Oh...Sharing here: Money is just potential, until it is exercised as leverage/purchase.

From:
http://www.cpf.gov.sg/imsavvy/blog_post.asp?postid=545156742-363-6007196306

Time Is Wealth: Important Lessons From Someone Who Has Achieved Financial Freedom
posted by Lau on 20 Jun 2012 11:09 AM

Most of us would have heard the saying "Time is money" when frustration kicks in due to waiting too long. However, a word play on this was the title of the recent Sunday Times interview with Dr Bernard Cheong who is a respected watch collector doctor. He made his wealth through investing in collecting time pieces.

I do not usually read such interviews but certain things he mention, in a different context (I'll explain why I have to specifically mention this), reminded me about my priorities financially.

First and foremost, he talked about how he is financially free and work whenever he wants to. It is my dream and I am reminded to work towards achieving this. He also mentioned something very key: paraphrasing, so long as you do not have to repay loans on your property or car, there is actually very little you really need to spend on. And I think this is very crucial. Of course, most would argue that he is so wealthy and has so much passive income from his business or investments that he could not possibly spend finish everything. Well, that is his bragging rights and let's not be sour grapes here. What I would like to focus is in the truth of what he said vis a vis one's situation.

The main point is expectations. Take for example my expectation is really simple, I do not mind settling for a BTO 3 room HDB flat in some suburban town with no car. That would put me back about $200,000, compared to maybe $1,500,000 for a 2 bedroom condo with a luxury car. The difference is I could probably pay off $200k in a much shorter amount of time and even shorter if interest is taken into consideration. Anyway, that solves part A of the equation, debt free with a roof over my head at an age I am comfortable with rather than debt laden till I am old and frail.

Part B is the passive income to choose to work. That again depends on the lifestyle expectation. A simple lifestyle or an expensive lifestyle with the 5Cs. Even though inflation is creeping up in Singapore, I believe my lifestyle expectation requires about $1,000 a month (hold your flaming). That is about $12,000 a year. With an annual return of a conservative 5%, $240,000 needs to be invested, also a manageable sum.

Well, back to the $1,000 per month, remember that debt free is a criteria first. Then some would argue about the need to save. In the interview, Dr Bernard Cheong also explained that he spends every last cent! This is interesting as it contradicts all the common knowledge to save. Well, in my opinion, if you are financially free, what are you saving for? To be financially free-er? Saving is the phase to help achieve financial freedom, but once there and all the appropriate plans like emergency cash and insurance are in place, I feel we should enjoy the fruits of the labour and spend everything as well. All the delayed gratification is to have the gratification now. We can't bring all the money with us to the grave and after life, it will mean the difference of being miserly or thrifty.

So, now if you do not need to work, do not need to save, do not have any debt, lead a moderately simple lifestyle, would $1,000 be sufficient for one person. Well, at least in my opinion, it is for me. Different people have different background, upbringing, experience and expectations. Anything I earn extra from active working will supplement and I can spend all of it! I like to keep my own goals realistic and achievable based on my circumstances. Everyone will have their own concerns and constrains like family or children. My example will not apply to the vast majority. Similarly, Dr Bernard Cheong's example would also not apply to me as he is probably leading a luxurious lifestyle. However, I still managed to gain something from his story. He gives a reflection on the kind of enjoyment when financially free and reenergizes me to continue working hard towards that goal. Hope you gained some insight as well that you could apply to your own situation.

Cheers towards Financial Freedom!