If you ask anyone about what advice their parents passed down to them when it comes to money, one of the most common advice is: Put away part of your money because you do not know what will happen in the future.

Saving money is nothing new.

No one will say they invented that. I certainly do not claim credit for that.

When I was growing up, mom and dad did not discuss much about money, but I observed what they do with it and the struggles every decision that they made involve money somehow. It drove home the idea that money is hard to come by and you need to take a great deal of care with it.

Since 18 years old, when I earned my first pay check, in the form of national service allowance, I have been putting away a portion of what I earned into savings or wealth building.

In my wealthy formula, I shared with you how I went about building my wealth, and what I have distilled up to this point that works for me, and I believe will work for many of you. Roughly how much I have built up is no secret, and avid followers will know where to find the figures.  I do not talk about it openly because, it is not very important.

The more important things is whether I can help you get to where I am now.

Someone asked me recently how much do I put away monthly and my reply is that I am not sure. While I carry out zero-based budgeting regularly, I do not have this figure off my head.

My best guess is 50% of my disposable income. Disposable, which means my take home pay. To be fair it fluctuates, and I believe it was closer to 70% in the past when I started working to 40% currently.

To him, it is a sum that is unfathomable.

He is rather responsible and like most people, puts away 15% of his disposable income into savings. So he asks does he really need to put away so much and how does living with a 50% savings rate feels like.

The first question, I have written about quite extensively here on my site,but the second one, the feeling of actually doing it, that is something new to me.

So here is what I told him how it feels to put away so much.

1 You become frustrated by people not knowing the intention behind putting money away

A lot of people tried their hardest to understand based on what they know, and why normal people would want to put such a large sum of money away, but they often missed what I think.

When I was 24, I started aiming to build a portfolio of $135,000 by the age of 35 years old. Back then, I don’t even know such a thing called Wealth Machines. You have less blogs that explain what are roughly the right things to do with your disposable income.

I came out to work during the SARs period and the psychology is that you will never gonna get a pay increment in your life, and I pessimistically fixed putting away $500/mth into a Wealth Fund. I save much more than this $500. It is the way I compartmentalize how my wealth would grow, the other savings above this $500 is for rainy days or other purposes that I have not thought about.

Over time, people know you save, but they always think you are overdoing things, without understanding the true intentions.

The reality is that over time, there wasn’t any true intentions other than reaching financial security or independence.

The reality is that there isn’t so much things to buy and enjoy. You work, you are satisfied with how you mentality stimulating it is, you are ok with the people you work with and the people you meet. And you have this amount of enjoyment out of work.

What more do you need?

Excess money just funnels to emergency fund, which is why over time I was startled by how it has grown.

2 People look at you as if you do not have a life

There are some things that you can infer from most conversations, but they expect you not to put away so much because it is necessary to carry out some customary things that young, single male that have a working income should do.

They have your best interest and are afraid you missed out important life journeys and that you will regret them later in life.

What I felt they failed to grasp is that: If you didn’t even know you need to enjoy something, how can you regret missing out?

Sometimes because we lived a much hermit life and are less exposed to opportunities, you minimized yearnings as well.

You are going to get many of these over time, and you can explain to them your ideas (and hopefully you find more soul mates) but you can also choose to not do anything and let others imagine, gossip about  it.

Sometimes they are right. You live a life that is less than deficient.

You got to be pragmatic in looking at  your own situation, reflect and admit that there are some truth to that and perhaps you might want to do what they say.

3 You develop an awareness of cost and value of things versus your priorities

You save a lot because of a saving goal, but for myself, it is more of having a rather clear idea of what exactly I want.

If I had that,  I choose what I want well. I discard things that are less of a priority in life, and try to find the best price for things that we value more.

If you develop an appreciation of your own priorities, you realize you might spend even less (when you pair this with less yearnings from #2) and put more money away.

4 You start seeing and exploring Possibilities and Models you can DO with your Wealth that didn’t occur previously

Unless you are the type who likes wealth building as an intellectually stimulating subject, putting 50% of your money away lets me explore some models that I failed to see.

When I put away 50% for 7 years, I started asking the question, so how much is enough? How would I know I reach my goal? What IS my goal?

It is where I understand the formula to financial security and financial independence, and further research tells me while these and retirement feels similar, these 2 are actually better than the idea of retirement.

I am also assured that when you placed your goals clearly in front of you, sometimes it is not about chasing the greatest return by pushing your money hard but to recognize that your goal might be smaller than what traditionally is (read the wealthy formula article).

I also understand the importance of recognizing what are your survival expenses and rich living expenses in the grand scheme of things.

Understanding these possibilities and how probable they are gives you excitement, contentment and calmness knowing things are within reach.

5 You really enjoy the luxurious stuff

When you save more, and honestly spend more time doing real work, you have less time for entertainment.

And when you have them, your satisfaction of these activities tend to be much higher.

It follows the theory that if you do fun things on such a frequent basis, they lose their uniqueness and joy factor after a while.

6. You have something that keeps you going

With the smartphone, I see many peers playing games where they level up their characters, chasing experience points to level up.

People like this kind of things, chasing milestones.

I just wonder why they do not gamify their life and do some goals like building a wealth machine.

When the money starts accumulating and you start realizing models and possibilities that defines your wealth goals better, such as a realistic $500,000 wealth machine in 10 years, you have something other than work that keeps you purposeful in life.

This is why there is no constant need to find ‘entertainment’  and lamenting ‘life is boring’

Conclusion

At the end of the day, things are really less bombastic as most think. I live a normal life. Some things you do, I did a much scale down version. That hasn’t bring down my satisfaction level.

I attribute the most important thing to understanding the concept of your priorities and how much is enough.

Overtime, it really becomes less of putting away 50% but more of, in daily life, I only need less than 50%.

In other words, its the spending equation then the saving one.

The savers would think this is a normal routine, but if you are a spender, can you imagine putting away that much and still  be quite satisfied with your zest in life? For the savers who also have a high savings rate, do you have any realization that you encounter, only when you embark midway into this journey?

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Behind every successful business man, career man or investor they always talk about the challenges in the early days.

Some of them lament about the tough life that they have to suffer.

When I was a junior staff at work, you end up doing all sorts of tasks, some you understand some you do not. Usually the thought going through your head is: “Why do I, a degree holder, needs to do things like this?” Whatever things your seniors do not want to do, its up to you to do them.

Looking back, you realize that all these difficult things becomes easier over time as you became familiar with them, develop better ways of doing things.

Even after you take on a different scope of responsibility and these tasks are not carried out by you, you somehow have a vague and good idea how to do them, because you have an unconscious competence.

Whether I am in the army or at work or investing, I am in awe of the accomplishments of my seniors. For them, things are usually tougher because the tough things have not been smoothed out.

In army, there was less regulatory measures to guard against tougher trainee punishments and that the tasks are less about technology more about physical and mental prowess.

At work, the systems and software are not abstracted to such a high level and they have to do all the low level work.

In investing, they didn’t have the internet. They have to really find mentors, and honestly only those lucky ones manage to find them. They didn’t have portals that aggregate financial data, don’t have blogs that provide some of the simple fundamentally sound wealth building principals, or to interact with like minded peers.

I always thought that these tough environment set them up to make their understanding of things, their reactions to better work or investing decisions.

The Willingness to Put in Effort Upfront

In this fast pace age, we were pampered by what the millennials developed that give us what we want, at the comfort of our smartphones. Software as a service provided services that make our lives much better then without these services.

What happens is that, we expected things to be effortless.

This is so when we come out to work from university or polytechnic, progression at work and also how we make money.

I believe we will get there when it comes to investing.

I do envision a future where smart ETFs based on some fundamentally sound allocation that shifts between cash, bonds and equities ensuring that your money is low volatile, rather passive and reasonable costs.

Till that day happen, investing in various wealth machines require knowledge, wisdom, execution, reflecting on what works and what doesn’t work and then doing more.

I haven’t been doing much prospecting lately, and I can feel I am getting rusty at it.

However, if I  encounter a potential business to look into, I know what to watch out for because I have put in the initial upfront effort.

Just like the above graph, your initial effort would be higher to comprehend and kick start, then when the knowledge and execution becomes unconscious competence, things become smoother, you can evaluate what used to be challenging for you in a much faster manner.

This is how we have the time to look at things from multi facets. We did the initial hard work and now the recurring effort we can make use of our unconscious competence and slowly learn new conscious incompetent stuff.

In all things you learn you realize there are usually: Upfront Effort + Recurring Effort.

Usually, different things have varying degree of these 2 kinds of effort.

In some of the wealth machines shown in this table, some of them requires high competence or relatively low competence. Before you get to the recurring maintenance stage, you need to put in the high effort, unless you are dealing with fixed deposits

In creating a cash flowing business

When I listened or speak to people that have build an online businesses, who is able to earn cash flows monthly with relatively less upkeep, the idea is still the same.

Not many see the effort that they have to endure, carrying out a 9 to 5 job then going home and doing a second job from 6 to 8.

Even if you have a good mentor, or go on a course that ironed out your mistakes, you also need to put in the time to comprehend and execute. With the competition nowadays, it is difficult to stand out. Even with good guidance, you still need hard work.

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You often think the place that you are going is Utopia, that is, until you reach the place.

Let me ask you a question.

How many times have you look forward to a vacation after a year of slogging at work and after you went and came back and 6 weeks later, you realize there isn’t all that much to that vacation experience?

I bet some of them would have left a deep impression but many of your vacation was not what you expected after all the anticipation.

In life, we often think that something is an extremely good idea, that it is something that we will feel good about, and would be great when you reached it.

Yet they often fall short of our perception. What was original a good idea didn’t work out in real life for us.

Striving for the Financial Independent Dreamland

When I was around 31 years old, I got to know the idea of being financially independent, and doing the math behind the financial independent concept, I realize it is possible for myself.

So I became very motivated to follow this realistic path since you can rationally execute it.

The nearer that I got to it, the more I anticipated it.

When i read more, and got to know folks who have reached there, I realize almost all of them have a job in some form of another!

So in the end you get to move from one job to another job. However, what if I do not have another job that I would like to do?

Do I really hate my job now?

So I did an experiment last year when I have a 9 day break from work. I did not go for a vacation but try as hard to simulate what would I do if I stop doing work.

I realize I enjoy many parts of the slacking and not having to think about something serious at work, but they were replaced by more thoughts on wealth building, and lazy leisure thoughts. I realize how hard it is to stay motivated and lead a purposeful life.

That experiment made me question whether what I strive for is really what is an ideal change.

Through that experiment I learn what is missing in that very nice dreamland scenario and what I needed to do to supplement it.

Your Reality Check: Test to see if Your Perception of your Utopia is Right

What I did was that I do not know if I would like what I have yearn for all this time. I have a sneaky feeling it might not turned out the way I hope for.

So I wargame that scenario a little bit.

And in a lot of destination, things, actions that you strive for, you can check whether your perception is correct or not.

By wargaming that scenario, or simulating the actions, feelings, and repercussions that comes along with the scenario, giving that perception a realistic twist, it may strengthen your perception of what you look forward to , or make you realize its not worth hoping so much about it.

Here are some possible Utopia of yours and what I think you can do to test them out

1. Freelancing Full Time

When you are in your full time job, but develop a competency that enables you to earn on the side, you might see the possibility that, if you do this full time, it could turn out to be more lucrative then your current job.

The benefit is not just monetary, but perhaps saving traveling time, and less administrative hassle to content with. It is the full package.

Being a teacher, an IT engineer, a digital marketing specialist, a specialist consultant are some competency that comes to mind.

To test this perception that this scenario is better, some companies might let you take up a 3 month or 6 month no pay leave.

This would be an ideal period to see if you can garner enough business to be sustaining, whether you prefer the perk of being your own boss, whether you will miss interaction in the office context and whether you get anxiety panic of not knowing you will have enough clients to do this for the long term.

2. Downgrading from a Condo to a 4 Room Flat, or a smaller flat

To realize the value of their non-landed property, you may want to downgrade to a resale HDB flat. However, your family might not readily adjust from a condo environment to that of public housing.

You might also want to realize the value of your flat by doing a geographical arbitrage by moving from a high value 5 room HDB flat to a 3 room that is away from town.

Some of the factors that might not occur to you is how does your family and children adjust to a new neighborhood, a smaller living space, with drastically different room configurations.

To test that perception, you could visit relatives that live in such spaces more regularly with your family, to observe how they live, and whether your family could adjust to something like that.

Perhaps spend one year visiting the prospective neighborhood to see if you could adjust to the demographics and nature of people living in that area.

If you are moving from a large housing to a smaller one, you could try to intentionally not use one room (perhaps rent it out even!) to see if your family can adjust to living with less space.

3. Moving to another industry

You may not like your current industry, or taken interest in a more lucrative or fulfilling industry and would like to switch.

What you think is suitable and appealing might have some significant differences that no one have told you yet, which ends up being your blindspot.

The easy thing to do is really to “just do it” and take the plunge.

Yet the sensible thing perhaps is to network better and talk to more people in the industry at your level, more senior level to gain a better perspective. The deeper you are able to dig the clearer your perspective on whether it is a good fit.

Moving jobs, if bridges aren’t burnt, is a better proposition in case things doesn’t work out.

4. Becoming a Stay at home mum

I know many lady friends believing that this is the great situation to be in. There are a lot of benefits, the chief among the reasons is to spend time focusing on the children.

While they may have considered the upside, the challenges can be how the finances will work out, and also like freelancing, the social circle changes.

To test that perception, what worked for freelancing looks applicable to simulate Stay at home mum as well.

It should be noted that one chief worry is that if this does not work out, the mother loses valuable human capital to re-enter the workforce.

More research done specifically for woman in your particular industry, talking to more experienced mentors might provide more clarity here.

Being a stay at home parent need not be a permanent thing with no backdoor. My manager is one who left the workforce to be with the children, and found a job managing us when she re-enters.

When it comes to finances, good preparation goes a long way. One year before taking the plunge to be a stay at home mum, a simulation of not tapping on to her income for expenses other than for transportation and survival might manage the perception whether it is manageable to live on one income

5. Living Overseas in Johor or Chiang Mai

This is something that many workers who are not location dependent would aspire to do. And many only see the upside and seldom talked about the downside.

One common downside is similar to that of free lancing, not being able to find consistent, sizable work due to not being in the same locale.

The culture and language barrier, the weather and security might be something that you currently take for granted.

You might also not be sure that you can do this for the rest of your life.

To make sure your perception that the area fits you, you could take more trips, perhaps lengthy trips to the place and explore them, not in a tourist function, but as someone wanting to live there.

For example, my friend really likes Taiwan on his few visits, and envision staying there once he made his pot of wealth.

In the mean time, he went up 4 times per year to Taizhong, and have become rather familiar with the area, living for a short stint like what the locals did.

He has started to test that perception already.

If you are planning to live in Johor, rent out your Singapore apartment and travel to Singapore from Johor to work, one simulation could be to rent AirBNB in the state for 1 week, and test out the concept to see if you can adjust to living there and traveling to Singapore to work.

6. More on Financial Independence

I shared my experience on some of the things and feelings that you might feel uncomfortable about.

The main emphasis here can be:

1. Would you lose a certain purpose now that there are no corporate KPI to keep you busy?
2. Would you eventually not like the way you become by only doing one or two things a day?
3. If you are semi-independent (check the stages of wealth meter where you are), would that job that earns you much less also make you feel less fulfilled?
4. Would your parents and spouse ask you to do something you don’t want just because you don’t have a job?
5. Would my Wealth Machine(s) generate the adequate cash flow to be financial independent?

You can test out some of these worries if you take a 6 month, 1 or 2 year sabbatical. Particularly, the 6 month no pay leave would work well here again.

To ascertain if the cash flow from your Wealth Machine(s) can be managed well, for the last year, you can put aside your earned disposable income from you and your spouse job, and rely only on the cash flow from your Wealth Machine(s) and see if that would be a problem.

You may realize that you have adequate, not enough, or that you need to tweak your wealth system & process a bit.

For a lower paying job, consult folks doing those jobs. This could be actively engage using your interpersonal skills to make friends with them even though you do not know them. Ask deeper questions and then go back and reflect if you can live with those way of doing things. You might want to inquire whether you will have enough freedom if you are more efficient in the job to have your boss not bother with you so much.

Summary

Why we do this is so that we don’t work towards something that may eventually not what you really wanted, that is far from what you were thinking in the mind.

It might turn out that the scenario is what you want, but with some negative points. You can then have time to work out a solution for these negative points.

What do you think? Is this being overly safe, or you prefer to just whack and risk being shocked that this is not what you are looking for?

Have you tested your perception before in a similar fashion?

I ran a Dividend Stock Tracker that Updates Nightly the dividend yields and various metrics of the popular dividend stocks such as Blue Chip Stocks, REITs, Business Trusts and Telecom Stocks In Singapore. Start by bookmarking it and view it daily.

Here is my current portfolio. It is a FREE Google Spreadsheet that you can use to track your stock portfolio by transactions. It is especially good for a dividend portfolio or a passive ETF portfolio. Get it for Free Today.