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

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.

How did AK amass so much money in his CPF-OA?

I received my CPF statement in the mail last night and when I was chatting with my mom, I told her how much money I have in my CPF-OA now and she was very shocked.

"How much did you say?!" my mom went. 





I passed her my CPF statement so that she could take a look for herself.

Well, to be honest, it might not be much to some people but it is quite significant to me.

So, how much is it?

How did I achieve this?

What I basically did was to do nothing to my CPF-OA after selling my last property about 3 years ago. 

In the purchase of my current home, I use my CPF-OA money sparingly as I was not and still am not able to get any interest income for my cash on hand that is close to 2.5% per annum.





Also, we have to remember that the opportunity cost of using our money in the CPF-OA is a bit more than that because we would have to pay ourselves the accrued interest lost for using our CPF-OA money. 

This happens in the event that we sell the property concerned (before we turn 55).

See:
Unemployed, almost 55 and worried about CPF.

Essentially, what happens is that instead of the government paying us interest on our CPF savings, we would have to pay ourselves interest as the CPF's primary objective is to ensure that we have a financial safety net in retirement. 

I rather prefer the idea of someone else paying me, to be sure.

For most of us, in our early years, it would probably be difficult to purchase a property in Singapore without the help of the funds in our CPF-OA.

However, if we are financially prudent enough to accumulate cash, invest to grow our wealth as we make progress in our career, it is not difficult to imagine us having more cash on hand as time goes by.

In the purchase of our second home years later, assuming that we do, it is then possible to use less of our CPF savings and more of our cash on hand, leaving money in the CPF-OA to grow.





Of course, we could always do voluntary refunds to our CPF-OA as well.

See:
How to stop accrued interest from growing?

Let the government work steadily to help pay for our retirement? 

Yes, you got it, that is the idea.

Related post:
A lot of the money in my CPF-SA is from...