How much is Enough?

In the world today, we are being brainwashed to think that we should have more and more. We should have more things, more money, more social media likes, more food, more gadgets, more of everything.

Success in life is often judged by external indicators like luxury items, popularity, salary, or status items. But, in reality, these external indicators are actually poor guideposts because they are not the real indicator of true wealth, contentment or positive lifestyles. The reality behind the shiny facade is often debt, money worries, stress, poor health, and dysfunctional relationships.

Understanding the reality, we need to reject this acquisition mindset and the consumerism that everyone is being caught up in. Thus, in order to restore balance as we pull back from our lifestyles of excess, we should strive for a more moderate lifestyle and care less about what other people think about us. With this, we may experience greater fulfillment and happiness.

Never enough

The problem with the current society is what we have is never enough. We would want more of everything. Collectively we are better off and have more than any generation before us, but it still isn’t enough. Even when we have everything we need, we are told that we must have better, upgraded versions of our endless possessions.

The race for more is a vicious cycle. The more we buy, the higher our expenses will be. Thus we need to work harder and longer to pay for these expenses, resulting in less time to enjoy life and more stress. Then, we would spend for more goods and services to compensate and make us feel better. And the cycle repeats again and again.

Striving for a more simple life

Instead of running the never-ending race for more, it would be better for us to strive for a more simple and moderate life. 

Life is not about how fast you get to the end. Rather, it is a marathon that we would take time to enjoy the scenery and companionship of your family and friends.

By understanding that more does not mean better is one of the first steps. There are many times that when we take things easy, we would be much happier.

Take a step back and stop everything that you are striving for. Take your time to look into all these goals and activities. Do you really need them or it is just a wants? Would it really make you happier? Does it improve your life by a large margin? Is there something similar that can give you just as much happiness?

Take an example of myself. My dream car when I was young was actually a Honda Civic. But the cost of buying that new car then was about RM 100,000 which is an exorbitant amount of money that I could not afford. So, instead of working endlessly to pay for the installments, I look into other alternatives that are more affordable. In the end, I bought a new 2003 Perodua Kelisa (which I still own until today). This Kelisa is still as good as it used to be and even until now, I am happy with it and have no thought of selling it, even if the one buyer is willing to pay double or triple the current price.

This article is first published in Radical Ringgit.

Needs and Wants

A need is something that a person must have in order to continue to survive. The basic needs of life are food, water, clothing and shelter. We also need rest, health, love, friends, family, security, etc.

A want is a choice. It is a desire which a person may or may not get and life goes on, whatever the outcome may be.

To differentiate a need and a want, let's us look at the following example.

We need to eat in order to continue living. But when we choose what to eat, it becomes more of a want than a need. For health reason, we should be eating fruits and vegetables but in our mind, we would want to eat steaks and other types of meats.

To be able to differentiate both needs and wants would be essential in your journey to financial freedom. To be able to control and not giving into all your wants, you would be able to save a lot of money.

Financial Freedom

Financial freedom is not a myth. It is something achievable but required a lot of discipline.

Financial freedom means that you get to make life decisions with being stressed up by the financial impact of that decision. 

For example, you can make the following life decisions such as quit your day job today and will still be able to support yourself financially. 

Do you want that? I'm sure you do. 

Remember, I'm not asking you to resign from your job today. I'm just telling you to be prepared for a worst-case scenario. 

Step 1 

Make a commitment to

1. Minimise the 'wants' expenses 

2. ‎Minimise debts 3. ‎Increase income

and stick with this commitment. 

Step 2 

Doa financial check-up. List down all your incomes, debts and your current monthly expenses. Go one step further by categorised your expenses as 'wants' or 'needs'. 

Step 3 

Start making a budget. For me, an app that tracks all my money (incomes, expenses plus budgeting) is totally essential. Remove expenses for 'wants' or keep it to the bare minimum. 

Step 4 

Keep to your budget and save as much as you can. The keyword here is frugal - spend less than what you can earn 

Step 5 

Save a minimum of 20% of your total monthly saving for emergency funds and pump in the balance 80% into your lowest amount of outstanding credit card. Repeat until all credit cards outstanding have been paid off. 

To bring this one step further, try not to use your credit card to pay for anything. If there isn't any choice, make sure to clear it off at the end of the month. 

Step 6 

Set aside an emergency fund of at least a month of your monthly salary. The best would be to have a saving of at least 3-6 months of your salary. 

Step 7 

Start investing your additional saving into low-risk investments, such as ASB, ASM and ASW. 

Investing is better than keeping your money in the bank. The interest that the bank is giving now is usually less than 1% per annum whereas our inflation rate is around 3%. 

Step 8 

Stay frugal. 

If you are interested in higher-risk investment, you can check out P2P lending. I am making a roll now with Fundaztic (ROI of 57% now). Read about it here.