I am not sure if thrift is part and parcel of Chinese’s culture. What I know is that I was brought up with the thinking that there are alot of things in this world that my family cannot afford, and I should not compare my situation with other rich people. Failing which, I would make myself miserable. Thus, I must be contented with what I have, even though there’s a little unhappiness or a tinge of envy hidden somewhere. I must say my mindset is shaped in this way. Only when I was exposed to the concept of law of attraction, that I see the root of all successes begin with the correct thinking. If I think in terms of lack, I will limit myself and abilities to have what I want. The converse is true, if I think abundance, I will have lots. That is why I changed the tagline of this blog to “living a life of abundance“.
Teacher Keane said before, “live below your means” is one of the most limiting phrases to be used. It tells you subtly that you should know your limits and stay in there! He also said that the parents will be inculcating a mindset of lack to the children when they say “we cannot afford it”. All these phrases are negative, and imagine this is the environment your children grow up in. In no time, they will start to see the world with lack. Instead of telling them you cannot afford, you should tell them to learn how to earn or own it. “How to own it” is an open-ended question. It spurrs creative thoughts for the individuals when they start to pose the question to themselves. Most importantly, it does not limit the mindset. It does not kill the idea that you cannot own it. It even gives you the opportunity to own it if you can find a solution. Giving them the responsibility to find out the solution is also a test for their desire for that item. If they want the item so much, they will be willing to work for it and not give up easily.
Having a right mindset is like learning the ability to fish. We always quote “give a man a fish he eats for a day; teach him to fish and he eats for a lifetime”. Inculcating the right mindset is akin to telling him to learn how to fish. You tell him that there is abundant fish in the sea and it is up to him to find ways to harvest them. For a mindset of lack, you tell him that there are fish in the sea but do not bother to catch them because you cannot afford the fishing rod, so you cannot fish. What kind of excuse is this? Are you able to accept this if someone said this to you? But this is what most of us are doing, using such phrases that inculcate lack, and they sounded ridiculous on scrutiny.
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The right mindset is to keep increasing our means but sill living below it. Living above our means is not sustainable in the long run.
You are right. My point is not that we should leave above our means, but we should learn how to expand our means.
I disagree. If a person spends all that he earns, this is a Habit. Even if he increases his income, he is still likely to again spend all that he earns.
So I would say do not spend more than 90% of what you earn, or if possible, do not spend more than 80% of what you earn, by doing so, as your expand your means, you might find it even easier to save a higher percentage of your income.
For instance, since I started my first job 17 years ago, I save at least 20% of my income. Now that my income (I’m a business owner now) is much higher, nowadays I find it easy to save 60% to 70% of my income.
I see your point.
I think it depends on what you want in life. Some people derive more satisfaction from consumption while others are already contented with what they have. If expanding the means allow the former to increase their joy in life, I think it is not wrong.
Hi Alvin,
just think about it, if a person Spends all he Earns, he has zero savings, if this is the “mindset”, then even when he increases his income, he will again Spends all he Earns, how can this person ever have Savings and move financially ahead?
As you read books, there are Books that teach the wrong things. So be very careful of what you Learn.
Unless you can show me how a person by Spending All He Earns can get financially Ahead, otherwise, IT is NOT about Personal Preference, we are Talking about Financial Principles.
Maybe his goal in life is not to accumulate wealth, but to use money to exchange for experiences that enrich his life?
I am not arguing whether what is right or wrong, but I just want to explore other perspectives.
I foresee myself as a live below your means, primarily because I have nothing much to desire for :)
There was a quote that came out from this financial crisis, “No nation could spend their way to prosperity”. The same can be applied to people. The credit culture mindset has been ingrained for years and the importance of living it now makes it less important to save. So leverage become an important tool in this credit culture, use 10% to own/control a 100% asset. So in came the good debt bad debt theory and the equity extraction model from assets (cash poor, asset rich). The last financial crisis was a good reminder, all we need is another event to reset the values (asset or currency) and a lot of people will be on level playing field.
Hmm, interesting debate…let me add to the confusion further :)
I find that I’ve the same mentality as alvin, in the past. But as I meet up with more people and read up more, I began to realise that I have a hoarding instinct. The problem with me is not that I cannot save, rather, it is that I save too much. It sounds ridiculous…how can pple save too much?
I began to ‘correct’ that problem by looking beyond my mindset. I used to think that I cannot afford this or that, but realised that it’s quite a limiting belief, just as Alvin had mentioned in this post. As I begin to spend more, my income rose correspondingly too, but there’s never a point in time when my spending is above my income. I actually began to save more too. I thought it’s a funny – I mean who would think that by spending more money, I actually began to earn more and enjoy life more?
I’m not saying that everyone should go and spend all they have. I’m just saying that it works for me, perhaps because I’ve hoarder instincts in the first place. Hoarding money is just second nature to me. Telling a spendthrift to spend more money is just disastrous, in my opinion.
so the KEY is if you Spend all that you earn , you have NO MONEY. Yes, over last 10 years, I increased my income by 10 times, and yes, over the 10 years, now I spend alot more. I can sign up for a S$10,000 seminar without blinking an eye, but NO, I do NOT spend ALL that I earn, and that’s HOW I become Richer. And last year I can make a donation to charity equivalent to what I earned 10 years ago (since I earned 1/10 of what I earn NOW).
So Alvin, be Careful of what you learn from BOOKS. Some are simply rubbish. I read Dr Michael Leong’s book, “Your First Million” and in the book he said there is NO such thing as Good Debt, and he also thinks there is NO way for a businessman to be Win/Win, it can only be Win/Lose. So I can only say this guy is spreading his “misconceptions” to the Public by sharing such misconceptions in his Book.
Please note, la papillon mentioned: “there’s never a point in time when my spending is above my income. I actually began to save more too.”
I hate to Repeat the simple Formula is is a Person Spends ALL that He Earns, he has NO money at all. Whether he earns S$1,000, S$10,000, S$1 million or even more, the equation will always leads to ZERO money for him.
Hi Alvin
I gained a lot of insights about the role money plays in our lives from the book, “Your Life or Your Money” by Vicki Robin and Joe Dominguez.
It makes you re-examine your relationship with money.
I believe in living within one’s means but I also believe in growing my means. The two are not mutually exclusive and can be pursued concurrently. My own experience has been to live within one’s means as a way to have a sustainable (and enjoyable) lifestyle and yet continue to develop relevant skills, experiences as well as passive income to grow one’s means.
Be well and prosper.
Yes. I think through the various views, the thing that we can really agree on is “not to spend all that you earn, and at the same time, increase your earnings”
Sounds right? I really appreciate the sharing by you guys.
And to Panzer, I read that book too. Thanks for your blessing :)
I’m not sure about others, but to me my aim is NOT to acquire money for money’s sake. Is it my Aim to make lots of money? Nope, I believe that the amount of Money is related to the Value-Add we bring to the Society. The Higher the Value-Add, the more money you’re likely to make if you’re providing Value NOT for Free.
Thus, to me, when I earn S$1 million a year, I know that the Value-Add would be At Least 10 times more than when I make S$100,000 a year.
And as we Expand our Means, of course, we can Increase our Expenditure. But to me, my Motivation of reaching the “Score” of earning S$1 million a year is so that I can donate S$100,000 a year. And if I can teach others how to learn how to Better Manage and Grow their money and if I can help 1,000 people reach their One Million Dollars and each of them only need to donate 1% of that, and I would have indirectly contributed to increasing Donations by another S$10 million. And I can help 10,000 people, the figure would be S$100 million instead.
Do NOT only think about yourself and your family. I believe we are part of the Society and when we make money, we should also be thinking of How we can Contribute Money, Time, Resources, Experience and any other things to the society.
But I would say Dr Michael Leong who only thinks that Win/Lose is the Reality and do not think that Win/Win is possible, I just feel very sad for him and feel sad that he is spreading misconceptions through his book.
I didn’t read the book and not sure what the book teach, The FACT is you don’t have to choose between Your Life or Your Money.
The Value of our Life is NOT equivalent to how much we can SPEND on ourselves, I think anyone having such a Thought is too self-centered to realise that Living a Meaningful Life is not just trying to increase our own Standard of Living and our Lifestyle.
Hi Dennis,
The books is not about making a choice between life or money. It’s actually more on making conscious decisions on spending time and money on things that advance your life goals, whatever that may be. It also teaches one to track one’s expenditures to ensure that each dollar spent is accounted for. At least that’s what I gathered from my first reading of the book.
I do not have such high aims in life yet. At present, I’ll be happy to settle myself and my family to a comfortable living. After that, I can begin to think of contributing to society. I do have a few noble aims in life when I’m sufficiently well to do…but that would have to wait a while longer.
Fortunately, La Papillion realized it sooner; or else he will end up as My Money Is My Life.
http://createwealth8888.blogspot.com/2010/01/my-money-is-my-life.html
isn’t that a very limiting thinking/belief?
from your words it appears that psychologically you’re not confident of able to Grow your Means to the extent that you NOT only can take care of your family but also contribute to the Society, be it Money, Time, Resources, Experience and any other things.
Cheers!
Dennis Ng
Hi Dennis,
I wouldn’t deny that it’s not a self limiting belief. I have a plan in mind, but until the first few steps of the plan are put into action, I wouldn’t want to think beyond that. My reasons to become financial free is not altruistic in nature, at least that’s how I feel right now. Unashamedly, it’s to provide security for myself and those immediate people around me.
Once I succeeded in doing that, then I can go ahead with higher aims in mind. I do not think I want to focus on building a better society while doing this, concurrently. If I say I’m doing all I can to make the world a better place now, I’m just kidding myself.
I think that’s an honest assessment of my motivation right now. It might change when circumstances change. I’ll leave the universe to send me that message until then. Till then, I’m just a selfish bastard.
there is nothing wrong with your goal. Personally, 11 years ago I wrote down:”I want to learn how to manage and grow my money to become Financially Free, and when I’m financially free, I will begin teaching others how to manage and grow their money, so that they can be financially free as well.
I reached Financial Freedom in year 2008 and in year 2009, I began conducting seminars through http://www.MasterYourFinance.com Interestingly, my experience is there is NO such thing as Too Big or Too Small for the Universe. There are ways to “tap on the Law of Attraction”, which I share in my “How to Save and Accumulate One Million Dollars” Seminar, as I’ve personally make Law of Attraction worked for me in the past.
As mentioned, it is just a limiting belief which I like to point out to you, that’s all. I didn’t say there is anything else wrong with your goal.
Cheers!
Dennis Ng
LP, most people would think for themselves first, and they would not admit like you do.