Friday, June 3, 2016

What People Misunderstood About Financial Independence - Part 2

Contrary to popular belief, you don't have to have a degree in economics or finance in order to achieve financial independence. There are a lot of courses out there that sells on scheme on how to get rich quickly but they might not be feasible to most people. You'll be surprised to learn that obtaining financial independence is easier than it looks but most people are not willing to spend an effort on it.

In my previous post, I wrote on a story of what I did during one of the weekends where our family went to the neighboring country to purchase some milk powders and diapers. By doing so, we are able to save as much as $50/month. As expected, there will be some people who applaud while others who scoff at what we were doing. The amount of savings amounted to about 1.7% of our monthly expenses so you can see that they are relatively immaterial. Still, every savings count at this point of wealth accumulation in our journey.

A great sage once said: "Never look down on money, not even trivial ones, unless there's money on the floor. That is one sure path to financial independence."


Today, I went to a survey conducted from a research house. The timing of the survey was after office hours, so while everyone was having a drink on a Friday night, I chose to spend my Friday evening attending the 2 hours survey, earning a reward of $150. While I can't disclose the specifics on the survey conducted, it is a pretty fun session involving psychology. We even had a 30 min yoga mind relaxing session and had to write our thoughts thereafter. That was it. These side income of $150 earned translates to about 5% of our monthly expenses.

"Expanding your earning horizon will help accelerate your accumulation towards financial independence."

Approach To Getting Richer Everyday

We often hear stories that goes like this:

Person A - Earning great income but having poor savings rate because of his high running maintenance of his various expenses.

Person B - A Saver who scrimp and thrifty on things but never really have the chance to look at earning more.

Income > Expenses = Financial Independence

Many people who are pursuing their own path to financial independence often focuses on one but not the other. Perhaps, we should be thinking about getting the best out of person A and B, i.e earning more income while reducing expenses both at the same time.

In the wealth accumulation phase, we should look for ways to allow us to earn more income, either by improving human capital to earn more salary, look for ways to earn a side income and/or investing in assets which will yield an income. On the same manner, we should look for ways to reduce our expenses, either through cutting unnecessary discretionary spending, using credit card for promotions and/or saving on items when you can buy cheaper elsewhere. Small amount goes bigger along the way. That's the reality of life.

Before we can transform our wealth from poor to rich, we've got to transform our spirit from rich to richer. The habits of doing so is itself an education. It fosters every virtue, teaches self restraint, cultivates a sense of order, trains to foresight and broadens the mind. The habits of doing so will stay with us for life and that's when we truly earned the rights to claim financial independence.


  1. Try to earn more and at the same time to save reasonably and smartly.

    Smart saving is the way to go! Too much cost cutting hurt our lifestyle. It is okay for single to squeeze themselves. They don't change their underwear for three days to save cost . Nobody care. None of anybody business.

    But for those who are married and have family, we want to treat our family well. Right?

    Quote : "Contrary to popular belief, you don't have to have a degree in economics or finance in order to achieve financial independence."

    Read? I am Finance Manager!!!

    I don't have any Finance and Accountings background but I did Economics at A level and Statistics as elective at Uni. Slightly better!

    1. Hi Uncle CW

      Finance Manager is different from Personal Finance Manager :) I think that's the key takeaway I recalled from your post.

      Saving can only save us that much, smart saving is the way to go. Everything is relative to reward and opportunity cost :)

  2. B,

    You're not the typical 2nd generation Indonesian Chinese ;)

    Notice I left out an important adjective usually associated with people like you?

    You say "spirit"; I call it "mindset". Others have written books and labelled it "attitude" ;)

    Well done.

    Its the thinking that makes a man :)

    1. Hi SMOL

      Didn't know there's a stereotype about 2nd generation Indonesian Chinese :)

      Most people have spirit and attitude, I hope they used it the correct way.

  3. "Waste not want not" is quite common practice.
    How about " Willful waste makes woeful want ."
    Like SI recently shares about $4,000,000.00 down the drain to gambling or what?
    What a sinful waste and woeful wants now?

    "If you buy things you do not need, soon you will sell things you need."

    i admit i am guilty from time to time.
    Who isn't?
    i still have my > $1000.0 "winter jacket" languishing in the closet bought during a tour in Turkey.
    And many more things lying/hiding around the house-useless for me now.
    Some i have kept for >35 years (acoustic guitar).
    Yet i am too lazy to convert them into cash.
    Perhaps i am too contented with life lol!

    Imagine how much more money i would have if i had not buy things that i did not really need or want later.
    But who knows why i bought the guitar then and have been keeping it for more then 35 years.
    i think i paid for it for about 300 to 600 dollars(35 years ago).
    It's still in pristine stage i think because after taking a few guitar lessons , i found i was not suitable for the guitar.
    That's life.

    1. Hi Temperament

      The impulse buy you bought during your trip only becomes so upon hindsight a couple of years ago. Maybe you feel a need to buy back then, we always do when we travel.

      Buy something to try something, I think that's a worth effort. Now I have to clean up my house as well, so many unwanted stuff that can be worth quite a bit of money.

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  5. After reading your article, and if I want to save $50 a month, I would cut back in other areas. One “crazy” thing I decided to try is reduce my lunch expenses from the usual $4 to $3. Instead of ordering 1 meat and 2 vegetable, I decided to just have 1 meat and 1 vegetable.

    Instead of making a special trip for grocery shopping, I will only do it after my gym, this saves me another $2.

    One other way is set a maximum expense for each week’s grocery. If it exceeds, then something in the grocery basket needs to go. Usually, it will be expensive protein, like fresh meat. Frozen meat and fish are cheaper.

    Unless I happen live near to JB, the time effort is too much. In fact, if we really want to save more money, it is to cut back on things like holiday, car usage, eating out and housing mortgage.

    The one to two hours that I spent travelling, I could have read or learn something on Coursera, -- expanding my horizon. There is commodity that is more important than money. It is time but my circumstances and yours would be different

  6. Hi B,

    Care to share how to participate in such surveys?


  7. Hi, can share with me about the survey you did? Like whom to contact to do the survey.. I want to earn extra money too.. Can't find legitimate survey companies online..

  8. Hi guys

    If you'd like to contact me privately via my email, I'd be happy to share them ;)

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