Do You Know the Meaning of Financial Freedom?

I want to be financially free!

This is probably the dream of everyone. What exactly is financial freedom? How do you achieve it?

By convention via a linear pathway, we were taught to study hard, get good grades, enrol into good schools, go to the University. After graduation, you find a good-paying job and then work work work to climb up up up the corporate ladder. 

After going through all the stressful periods farming your hard earned money, you then feel the urge to spend spend spend to satisfy your material needs, pamper yourself like royalty on holidays, buy bigger houses, cash in on the latest car models etc. After splurging on those big-ticket items, you then feel the pinch and obediently goes back to work to earn back the money again. Sounds familiar? 

Indeed, most people trade the bulk of their time for a paycheck. I'd term this a 'vicious cycle in perpetuity'. In other words, it is a self-imposed rat race. 

What is financial freedom?
As the name suggests, it means being free financially where you can maintain your lifestyle without worrying about a monthly paycheck, bills, food and entertainment expenses etc. 

Financial freedom is not merely about having more money. We have seen wealthy people fall from grace and become bankrupts, high-income earners who had to slog/borrow/beg to pay off debts or people who seems to be rich on the outside but actually poor on the inside.

On the flip side, we also witness ordinary people who earns modestly and lives simply. Despite that, they are able to do what they like. They work because they want to work, not because they need to work. They can afford a yearly holiday trip and some occasional splurges yet don't feel a pinch in their wallet.

Achieving financial freedom is about how you make use of money wisely with a peace of mind.

If money is not an issue, what would you do?
To understand financial freedom, you need to ask yourself the question above.

Would you travel around the world?
Would you start a new business?
Would you spend more time with your loved ones? 
Would you spend your time volunteering and help the needy? 
Or would you take on new hobbies?

Being financially free gives you these options. 

Take control of your life
To achieve financial freedom, here are some simple steps you need to take:
- Avoid debts
- Spend less than what you earn
- Invest your spare cash
- Generate multiple income streams 
- Set your financial goals. Know what you are working towards to
- The earlier you start, the better
- Be grateful with what you have, don't compare with others

What does financial freedom means to you?
Building wealth is just part of the equation. There are many more aspects in life to appreciate such as building your health, happiness, dreams.

For me, financial freedom is more than just financials. It means having the time of freedom to do what I want to do. Instead of material possessions, I prefer to have freedom to spend time with my loved ones. Having the freedom to change my career, start a new business, take some time off to gain new perspectives through meditation, pursue my passion and dreams, travel the world to learn more about what this splendid world has to offer and celebrate for. 

It’s not about what I choose to do, it’s about having the freedom to choose who I want to be or do what I want in my life fulfillingly and meaningfully. 

Go forth and plan your financial journey. Believe in yourself and you will reap the fruits of labour eventually. 

I would love to hear your definition of financial freedom! I would appreciate if you could leave your comments below :)

Cheers, 
EzHuat

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YoloHuat's Journey with Money

I learnt the importance of money through the hard way, having grown up without much. Money isn't everything but money gives you choices and freedom. I truly understood, after earning my own keep, that money does buy happiness because once you have money, you don't worry about money anymore. 

Money can also buy you opportunities to make fond memories with your loved ones - a great example is travelling overseas to discover new places, food, and culture. Last year, I spent over a week in Croatia with my husband, and earlier this year, I chased Northern Lights in secluded areas of Sweden with my best friend (because they said 2016 is the last year when you can catch Northern Lights easily). I’m already dreaming about where my wanderlust will take me to next year. :)

Of course, the first thing I actually did back then when I had some extra money in my pocket was to pay off my student debt, which was accruing interest at a hefty rate of 4.75% - hey I think of myself as a triple-A credit (PLUS my latest credit report also says so)! :p I would rather pay myself than pay the bank. So I spent my first year out of college paying off the loan as quickly as I could. Only when I cleared about 90% of the outstanding balance did I start thinking about investing, because even if I lost money in the market it would not affect my ability to repay the rest of the loan, nor will it affect my daily life. (Please do read GoHuat’s post on how important spare cash is.) 

So how did I start investing? Very simple. From the very start, I knew I did not want to worry about money. I did not want to get myself lost in the rat race for a good 40 years of my life, because you only live once. Somehow I stumbled into a job in the financial sector, and from there I started picking up some knowledge about investing and using money to grow money. The rest was history. My first stock buys in late 2013 were Nikko AM STI ETF and SGREIT. I remember thinking to myself then that I want to 'own properties along the Orchard Road stretch because Orchard Road will always be around', so I went and bought OUEHT as well. Hahaha. These days, my investment strategy is a little more refined (as I would like to convince myself). I primarily invest for income, although I do take a punt sometimes when I think there's some opportunity. The punting has not been always successful, but let’s leave this for another time. ;) 

Back to talking about money per se, I can’t emphasise enough how important money management is. You could very well be earning six figures but have less than a grand in your savings account. I use an app to record my expenses and stay on track on my budget, and I find that not indulging in food or transport, my biggest daily needs, help a lot in saving money. So, like my friends here, I did not change my basic lifestyle. In fact, I like taking public transport because it lets me daydream, read, email, whatsapp, and Facebook when I’m on the go. I do complain about the crowd and the MRT breakdowns, but really, do I want to ride a car in comfort when I am young and healthy in my 20s, 30s, or even 40s, but find myself having no choice but to ride the bus and MRT when I am old and fragile in my 60s and 70s? The mid to late 20s is definitely the best time in your life to be saving as much as you can. I know that this stage of one’s life is also when you are tempted by materialism. Believe me, I’ve been through that as well. But I’m thankful that I realised early that it is a vicious cycle - the satisfaction is only fleeting and you end up wanting more and more.

I adopted the moniker YoloHuat - why? Because I strongly believe that because you only live once, you gotta live on your terms and never be a slave to money or work or material goods. 

This is my definition of yolo, thanks for reading and feel free to share your thoughts and experiences. Huat ah!

Cheers,

YoloHuat

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How EzHuat got started...

Singapore so expensive! Living cost so high! My salary so low! I need a car! I want the latest iPhone 7! I want to travel! Money no enough!!! Ahhhh~

Feeling squeezed? This is the new normal.

Very often, we hear these common grouses in our daily lives. Based on the latest report by the Economist Intelligence Unit (EIU), Singapore is indeed one of the most expensive cities to live in[1]. Clearly, this report is so conspicuous that it resonates highly amongst the majority sandwiched class of Singaporeans. Many find themselves caught in the seemingly endless rat race in pursuit of higher quality of living while some laggards struggle to keep up with the fast pace amidst the growing economy. Likewise, the onslaught of these led us to blur the line between needs and wants. With rising cost and inflation, it is no surprise that Singaporeans are one of the most overworked, clocking more than 2,370 hours per year[2]!

After a balance check, you start to panic and worry. It is always easy to say - you must save, you must invest, you must this, you must that! This is what you've probably heard umpteen times and all of the sudden everyone seems to be your ‘financial consultant’. But in reality, how many people actually practice what they preach, including those 'financial consultant' themselves? The fact of the matter is that not many people can instill that level of discipline simply because we live in a consumerism and materialism society.  

Why am I Writing a Blog?

Basically, my purpose of writing this blog is to share and chronicle my financial journey – same for GoHuat and YoloHuat. In addition, we want to give our readers three perspectives in a blog. We would love to hear from you too! In my first blog post, I will share how I started to embark on the path to financial prosperity. My goal is to attain early retirement before 50 or earlier. With proper and structured planning, I believe it is within anyone's reach. Instead of working hard for money, why not let money work hard for me? Sounds cool?

Essentially, it is easy to huat if you commit yourself and just do it! :)

My Investing Journey

Okay let’s just started. My investing journey began in 2013. My very good friend, GoHuat was the one who piqued my interest in investments (go read GoHuat's post!). Once you put your mind and soul to plant the first seed, the rest is history!

 

At the initial phase, I knew nuts about investments. All I knew was to save because I wasn’t born with a silver spoon and was brought up in a frugal lifestyle. My father is the sole breadwinner and my mother, a housewife. My parents taught me the value of saving for rainy days as they had went through tough times in the early days. Their perseverance and hard work made me what I am today. Innately, I grew up with those values and saving became the cornerstone of my early financial journey. I studied hard and graduated from NUS. Eventually, I started my career in the public sector.

Ever since I started to earn my own keep, it dawned upon me that saving and putting your money in the bank is going to take a very long time to achieve my financial goals. Simply because bank offers very meagre interest rates. I needed something else to grow my money better and faster.

As I have zero finance background, I attended various investment related courses and platforms such as SGX seminars, SIAS investment week, read The Straits Times Invest and numerous financial blogs to gain a better understanding and get acquainted with financial terms. As a result, the stock market came to my attention. It is one of the means to generate additional income. It took me more than 10 months of ‘homework’ before I bought my first two blue-chip counters in late 2013 – SingTel and Keppel Corp. Gradually, I developed and fine-tuned my own financial system and risk appetite. 

What’s My Personal Financial System?

In fact, there isn’t much change to my lifestyle. I still lived the same for the past 20 odd years. I saved and spent money wisely. Similar to GoHuat, I am contented with hawker fare and love home-cooked meals. I take the public transport even though I can afford to buy a car now. Occasionally, I indulged in café/restaurant with my foodie girlfriend and in social gatherings.

In spite of my thriftiness, I have a very lovely and supportive girlfriend who understands me well because she knows that I am building a solid foundation for our future. She too, is simple and prudent. Indeed, I am fortunate to have met this wonderful lady because she frowns when it comes to shopping! (A boon to guys eh! hahaha :P). Besides, my girlfriend always jokes that she will find me when it comes to value-for-money lobangs! 

The key is: You must discern between needs and wants. It is a crucial balancing act.

 

In order to have better sight of my cashflow, I tracked my expenses and income consistently for more than three years. Every quarter, I would reconcile the records and work out my personal financial report. This allows me to have a better overview of my expenses and income for the year. It has benefitted me a lot. I used the data to assess how I can trim my expenses so that I have more savings to plough into investments and explore new areas to increase my income.

At my peak, I managed to save 80% of my overall income minus all expenses for the entire year without comprising my lifestyle. What! 80%? Are you sure?! Yup, that’s the merit of tracking your balance sheet because it gives you greater control. The 80% savings was then compartmentalised into stocks, emergency fund and my investing coffer. The reason why I only have these categories is because I am still young and able to take on more risks to seize any golden opportunities. That being said, youth is the one of the most valuable assets in investing. So my advice to my young readers is: Save reasonably hard while you are young! 

It is easy to say this but not easy to do it because we are constantly thinking of enjoying life first while we are young and working in a stressful environment i.e. the YOLO mentality. To be honest, it is hard to resist temptation when airlines are dangling cheap airfare promotions especially when I love to travel! 

Additionally, I ensure that I ‘pay’ myself first whenever I receive my monthly salary and clear all my bills on time so that I am debt-free. Once you’ve instill this habit, you’ll be surprised at the results. The reason is simple; doing this will give you more leverage to tap on more opportunities to grow more money. Period.

Most importantly, you must have the discipline and you reap what you sow.

What’s Next after Saving?

It is an open secret that Singapore banks give very low interest rates. Ideally, it is not advisable to park my cash there. To grow my money, I had to leverage on the power of compounding effect to build a sizeable chunk of income for investing.

In my next blog post, I will be sharing “What’s next after saving?”

I hope you enjoy my maiden post and stay tuned for more tips and strategies to size up your finance war chest! 

Please don’t hesitate to leave your comments and share your experiences. We get better and stronger by learning from one another!

Together, it can be easy to huat!

Cheers,

EzHuat

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[1] TODAYonline, 10 March 2016: Singapore ranked world’s most expensive city for 3^rd year running; http://www.todayonline.com/singapore/singapore-worlds-most-expensive-city-third-year-row-says-eiu-report

[2] Ministry of Manpower, Singapore; http://stats.mom.gov.sg/Pages/Hours-Worked-Summary-Table.aspx

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