Saving Money Is Not The Best Way To Be Financially Free

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We came into this world and learned that saving money is the key to be financially free.

“We shouldn’t spend on expensive beverages and we should compare grocery prices to save on the few cents”

Everyone ought to save whenever they could and that’s not a bad thing.

But as I got older, I found out what these people fail to realise is that saving a few dollars will not get you to be financially free and may even get you to spend more.

Yes, saving money is part of the financial freedom equation but it’s not the only equation.

Instead of focusing on saving money, think about ways you can earn and multiply your money.

Saving Leads To Spending

I talked about how saving money may get you to spend more and as ironic as it sounds, it’s true.

Many people fall for marketing stunts such as “50% off” and they felt that they had saved 50% of their money when they buy something they don’t need.

The action of that purchase was not logical, it was emotional.

Most of the time, some of these purchases were things that you didn’t need but you felt that you were missing out on an amazing offer and it would be stupid to not buy it.

You didn’t save 50%, you just spent 50% of that amount.

At the end of the month, you thought to yourself, “where did my money go?” you then tell yourself to start saving more money the next month and it becomes an endless cycle.

Savings Vs Earnings

When you get yourself a job, you’re limited to the amount of money you can spend every month in relative to your salary and for the average person in Singapore, salaries may work out to anywhere between $3,000 – $5,000 SGD.

For some of these people, it may be comfortable when they’re expenses do not exceed their salaries. For the others, it takes effort for them to not overspend.

To be able to achieve the life that you want or at the minimum, being comfortable, starts with the idea of removing this income ceiling.

When people start earning salaries, they either focus on striving to do their best in the job or they get comfortable with the monthly income making them feel secure.

But at the end of the day, no matter how secure or how much effort they put in, they’ll only get the same amount of income every month.

As years go by, the increment of their salary may not be able to compete with inflation.

When you start with the goal of removing the income ceiling, it makes you creative and you start thinking of ways on how you can “uncap” your income and earn more than you think you can.

Some of the things I am trying to do to remove my income ceiling is to build valuable online assets and skills that can help me compound and multiply my money.

They are:

  1. Blogging
  2. Forex Trading
  3. Business

These are the things that I am working on as of now and I foresee more coming in the future. At the end of the day, you need to find ways to build any form of assets that pay dividends in the long run.

The Productive Expense

Needless to say, it is also important to save while building your assets and by saving, I don’t mean to be frugal.

You can still spend on that cup of $8 coffee or the new “Airpods’ but here’s how I manage my expenses now.

I call it the “Productive Expense”

I think it’s okay to spend money on these things with the exception that it will make you happy and/or productive, enabling you to do your best work and to be productive on things which can potentially make you more money.

One of my productive expenses for example was the “Airpods”.

Buying the Airpods made me happy and it also acts as a productivity tool for me. I use it to listen to podcasts, music and probably audiobooks in the future.

This helps me to gain more insights and knowledge on the things I am working on such as investing, trading and business which can potentially make me more money.

Whenever I am tempted to make a sizeable purchase, I would ask myself if the thing I am buying would contribute to my happiness (for the long run) or more importantly, contribute to my productivity.

Usually, happiness from material possessions is short-lived so its more important for me if it’s able to help me on my journey towards financial freedom. This conscious decision-making process also helps me to focus on the things that really matter so I can stay less cluttered.

Another productive expense was my Kindle which I am happy about, on top of that, it helped me with reading more books. Here’s an article I wrote the other day about how you can read more books with the Kindle.

Keep Earning, Spending & Saving

I hope you’ve learned a thing or 2, probably 3. Earning, spending and saving.

Remember that it’s okay to spend but at the end of the day, stay conscious and be accountable for your own purchases.

Use the “productive expense” to help, if it’s something that makes you happy and/or makes you productive which brings you closer to your goal of being financially free, it’s probably worth spending on.

Always think of ways to “uncap” your income ceiling and find ways to earn more than your job, in other words, work on some side hustles. You can take a look at this article on the best side hustles this year.

Finally, do continue to save. What I have just put out does not replace savings, but another perspective so you can improve and spend along the way.

This concludes my 10th article for the blog! Let’s continue pushing towards our goal of being financially free.

See you on the next one!