A taste of freedom or an illusion?

Freedom is what we all want. Kids want to have to freedom to go out without their parents controlling. I remembered when I was younger, I wanted to grow up so badly so that I have the freedom to do what I want and best of all no more home work! (I hated studying). I wanted to start working and earn my own money.

After graduating with a diploma from polytechnic,  I went on to National Service which essentially took away my freedom again. People who went through the army will know the regimentation involved and more often than not, we have to do the things we do not want or do not like such as being scolded because someone else made a mistake, wake up early everyday, march around the parade square aimlessly and a lot more other regimentations. Thinking back, all these discipline and regimentation does have its benefits. Apart from the experiences which I'll never forget, it made me a better person with dreams and determination to persevere no matter what.


Discipline before freedom

This leads me to the point that before freedom can come, discipline has to come in first. Your parents will let you have more freedom if they know you're disciplined enough to handle your own affairs as you grow up. You get freedom in the form of graduation after you have the discipline to study and pass your exams. You get financial freedom after you have the discipline to plan your finances in the right way.

Let me repeat again. You only get financial freedom after going through a process of discipline. This includes the discipline to save money, to spend wisely, the discipline to acquire knowledge of investing and financial planning and how about the discipline to earn money?

I've just finished my last paper for my entire degree course yesterday and it was a taste of freedom. After years of studying, rushing from work to school(sometimes skipping dinner), balancing time between work, studying, social life, I've finally endured through it all. The satisfaction of finishing something after going through the tough times made it seems even more worthwhile.


What is financial freedom?

For those who do not know what is financial freedom, let me explain it briefly. Financial freedom is the ability to stop working and still able to sustain your current or desired lifestyle. It is the state where you don't have to worry about having not enough money any more.


Beware of illusionary freedom

So many of us think that once we grow up and start working, we already have the freedom. What is this freedom? Freedom to spend your own money without having to rely on your parents? Freedom to buy the things you like? This is what I call illusionary freedom.

Do you see the illusion of it spinning?

I remembered when i had a taste of working for the first time at the age of 16, the feeling was magical. Even before i had received my salary, i started spending thinking that the money will come later. I could now buy the things i want without relying on my parents. When i got my pay check, i felt rich and had the freedom to spend it in whatever way i deem fit. After all, this was my hard earned money and nobody can say anything right? At that time, camera hand phones were getting more popular and i got one for myself at $300 plus. This was a freedom to spend but i did not think that if i saved it up, it would be useful for me in the future.

This illusionary freedom could be even worse with the easy money out there. Credit cards and money lenders make it much easier for us to spend more than we earn. Those who followed me on Facebook would know that i shared an article by inSing of a Singaporean professional in his 30s who got himself deep into debt. He's currently forking out $4000 every month just to pay interest on the loan he borrowed. The original loan amount was only $20,000 and he has already paid $70,000 in interest.

What's the cause of all these? You'll know by the words which he said which i quote below:

“My family has never been well-off, he said, "so when I started my first job and earned a proper salary, I suddenly felt like I was awash with cash. I started splurging.”  

“The banks kept on sending me invitations to sign up for credit cards, and at one point, I was using 10 different credit cards. I lost track of my spending,” he said.

Read the full article here

Discipline yourself for financial freedom

Now, i'm not saying you save all your money and not spend at all. It's ok to splurge once in awhile but splurge in a controlled manner. Planning your financial goals is the key. You can refer to my financial goals page for an example of the financial goals that i set for myself. This gives me an idea of how much i need to save for retirement and i work towards that target.

When i find that i can no longer reduce my expenses to meet my targets, the only way will be to increase income. However, increasing income doesn't come easy and it takes time and effort to build up another stream of income. Even if you want to get a promotion in your job, it also requires effort to excel in your job and still the promotion is not guaranteed. In a sense, reducing expenses is much easier.

Discipline to build up an investment portfolio and create passive income will lead to financial freedom. But to do that, having a substantial savings first is important. This is what i always tell my readers who email me and ask on how should they start investing.  The truth is if you have $10,000, a 10% yield is only $1000 but if you have $100,000, then the same 10% yield is $10,000. There is no short-cut to the process of discipline in saving money.

Without the discipline on financial matters, it will lead to undesired consequences. Read related posts below for more stories.

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