your needs and wants. How fast or slow you achieve your goal of financial freedom is driven by how you see something as a need or want. The more you make out wants to be needs, the more you will spend. For example, you need to eat to live. To go without food means starving yourself. How do you go about filling this need? Cook at home with housebrands? Eat at nearby coffeeshop or food court? Grab the nearest McDonalds meal? Go share some pizza? Try Tung Lok for sharksfin? You decide on how your need is met.
You need to eat. But where do you go to fulfil that need can make you cross the line between a want/need. For a nourishing meal, my breakfast consists of rolled-oats that costs me about $5 a pack that lasts me a couple of weeks. For $5, I could blow it all on a McDonalds’ breakfast set. Where do I draw the line? For me, a combination of discipline and keep my weight and cholestrol level in check means rolled oats satisfies my breakfast needs from Mondays to Fridays. You don’t have to do this to be living within your means. You just need to be conscious where you are spending your money and see if you can simplify by removing some of the frills.
Consumerism is built into Singaporean DNA
Globalisation brings with it greater access to the media telling you what is the next great thing for you to CONSUME. Our economy is built on the concept of satisfying needs and wants of individuals, organisations and countries.
When you ask someone who stays in Singapore what are the national pastimes. Many will say shopping and eating. Consumption activities. It is a little wonder living within our means remains a challenge for many of us.
I believe that within all of us, we can make a difference. The difference is to avoid falling into the consumerism trap and to spend LESS than we EARN. Once you have developed a habit of doing that, you will realise it frees you to look for VALUE when you consume goods and services and make a greater difference between knowing what you NEED and what you want.
Can you achieve financial freedom and spend more than 100% of your income on your lifestyle?
The answer is clear. You cannot.
Decide if you want to achieve financial freedom.
You are the one in charge.
You are the decision maker.
Be well and prosper.