Financial freedom - The Choices You Make

Financial freedom is a journey and not a destination. So long as you spend within your means, save and invest and enjoy the ride towards reaching your goal, you are doing what is necessary to achieve higher net worth for now and for the future.

For us to stay on the path towards financial freedom, it is not the big decisions you make now and then but rather the small, controllable decisions you make each and every day that is leveraged to positively impact you on your road towards being financially free.

Spend or Save: You Decide!
It is not rocket science. The key decision every day to move yourself towards financial freedom is the decision all of us face: spend or save?

Sounds deceptively simple, doesn't it? Experience has taught us that it is the simple things done consistently over the long term that yields superlative results. The key to taking that positive step towards financial freedom is to build up your financial habit of making a decision to save more than the decision to spend.

It is not a 100% spend or 100% save strategy. It is simply recognising that if you tilt your decisions towards saving more than spending, i.e. to live within your means, you will find your nest-egg comprising investible savings and investments growing.

The story of the rickety old computer chair and the PDA phone
As I type this, I am sitting on a old computer swivel chair at home. It is easily 3 years old and I bought it for less than $100 at IKEA. Now, it is due for replacement and I intend to replace it. The trick is that I am replacing it when it goes completely kaput or breaks down completely. Even as it was showing minor signs of wear and tear but could still function safely, I continued to use it and use it and use it!

Look at the things around your house? If it can be used, just use it until it breaks down and then change or buy a new one. By doing this you end up delaying your purchases and delaying spending. The concept of time value of money means when you save more now, it translates into a higher return later. My PDA handphone is the same. I have used it for close to 2 years and it still works well. I have been tempted to change it given how fast new phone and pda models come into the marketplace but I resisted this temptation.

Some of you may scoff, aiyo Panzer, why so stingy? Isn't spending part of living? Those of you who scoff at me are also right. I don't dictate how you should live your life. Remember, it's not about who is right or wrong just how your behaviour between choosing to spend or save affects your goals towards financial freedom. If you operate on the assumption that you will work until the statutory retirement age and rely on your CPF plus home to retire. By all means do it and tilt your spending/saving ratio to the point that satisfies you.

If, however, but no small coincidence, you come to my blog because you, like myself, WANT TO RETIRE WAY BEFORE THE STATUTORY RETIREMENT AGE, then your decision to save/spend every day will have an impact on when you can do so.

The journey of a thousand miles start with a single step
Wise sages have opined that the journey of a thousand miles starts with a single step. I'll add that single step has to be followed consistently by another step, and another, and another before we come to our destination of being financially free, where before our statutory retirement age, we can rely on our passive income for living expenses and do whatever we want with our time.

But in the meantime, enjoy each step you take towards financial freedom. Do enjoy yourself a little as Chinese New Year is around the corner and I wish you, as always, be well and prosper!