Posted: 23 Jan 2009 07:56 PM CST
The path towards financial freedom is known to you. Live within your means (and sometimes expectations), save and invest, grow and protect your means.
How we live out these principles is influenced largely by how we were brought up. How our environment, experiences and encounters with people in the way they earn, spend and save shape our own financial habits that bring us closer or further towards the goal of being financially free.
1. Environment
We know our environment affects us a lot. While being born into a specific set of circumstances doesn’t mean our fates are already determined, but it does play a big part in affecting how we have when it comes to money and finances.
If everyone around you is constantly trapped in the work-earn-spend-work cycle or “rat race”, there will be strong forces that lure you into thinking that is the only way in life. We are to be bound in debt, forever working even beyond retirement age to pay for our living expenses and for our homes.
If you are in an environment where family members were able to retire comfortably, both asset rich in owning their own homes plus investment income from their financial assets. You are influenced to think that this is a possibility to strive for.
No matter what our environments, the important thing is to learn from it and to avoid repeating the behaviours that pull you away from financial freedom, e.g. spending almost all of your income, constantly comparing against the neighbours, relatives and friends and never paying off your home and taking 30+ years home loan and yet spending large amounts of disposable income on lifestyle expenditures and not on investments.
2. Experiences
The experiences you gain from doing things also shape your habits towards or away from financial freedom. I have lost money before in buying lifestyle items I did not understand or need. I lost a few thousands on a timeshare program when I was younger and much more ignorant about financial matters. I have made realised losses on the stock market in 2008 because I confused speculation and investment. I have made unrealised losses on foreign exchange fixed deposits due to foreign exchange losses when the foreign currency dropped very quickly in the short span of a few months.
Each time I lost money, I started to learn why it occurred. I count my blessings that the losses, while costly, were not catastrophic like a black swan event. It made me slightly poorer after the loss but put me on a firmer foundation towards financial freedom. It made me learn more about myself. How greed and fear coupled with ignorance and sometimes plain lack of common sense led to me paying tuition fees to the market.
Your own experiences shape you. It may be a positive or negative experience. Unless it costs you life and limb, you need to consider how that experience makes you understand yourself and the world a little bit better. I recall reading the book by a former Jewish Holocaust survivor. In it, he shared how even in the most terrible times for some of the inmates of the death-camps, there could be hope in midst the horrendous suffering at the hands of the Nazi camp guards. The older I get, the more I realise how true this is. What happened, happened. What is more important is how am I going to react to it, and how do I go about making things better?
3. Encounters
Your environment and experiences are derived from the countless encounters you have with people who come into your lives. Some of these encounters are brief and fleeting, while others are long and lingering. The people you meet in your life can have a profound impact on your journey towards financial freedom.
Take your family. You spend most of your formative years with them. They shape many of your attitudes and beliefs. Take your school/class mates, they are your peers and we tend to see the positive and negative in ourselves in them. Take those people who you encounter for a brief time but leave such a lasting impact that you never forget them.
As a toastmaster (on temporary sabbatical) I have encountered people whose charm and eloquence was so compelling that I have benchmarked myself against them when it comes to public speaking. I have been touched by my friend JW, who is truly a renaissance man. He was the one whose simple words of wisdom taught me to establish work-life balance in that after work, there is a whole new world to explore in personal interests, personal development and in networking.
I learn from my ex-colleague and now good friend CH, on the power of professionalism and hard work. I learn from another ex-colleague and friend KS about how markets work and a regional perspective on issues. I learn from CK about family and being a family man, in his selflessness in tending to his father even while taking care of his family. I learn more about financial freedom from them even as they also learn from me. The encounters we have leave us a lasting bond that sees us walk together towards financial freedom.
Who has touched you towards financial freedom
In your journey towards financial freedom, what has your environment been? What were your experiences like and who did you encounter that made you learn something about yourself and financial freedom?
Share with Panzer in the comments section.
Be well and prosper.