The Most Important Thing About Money That Has Nothing to Do With Money

During a shift at my previous job…

(Yep, I wasn’t always the Editor of SeedlyReads…)

A colleague who had just joined the organisation asked me why I didn’t own a car despite my seniority.

Given my income then, it wasn’t something that was out of reach.

Rather, it was something I chose not to reach for.

For context, my workplace was in a far-flung corner of Western Singapore, while I live in the East.

The commute takes me a little over two hours via public transport (yes, there are places in Singapore that are that hard to get to).

And after that, it’s about a 15 minutes walk from the gate to my office.

The walk was also unsheltered so that means that I had to deal with the elements — rain or shine.

For most of the new-joiners, almost all of them decided to purchase a car after a few days into the job because the long trek to the office was something that nobody in their right mind would relish.

I’ll admit that there were times when I entertained thoughts of owning a car.

However, I never caved.

In fact, I stuck it out for almost 10 years before I decided to leave my job.

(By the way, the commute was one of, but not the biggest factor which prompted my departure.)

The reason why I’m sharing this story is when I recently reflected on why I’m so invested in beating the personal finance game, I realised that…

What we value in life influences the kinds of goals we set. In turn, our goals will define the tactics we choose to reach them.

Sounds pretty obvious huh?

But you’ll be surprised how many of us never stop to think about why we should be saving money in the first place.

It’s just a value that somehow got attached to us by our parents, peers, or even societal expectations.

However, everyone’s got something that drives their behaviour.

And when it comes to something like money management, we just need to take a little time to get back in touch with our personal core values in order to understand why we do what we do.

This way, it might even make seemingly painful stuff like managing a budget (gasps) enjoyable.

We’ve Been Looking at It All Wrong

When it comes to personal finance, we have a tendency to focus on strategies and tactics.

That’s the reason why we lap up actionable guides and money hacks like:

• What is the best high-interest savings account?
• What kind of insurance should I get?
• Should I top up my CPF Special Account to save on my income tax?

And also how-tos like:

• How to invest $10,000?
• How to retire a millionaire?

While all of these are arguably important — otherwise we wouldn’t have written about them — the results will always vary depending on who we are as a person.

If you take a step back and think about it.

We all earn vastly different incomes, come from markedly different backgrounds, and lead very distinct lives.

All of these inform our values and naturally, how we view money will always be different.

So while financial literacy is crucial.

Financial products, tactics, and strategies will always be secondary to understanding our individual constellation of values.

The Heart of the Matter

Imagine this.

You wake up one day and realise that you’ve finally done all the ‘right’ things with regard to managing your money:

• You’ve whittled your utility bill and living expenses to the minimum
• You’ve got the best savings account + credit card combi that rewards you with cashback and rewards
• Your insurance coverage is perfectly balanced (just enough for you and your dependant’s needs and nothing more)
• You’ve maximised all your CPF contributions, tax reliefs, retirement schemes and etc.
• Your investment portfolio is perfected to give you the ideal returns you need to secure your retirement

Basically, you’ve optimised your life till the point that there’s nothing else you need or can do to improve it.

What if after chasing and attaining this ‘perfect’ life you’ve built… you realise that you’re still not happy?

And that your life was built upon values that came from everyone else and all the advice and how-to resources in the world, but not the most important person in your life?

That’s right.

YOU.

If you ask me what I value, all I have to do is open my Seedly app and it’s immediately obvious that I spend most of my money on travel.

(Not that ANYONE is doing any of that now, given this whole COVID-19 thing and circuit breaker period that we’re all going through.)

So what do I value?

Travelling.

But… that’s still really vague.

More importantly, I need to figure out what is my motivation behind that spending.

In order to do that, I need to understand why I find a particular expenditure meaningful.

Defining Value

Back at my previous job, my wife and my combined income could comfortably afford us two overseas trips a year to locations outside of South East Asia.

This is on top of the basics.

Which includes stuff like servicing our mortgage, living expenses, supporting our families financially, and saving for our future.

All of these have been taken care of.

And the only way we could’ve afforded two overseas trips a year was because we prioritised travel over the convenience of a car.

“Was it worth it?” you ask.

Well… That’s really subjective because it depends on what you value.

Sure, I’ve had colleagues who owned a car AND took two or even more overseas trips a year.

Could I have done the same?

Maybe.

But my ‘internal compass’ was so strong that I already knew what I needed to do when faced with that decision.

In fact, when I was going to leave my job — without having another one lined up, by the way — I sat my wife down and explained to her that my foray into the unknown would mean that we need to tighten our budget.

And even though I had saved up the equivalent of one year’s worth of my monthly salary.

I knew that I didn’t know how long I might potentially be unemployed.

And that I needed to make it last for as long as I can while I experimented and figured out what I wanted to achieve in life.

Naturally, the most ‘sensible’ thing to do would be to put big-ticket items like overseas trips on hold.

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.

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Two months after I left a career which I built for close to 10 years.

My wife and I visited Melbourne and we had the most epic road trip of our lives on the Great Ocean Road.

I know what you’re probably thinking…

That’s money which could’ve given me a few more months to figure out what’s my next step.

In case you think I was being financially irresponsible for no reason.

I wasn’t.

I was guided by my personal core values when I decided to cut into my budget (not to a ridiculous extent of course).

For me, travel is about seeing the world.

It was about expanding my worldview and enriching my life with experiences in a way which no tangible object could.

At the same time, I also value spending time with my loved ones.

To be able to share the sense of wonder and awe that you feel in the face of nature’s ephemeral beauty with someone whom you care deeply about…

These are the values that I hold dear to me.

I guess what I’m trying to get at is this:

When you understand and recognise your own personal core values. That’s when you’ll know how to prioritise how you spend your money and in turn, can live the life that you want.

Of Values, Goals, and Tactics…

The ironic thing about money management is that it isn’t just about money.

The way that most of us approach it — by focusing on tactics and strategies — reveals a deep-seated symptom of disconnect between what society has conditioned us to think that we should want and what we really want.

For example, we know that we need to save money.

But WHY do we need to do so?

And does saving money means saying no to things?

Not exactly.

I’d say that it’s actually about having the ability to say yes.

Let’s say that there are two HDB flats in the market right now.

You’ve looked at your budget and you’ve done the math.

The flat in a remote neighbourhood with no schools or even a convenience store nearby is exactly how much house you can afford if you plan on retiring comfortably by 65 years old.

The other flat is in a neighbourhood which you’ve come to love — since you’ve lived there with your family ever since you were born.

It’s within walking distance of some of the best schools in the land, perfect for sending your kids to, along with every facility and amenity you could ever want.

Plus, your parents are just around the corner which means you can always count on them to babysit your children, and you’re just five minutes away if they ever need you.

However, choosing the latter means that you’re paying more.

In fact, you ran the hypothetical numbers and realised that you’d have to postpone your retirement by another five years…

That sounds like a pretty tough decision, isn’t it?

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But if you value family and building a home, then your decision’s probably already made.

P.S. This is a true story, by the way. A friend of mine was adamant about keeping his expenditure low, so he only ROM-ed his marriage and went with the cheapest flat he could afford. Today, he and his wife are earning more than they used to and one of his chief regrets is not buying a flat in a more favourable location.

The same could be said for any of these values which you can then ascribe a goal to:

Anyways, what I’m saying can be distilled into this very simple checklist:

1. Understand your personal core values: What is the purpose of money in your life?
2. Set goals that align with your values and decide how to manage your money in order to make those goals a reality
3. Once you have the above two sorted out, then you can pick one or more tactics that will help you achieve that goal

Money will ALWAYS be hard to manage.

So why bother finding out which credit card or savings account gives you the best value.

When you don’t even know what your values are?