Many years ago, I wanted to buy a watch. I enjoyed the process of searching through watch catalogues, reading about the history of the brands, learning about the quality of the craftsmanship, the impact of the different materials. I eventually settled on a SG$25,000 watch and was really looking forward to buying it.
Just before I made the purchase, I imagined myself putting on the watch, walking around with it, working at my desk with it, taking it off at the end of the day. This made me realise that one thing.... I don't actually like wearing watches. You see, I am right handed and my dad is left handed. I learned how to wear a watch from my dad, so I wore it on my right hand. Every time I settled down to write or type for a long time, I had to take off the watch, because I was wearing it on my dominant hand and it got in the way.
I snapped myself out of it and realized that I was falling into the marketing gimmicks of the watch sellers. Instead of buying a $25,000 watch, I stopped wearing watches altogether.
I almost fell into the trap of buying something that I totally did not need or even want to use. Want to know how to prevent this from happening to you? Try this new tip on getting value for the price you paid.
Another trick about the human mind is that it takes about 3 months before the current reality of a person becomes his "normal" reality. Say a person wins the lottery, he will initially be ecstatic and continue to be less and less happy over 3 months until this new reality of "having a million dollars" becomes his "normal" reality and it doesn't make him happy anymore. In fact, after this, if he losses the million dollars, he becomes much less happy then he was before, because he has come to expect to have the million dollars.
So when you are about to make a large purchase that will significantly improve your lifestyle, think about whether you can continue to afford this step up in standard of living, especially if it comes with a corresponding increase in cost of living. Some examples are getting a car when you never had one, getting a maid, moving to live in a condominium from a HDB etc. The happiness you will experience will at most last 3 months, but if in the future you have to give up this luxury and go back to how your life was before, the disappointment might not be worth the original upgrade in the first place.
One way to apply this practically is when you receive a raise in your income or have a new income source. Understand that spending that new money might only lead to temporary happiness, while not spending it will lead to long term financial stability and freedom. More details on this savings tip here.
"You can't manage what you can't measure" - Peter Drucker.
In the case of expenses, we can measure it, but most people choose not to. Today's tip is as simple as that, measure your expenses, so that you can actively manage it. More details here.
I have done this twice in about 10 years, first when I started working and another time a few years back. It had the effect of making me much more aware of my spend for a few years after that, so I can say the reward is certainly worth the effort. If you are having trouble keeping track of where your money is going each month, give this a try, it might be your first step towards a better financial future.
The easiest way to start on the journey to financial freedom is to get more out of what you already have. The first few tips I have planned for you are just that, to make your salary go further towards meeting your desired lifestyle.
The first tip I have is on how to consistently save. If you are having trouble saving regularly or keeping your savings up "oh! I have $5K, let's reward myself with a trip to Bali!" this technique might just be for you.
Check it out here!