The Simple Life: Managing Our Living Expenses

I frequent hardwarezone forums and get involved in discussions with the forummers there in the Money section over personal finance and it is interesting to see the questions being asked as it reflected how I too was still learning the ropes of personal finance and managing my hard-earned money.

One of the interesting issues that crops up now and then is financial freedom.

What really is financial freedom?

Different people look at it differently but if you have read some of my earlier posts, I see it as popularised by Robert Kiyosaki, passive income > total expenses. This is not a totally original concept, even Clason had expounded on such concepts in his book, "The Richest Man in Babylon".

My previous post talked about playing the Cash Flow game. I am not endorsing that game but it is one of the few games (the other I heard about is FQ but I have not got a chance to play it) that teaches about personal finance in a relatively fun way.

I played the Cash Flow game twice at Settler's Cafe @ Buona Vista and what the game demonstrated was that even with a low paying job, one could get out of the Rat Race by getting into small deals where finally financial freedom is achieved with passive income > total expenses.

This is a game and some aspects are not practicable but the interesting thing I learn was that we tend to be fixated over the income part of the financial freedom equation. E.g. I would be financially free if I hit $1.5 million TOTO on Thursday (hmmm... remind me to buy TOTO later during lunch..hahaha)

But let's re-examine the paradigm, i.e. if we keeps total expenses low, then we do not need a very high passive income to be financially free.

Hence, we tend to focus on how to get more passive income which is good. But how about focusing on the expense part?

• Can we live a simpler life?
• Can we cook at home on weekends to have nutritious, healthy and value-for-money meals?
• Can we walk, take bus/mrt/taxi instead of getting a car?
• If we need transport can we buy a panel van vs a car?
• Do we blow our bonuses on an overseas trip to Australia or just visit Vietnam instead?

I see financial freedom as an equation and we need to work on both the income and the expenses side. Our daily, weekly, monthly choices in earning, saving and spending makes a lot of difference our overall financial freedom!

Manage our living expenses and we may find ourselves reaching our financial freedom sooner than later!