Mr. Tan,
Just to share from my personal experience, as a young working adult with a very young family.
Based on the advice of good friends, my wife and I planned our finances based on one of our incomes only, in case either one of us becomes incapacitated, or decides not to work.
We started our marriage with a combined annual income of about 80K. If we based it 5 times our annual income, we could have gotten a property of $400K. Instead, we got a 4-room flat at about $200K.
As our family members increased after a few years, we sold off our 4-room flat. Then, our combined annual income was about $200k. Once again, instead of getting a $1m property, we opted for a $500K property.
With our proportionately low financial commitment, we were able to live worry free financially. In fact, as a couple, we hope to be able to pay off the mortgage soon, with a view that my wife can stay at home to be a fulltime stay home mum.
While I am sure that different families have different financial circumstances, and that our financial circumstances are a lot fortunate than many people, I believe "living within your means" is a hardly a virtue nowdays as people are encouraged to live beyond their means, be it getting a too big/fast/flashy a car, rolling credit card debts, too big a mortgage etc.
Mr Tan, just as a suggestion to your posting about financial planning, perhaps you may want to encourage your (numerous and growing) readers to live within their means. Thanks for your hard work!
I tend to disagree. While I agree that one should live within our means, I think one shouldn't "under-live" way below our means. We work hard for our money, so it is our right to spend it. Don't be so miserly. When you die all the money in the world also worthless.
ReplyDelete"....Based on the advice of good friends..."
ReplyDeleteIn 1980s, I also met a good friend who was a top Banker responsible for foreign exchange.
I asked him why he don't he play golf and spend free time in a temple.
He told me no good friend in a golf club!
This top Banker was stay in 5-Room HDB flat !
WHO IS YOUR GOOD FRIEND IN FINANCIAL PLAN?
This Blog !
It is because of 'live within yr means' made me a millionaire by forty.
ReplyDeleteAt present age(53) i have a passive income for 100k per annual excluding current pay scale and cpf.
It gives me great satisfactory to achieve this much because I come from a poor family and I am just a average earner.
For those who are starting out.'live within yr means' is utmost impt and believe in the power of compounding.
- Sometime it is not how much u earn, it is how much u save.
- We people who save not because we are scare of no money. We want to achieve a scene of satisfactory. a feeling of financial freedom.
Many today cannot make it to the retirement because they squandered on life insurance which has been one of the worse saving instruments.They believed the agents too much and they now impoverished.
ReplyDeleteTo the first reply, living within our means doesn't always equate to under-living.
ReplyDeletePeople should spend and save wisely. Always get your money's worth.
How would you like to keep spending until you realize you have to roll over the credit card bill every month or get more cards to roll over?
ReplyDeleteThe thought of "cannot bring money along when you die" sounded logical but if you ended up with a load of debt, then is better to be dead then alive. Worst is when you have a family with children and your wife is not working.
Money is not everything but everything is about money.
Save early and when you reach middle age, chances of being jobless and no income is very high.
I am one of them.....MB disaster make it worst...
Live within your means and invest the rest. dun let the hidden interest of house loan blind the money you could made if invest in a etf which yield 8% annually.
ReplyDelete