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Some lessons learnt from going through a budgeting exercise

Reservist is a good time to self reflect on some things that you find it challenging during your daily hustling in life. Some folks do not like the feeling that you are wasting time and being detached from the world. However, sometimes it is good to realize we kept ourselves busy but we didn’t take time to reflect about things.

We always want some quietness in life and thought that we can only get it when we go for an overseas holiday.

Well in-camp training is almost the same.

I was quite glad that I have soul mate in reservist. I am usually quiet so its good to have someone talk nonsense to me. He however, is the rare few that are progressive in thinking, reads adequately, and enterprising enough to explore various way to supplement his main job.

I think he would do well with the mindset like this in life and young at 31 years old.

We discussed about getting married, renovating a new home and planning his financial resources all together.

One good lesson learn was that if you are able to align the ideal wedding goals and how your home looks like with your spouse, things become much easier and there are less frustration. The frustration is more of sharing challenges together.

We did roughly two to three simulation planning in the time we had.

One of them was budgeting for single person. He already knows how to use the budgeting software You Need a Budget or YNAB to carry it out. Going through that exercise with time on his hands, I got him to throw most of the budgeting categories in 3 baskets: Survival, Value Add, Obligation.

The idea is that, it gives you a figure of roughly how much you need to survive and oblige to paying for monthly or annually. You also know how much is your extravagant spending.

In this way, if he loses his job, it is easier to see how much he needs to cut down by, and where he needs to cut down.

It gives him an idea, if he would like to reach financial security, how large of a wealth machine he requires to generate that monthly sum of money.

Without guidance, I realize that there are some common spending categories that are always omitted.

One of them is Gifting for Chinese new year, White Gold, Wedding Dinner.

Some things are seldom split out are what are subsistence meals and what are meals that are value added.

If you define them well, you trust the figures better.

For a person who declares that he have a spending problem in the past he was able to put a relatively large amount into his wealth machine. He did work out that his survival expenses comes up to $1,400 and in total it is $2,500.

If he were to embark on a change in career, or take on a risky job, he probably needs to find something that makes $2,000 per month.

When he went through that exercise, you getting sad, relief or glad on how well or bad you are doing. Most of all you get clarity.

The second exercise he did was to take a bottoms up approach of estimating what are the furniture and renovations that are required for the new home.

With a quote from a relative of a place that are said to be sparsely renovated and furnish, he went on to dissect why a bare minimum renovation costs $20,000 and how the whole cost adds up to $38,000.

He made a list of what he would like to have in each room or living space and which items that he can live without custom furnishings.

Would things eventually work out the way he wants? Likely not. I tend to think that, once you have considered it before, it somehow gets imprinted in your head where you can always return to that bookmark.

When you have went through that exercise working out budgeting, renovation and wedding planning, you have something that you can move up or down, vary to determine the grading and quality of life you want.

I hope another lesson learn is that he can always attempt to do this kind of simulation for other big money projects that he needs to deal with at work or personally.

Here are two past articles on budgeting that are related to what we discussed today:

  1. You don’t really need to budget but….
  2. Before retrenchment – be aware of a normal and contingency personal cash flow



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New Yi Qing, Izack

Sunday 6th of September 2015

Thank you Sensei!!! I will always remember your teaching!!! It is not easy to face the truth alone, I am glad to always have you as my best reservist mate!!! Cheers!!! Keep rocking!!!


Sunday 6th of September 2015

Now folks know who you are!

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