Living below means
Have been reading news articles about how to cope with inflation and rising costs/interest rates.
I think, at the heart of our financial philosophy, is knowing what is really important to us. After all, few can have everything they want in life.
I want to share our approach.
My husband and I are in our late thirties.
Together with our toddler, we live in a four room BTO which costs us around $450k.
Our combined gross annual income is estimated to be around $200k. Before the recent interest rate hike, we pay around $700 each via CPF OA monthly to service our housing mortgage.
We own a (?probably) fourth hand vehicle.
I wear a uniform at work. I have more old and comfortable t-shirts and shorts than new clothes. Especially with the pandemic, there hasn’t been any need to buy new clothes. With mask wearing, there is also less need for cosmetics.
My CPF has already attained FRS since I turned 30. Even if I stop working, compound interest should continue to work its magic and maintain the balance above any increase in CPF minimum sum.
With our spare cash and savings, we invest in shares for dividends and capital gains. We often buy SSBs and other bonds that the market has to offer.
We think that we are financially healthy when we don’t have to think too hard before buying something we need/want. We are not doing anything different to combat inflation and rising costs. Probably because at baseline, we are quite frugal. To us, spending quality time together as a family and enjoying good food/shared experiences are what really matters.
Never mind that we are not driving a brand new car. Or that we are not staying in a private home. Or that we are not wearing branded apparels.
Having a peace of mind that we do not have to struggle with credit card/mortgage payments while focusing on quality time together as a family is something that not many people may consciously prioritise. Cultivating the habit of spending/living below our means is key to ensuring that we do not have to make drastic adjustments in our quality of living when certain monetary conditions change.