Work-earn-spend-work Cycle

The endless cycle
You wake up. You wash up. You start the endless cycle of working, earning, spending and then back to working again. This cycle appears to be never ending, to consume our very souls as we wake up and go on autopilot. You wake up. You wash up. You start the endless cycle of working, earning, spending and then back to working again. You wake up. You wash up. You start the endless cycle of working, earning, spending and then back to working again.

STOP!

Pause...

Reflect...

Is this my life? Is this your life? Is this our lives?

Do you want to change?

Are you willing to do what it takes to make a change?

Then read on. :-)


Breaking free
Unless you were given a large inheritance or were born rich, you have to work for a living. If you want to do something else other than work (especially in the job you dislike), then you need to CHANGE in order to break free from what is universally known as the rat-race or working life.

The work-earn-spend-work cycle is necessary for us to feel valuable in society. To contribute by giving of our productive effort and to receive returns through the monthly paycheck. However, this cycle continues to perpetuate itself where you generally have to trade time for money. Each of our 24 hours or 8-10 hours or work a day are valued differently by different employers. Some of you could be making close to what our Ministers make, i.e. a few million Singapore dollars a year. Some of you could be making close to minimum wage or McWage of less than $1,000 a month or $12,000 a year. Some of you are still studying and haven't worked in a permanent job.

If you wish to break free of the rat-race, then you need to consider changing what you are doing in this cycle. I have come to realise that in order for me not to be still caught in this cycle by the time I am 67 or eligible to draw out my CPF monies, then I need to make some adjustments.


Adjusting your spending
This is one of the areas where we have the most control of. Some of you may think that you have power over your earning capacity. If you are able to work harder or longer or get promoted or clinch that bonus, you can improve you pay. But having achieved that, many of you may be tempted to spend more and you are back to your original position.

Adjusting your spending is one of the most direct ways you can control. In doing so, you can save more. Life is not about consumerism. If you do not agree with this, then you will have to work very hard at always increasing your earning capacity in order to save more if your spending pattern stays the same.

If you are able to control your spending, to consistently spend below your income, you will find that extra cash every month to save, save and save! These savings are the seeds of your financial freedom because it is through savings prudently allocated into investments that will yield you the returns passively to help you slowly be less reliant on your earned income.

With savings you can pay off debt. With savings you can have a buffer in case of emergency expenses. With savings you can withstand even short-term periods if 1 spouse's income becomes at risk. With savings you have more flexibility in financial planning.

When do you want to retire
Your retirement age is controlled by the Central Provident Fund Board if you only rely on the CPF system. Having savings IN ADDITION to CPF savings, you start to gain control over when and how you can retire. My goal is to develop my own retirement fund outside of the CPF system so that I can choose to retire when my investments have grown enough to generate a stream of recurring income that covers my living expenses. Having established a relatively simple life, I can live at a relatively low income level if I need to.

I don't need to keep up with the Joneses. My working watch is a Hamilton watch received from Mindef upon completion of my 10 year reservist obligations. I only have 2 pairs of black working shoes that I alternate each day. I have taken public transport as my main mode of transportation for the past 12 years. I live simply but I live well. My pleasures are simple. Books from the library. An occasional McDonald's sundae or cone. Movies. I take plenty of yummy fresh fruits and enjoy the occasional cup of Coffee Bean latte. I am happy with my simple life.

Rolexes don't move me. Designer clothes don't excite me. Expensive renovations don't thrill me.

Health and happiness through simplicity in life gets me going.

Family and friends makes me happy.

What are you willing to do to get out of the work-earn-spend-work cycle?

Be well and prosper.