Wednesday, April 29, 2015

Route towards Financial Freedom - Breaking down the target into smaller goals

When I started my journey towards financial freedom some years back, I started to record my monthly expenses to see how much I need in passive income to cover these expense. The first finding was scary. The expenses and potential expenses (e.g. medical expenses for aging parents, eventual overseas studies cost for kids etc...) made me feel that I would never reach the state of FF. It seemed to be a number too big to achieve.

Then I started to breakdown the expenses into smaller groups:

1. Essential living expenses - Daily expenses that will stay in any stage of life - food, clothes, utilities bills, telecom bills, property tax, children allowances etc.

2. Children education cost - Essential, but will disappear when they graduate.

3. Allowances for parents - Essential, and will stay as long as they live.

4. Church tithing and offering - Essential, may reduce when retire.

5. Car - nice to have luxury, can downgrade to BMW(Bus, MRT, walk) eventually.

6. Income tax - Must pay now, will disappear after retirement.

I set my first goal to have passive income covering item 1, which was relatively easy to reach. After I hit my first goal, I then worked towards item 2 & 3, and then 4. It took a few years but I finally reach 4. When my passive income was able to cover items 1 to 4, I realised that I was more or less financially free!

Breaking down the target into smaller goals has a few advantages:

1. Smaller goals are easier to achieve, hence the journey is easier psychologically.

2. Success boosts morale, and inspire one to move on.

3. With the breaking down of target, one can separate the needs and wants, and not overly plan.

Happy investing!


finance4uandme said...

Hi Sanye,

Thank you for breaking this down for me!! It makes the target setting much easier!

Just curious, how long did it take you to cover each item?


Jimmy L said...


Sanye ◎ 三页 said...

Hi finance$uandme,

The beginning is the hardest. It took a few years to cover it. Along the way, the journey got easier, due to career advancement, and re-investment of dividend.

Anonymous said...

Thanks for sharing your thoughts on financial freedom. Hope you could blog more on this topic moving forward so as to inspire more people to embark on such a journey.

Sanye ◎ 三页 said...

Hi Anonymous,

Thanks for your encouragement.

Anonymous said...


I just got away from uni loan debt and have more cash on hands and would like to start or begin investment.

Do you have an article to guide along? I read it is better to start with UT but some are suggesting that it is better off with starting with shares