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How to recession proof your life? Your time will come too.

Sunday, February 1, 2015


Last evening, after the group photo taking ended, I took my first selfie ever with a couple of readers and the lady asked me whether I might make some changes to my frugal spending habits as I go into retirement. Well, maybe not in those exact words but I think that was what she meant.

Actually, many people asked me questions along the same line before. Why not be more generous to myself since my investments are generating meaningful income annually? Why am I still so frugal? (Aiyoh, car, chocolates, ice cream, remember?)

"I don't think I will change anything. I am too used to what I am doing now. I don't think I can change," was my reply. Now, this can either be viewed as a good thing or a bad thing, depending on what we are talking about.

My breakfast this morning.
Yes, got chye sim! Trying to take more vegetables.
I nag at readers about money and readers nag at me to eat vege.
Sounds fair to me. ;)



Human beings are creatures of habit. Everyone has some habits, whether good or bad. Look at ourselves and be honest. I am sure we can identify some of our own habits.

We might need a little help because our eyes are looking outwards. So, ask our friends and family members and they will tell us. They might be brutally honest but that is a good thing. It is all going to contribute to an important body of knowledge, self knowledge.

A visit to NTUC Fairprice in the morning.

There will always be some habits in life that will hold us back from achieving financial freedom. There will be habits in life that will help and, no matter what your persuasion might be, it is probably difficult to dispute that being frugal is one good wealth building habit. If we keep to our frugal lifestyle even as we make more money in life, we would probably be on our way to financial freedom.


My dinner tonight, breakfast and lunch for tomorrow.



I shared last evening that my family narrowly averted bankruptcy when I was in primary school. It was a difficult thing to understand for a boy but my mom was able to paint a picture of total loss for me that has stayed with me till today. I forgot to mention last evening that although we averted bankruptcy, we suffered financial hardship for many years. We lost almost everything. How does one forget something like this? Quite impossible.

The fear of growing old and destitute stayed with me till today.

I must never be in a situation like this, I told myself, and the last two decades have been a journey of self-discovery and stumbling in the dark, somehow doing mostly the right things but also falling into a few pits along the way. I do feel that I have been mostly lucky.


Of course, I could still fall into a pit or two in future. I don't know everything there is to know, for sure. However, I hope that I have done enough that is right so that, unless the pits I fall into in future are particularly deep, I would be able to recover quickly.







In summary,

1. Develop good habits that will help to build wealth.


2. Discard habits that lead to wealth destruction.


3. As our wealth and income grow, maintain a frugal lifestyle.

If we do all these, we would most likely become more recession proof than the average person too.

It is always hardest in the beginning. It takes time but you must believe that your time to work when you want to and not because you have to will come too just like it has for AK the giam siap fellow.


Related posts:
1. If we are not rich, don't act rich.
2. Three points which could turn our lives.
3. To retire by age 45, start with a plan.

25 comments:

yeh said...

hi ak,
my FIL declared bankruptcy due to fail in business when my hubby in sec1.

my hubby is also a fugal man like you:)
probably because he went through what you have went through.

I am sick since young, my parent was poor that time. although i was 11 years old that time, i already knew the power of money. Since then, i told myself i must have money for my illness.

anyway now me n my hubby try to enjoy life a bit. well, we work so hard and also must enjoy a bit. right?


Ashwin said...

If someone comes to me and tells me that they are living frugal, I’d think that it is a right thing to do. It is true indeed, but only to an extent. I guess people should spend within their means, but they should definitely spend enough. It is consumption that drives the economy and not savings. If everyone hypothetically stopped visiting a restaurant from this day, within one month, we would see thousands of people thrown out of their jobs as the F&B industry would suffer seriously. In two months, you would see thousands more jobs gone from other industries too as the economy is interconnected and the collapse of one will certainly mean collapse of the others. This happens if everyone stops visiting a restaurant, and just buys basic necessary food items and cook at home. Of course, the above is a hypothetical scenario, but it nevertheless illustrates that consumption is what drives the economy. Our investments will sink in no time if consumption falls. The key is in drawing the line so that people spend healthily but also save and invest to an appropriate amount.

People should definitely spend sometime thinking about how to minimize expenses. However, I’ve encountered a lot of people who spend way too much time penny-pinching (the practice of being extremely frugal), that it is only detrimental. People should spend more time on how to earn or how to create something and make this world a better place.

I have to illustrate my personal story to better explain what I said above. In a few months, I will turn 30. I was done with my studies by 22. In the seven years that followed my graduation I managed to create a net worth in seven figures. In the midst of a brutal financial crisis in 2008-09, I’ve setup my first business and hired Singaporeans and others when large businesses around the world froze hiring or even removed people. My family had no business background, and I had zero cash except for some very good education. I sold my business for good to a FTSE 100 company and I am happy to see it continue to create jobs. I wouldn’t detail how I managed to raise funding and create a small but successful business, but I want to highlight that I managed to do this only because I spent most of my time wanting to create something. I hardly spend time trying to save money – even though I do ensure the expenses stay healthy and not excessive. I rather I spend more time doing productive stuff. You see, I am not saying everyone should take up entrepreneurship or take risks. All I am saying is that people shouldn’t spend way too much time thinking of how to save money. People should spend more time trying to earn more money or add more value to the society – which in turn can make you more money and/or will make the society a better place.

AK71 said...

Hi yeh,

Thanks for sharing your story and your husband's story with us here. :)

Oh, I agree that we must learn how to enjoy life a bit. I just bought 12 cans of Coke Zero from NTUC Fairprice for $6.25 this evening. It is one of the "MUST BUY" specials.

I love Coke Zero because it tastes like Coke (actually, better) and has zero calories but I always wait for a sale before I buy. :D

AK71 said...

Hi Ashwin,

Thanks for sharing your success stories. For sure, if a person has the disposition to become an entrepreneur, I would encourage him to take that route. :)

However, for most in the working class and that means most of us, saving money is the beginning of a financially secure future.

Having said this, congratulations on what you have achieved as I think that even amongst entrepreneurs, yours is a not a common story.

I don't believe in being overly optimistic or pessimistic in life. I am a pragmatist. I feel that each of us must know our own strengths and weaknesses and we will find our own ways to make this world a better place for everyone. I like to think that I have done so too. :)

Ashwin said...

Hi AK,

I generally wanted to write about extreme frugality and tell a different story - especially, to urge people to think of how to spend more time creating value or trying to earn more money.

You are making the world a better place, otherwise I wouldn't read hundreds of your posts. Keep up the great work.

-Ashwin

AK71 said...

Hi Ashwin,

Since you are a regular reader, you would know that I also blog about how we should seek to increase income, both earned and passive, while being frugal. That is what point number 3 in the three points towards the end of this blog post is about.

So, I do agree with you that we should find ways (legal and ethical) to generate more income. :)

Finally, I must thank you for taking the time to add to your earlier comment as, initially, I thought it seemed rather out of touch with the masses. All better now. Much appreciated. :)

ladykiller said...

I think the life parents have led and its attendant implications and lessons always get transferred to kids and imprinted in their minds, to the point that in adulthood they reshape their paradigms to consciously avoid ending up in the same situations. Congratulations on having a successful session last night!

AK71 said...

Hi ladykiller,

Children naturally learn from their parents. They can't tell whether they are learning good or bad habits.

In adulthood, children who were unfortunate enough to pick up bad habits might or might not change. To a large extent, it would depend on the type of people they have for friends and the type of education they have.

In my late teens, for a while, I was lost too. I was worried about losing face. I thought that it was important to look rich or people might look down on me. :(

Thankfully, it was just a phase I went through. I sorted out my thoughts and priorities by the time I started life as a working adult. I was one of the lucky ones. -.-"

Were you at there at the event on Saturday night too?

Serendib said...

Hi AK,
very pertinent and timely post. Its been a 5-year bull market in almost everything (except commmodities!) everywhere, and peoples' memories are short.
There are those who can live an extremely frugal life, but these people will be a small minority. For the rest of us, we should learn how to manage our expenses, use our financial prowess for the betterment of our own lives as well as family and society.
Especially during a time of crisis (job loss, financial hit etc) we need to be mentally prepared to tighten our belts. I recall i was 29 when I made a career switch and wiped out nearly all my savings. I was a young father too, but fortunately my wife had a stable job, and I put in place an austerity plan. We cut waste where we could (eg dumped the home phone line, less going out for meals, less cab rides). We reap the rewards now - financially and emotionally we are better off, but I've always got an eye out for a rough patch down the road. FYI you might find this article from Monevator very relevant to this discussion!
http://monevator.com/investing-do-more-with-less/

AK71 said...

Hi Serendib,

Hey, long time no hear. Thanks for sharing your experience with us here. :)

We must always be prepared that things could go wrong even as we enjoy some peace and prosperity in the meantime.

Of course, those of us who have gone through hard times will feel this more poignantly. It is not just something academic to us.

I do hope that the vast majority of the population is prepared for a time when things go wrong but anecdotal evidence shows that this is not the case. -.-"

raf said...

Interesting discussion. I started life in a very poor family. Became very well off as a successful professional. A frugal (but not miserly) simple lifestyle with no desire for showing off or splurging on brand names enabled me to save, invest and retire early and pursue other interests (including attempts at self-discovery/improvement). Trying to maximise income is fine as long as it does not distract from one's duties to others and to one's own self-development. When all is said and done, one may find that true happiness comes from within, not from things we own or people we know. Here are some sayings which may or may not be relevant depending on one's worldview re questions like: is there life after death: "The best richness is the richness of the soul". Also, "You can possess the world, but dont let the world possess you." Lastly: "The more you spend,the more you save"!(spend refers to spending on good causes, helping others etc and save refers to amounts so spent being permanently saved in one's accounts as opposed to being left behind when the inevitable parting with this world happens)

AK71 said...

Hi raf,

I like the idea of being charitable and have a list of charities which I support. I have been rationalising lately and decided that I will try to influence how my donations should be used in future.

I also believe in karma and that we should do good as it helps both the receiver and the giver.

Without my parents, there is no me, and I hope that any good karma I accumulate will be transferred to them. :)

Ana said...

What interesting comments... !

darren said...

I think it's also about maslows hierarchy of needs. When we start to accumulate wealth and grow to be able to afford some things, we should not hold back from spending on the things that are important to us (especially if it is the case that holding back from spending would be detrimental to progress). But what's important is spending for yourself and the people who matter to us in life, and not for the purpose of impressing people in our life who do not matter.

Fish5566 said...

Interesting discussion. I suppose there is no absolute right or wrong. It is about finding each individual innerself and not letting the material world control it. Recession or not, the innerself shall prevail. May the force be with us. Breathe into us charity, joy, peace, patience, kindness, goodness, gentleness, generosity and self-control.

Sorry 4 this late comment. Carpe diem!

Fish5566 - 4 Jun 2017

AK71 said...

Hi Fish,

Peace of mind is indeed priceless. :)

Fish5566 said...

Hi AK,

Yes, peace is priceless in our material world. How abt charity, joy, patience, kindness, goodness, gentleness, generosity and self-control? To me, they r equally priceless for our eternal life. U happy, I happy lah! May the force be with u.

AK71 said...

Hi Fish,

Om Amitabha. ;)

Fish5566 said...

Good morning AK,

Roger, our spiritual beliefs r different. Going back to the initial question "How to recession proof your life?...", I ponder if the pursuit of financial independence is over rated in our society. Our wealth position is just one part of our overall happiness. As we accumulate wealth, could it be better if we not forget to be more generous to oneself and spend some money to satisfy our material desires? Collect happiness as we go along accumulating more wealth? From a different perpective, slow down wealth accumulation for other pursuits. Life has to go on even the stock markets crash and the portfolio value turns zero. Life cannot end because of a recession. So, would it be better to take some profit and enjoy while the times are good. I would reward myself materially when the money is coming in easy because "money not spent is not ours". Perhaps, the initial question tries to cover too broad a space. Suggest to change to: "How to recession proof our wealth position? The cycle will repeat."
I hv several other random thoughts as I search inwards about money. "No money, print money. The western banking institutions did this. Money seems easily created. Our wealth positions can just shift overnight because of their decisions. Individuals are powerless... Why then do I want to accumulate wealth beyond a certain point? ... Accumulate wealth at what pace and at what cost? ... Smell the flowers as I walk the journey.....Carpe diem! Love one another! Money cannot help but love can......"

I hv no conclusive answers so I continue to search. A thousand apologies for trespassing into your space.

AK71 said...

Hi Fish,

Oh, I am non religious. Too lazy to be religious. ;p

There are many questions we could ask ourselves in life. What we want out of life will determine which of these questions are more pertinent.

How much money do we need? This is also something I blogged about before. Everyone will have to find his or her own answer.

However, if we want more freedom in life, being financially independent cannot be wrong. :)

oldmanandthesea said...

Sometimes, you can take a man out of poverty but you can't take a poverty out of a man.

Frugal to me means living within your means. If your means improve, your living quality can and should go up.

AK71 said...

Hi OMATS,

Prudence means living within our means.

Frugal means living way below our means. ;)

Unknown said...

Prevent recession:
1) i split my stock profile. Buy 6 stocks almost equal amount.
2) 4 are reits and 2 are more active stocks with risks.
3) 4 reits stock will earn dividends while active stocks with risk for big gain or potential capital growth.
4) If i keep increasing this stock portfolio, i believe that this will contribute to recession proof as i age.

Unknown said...

Prevent recession:
1) i split my stock profile. Buy 6 stocks almost equal amount.
2) 4 are reits and 2 are more active stocks with risks.
3) 4 reits stock will earn dividends while active stocks with risk for big gain or potential capital growth.
4) If i keep increasing this stock portfolio, i believe that this will contribute to recession proof as i age.

AK71 said...

Hi Jimmy,

I hope your strategy continues to work for you. Gambatte! :)


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