In Part I we used the classic game Red Alert to reference our battle to reach financial freedom. Today we will continue using Red Alert as an analogy to go deeper into detail the things we could do. Analogies are good because with it we can describe relate a more difficult or abstract concept into something which people could understand easily, such as my specific example on why we should have a broad general knowledge and to know current affairs, which I mentioned in part I.
Red Alert was created at a time when the Cold War just ended, and the game was full of political meaning. The 2 factions in the game were the Allies and the Soviets. Just like any other war games such as Starcraft or Civilization, each faction has their strengths and weaknesses. The Allies specialised in light machinery and mobility, while the Soviets focused on heavy machineries and durability. Gamers would play and strategise based on their faction's strengths and weaknesses, as well as taking into account the enemy faction's. Similar for us, it is important to analyse what are our strengths and weaknesses so that we can determine what is the best way forward for us to move forward. These strengths and weaknesses does not only mean our skills, but also our character, family background, country we are living in etc.
For those of us who are not married, we do not have as much responsibilities. But at the same time we do not have a combined income of a married couple. By ourselves, our earning power is limited. While there are many people who choose to remain single, in this example I will assume the population of singles to be the generally younger group as those older ones generally would have saved up enough money to do whatever they want to do.
First, if your family is slightly well off, perhaps you may consider borrowing a sum of money to start off your very first safer investment - properties. Not stocks, not businesses, not anything else. Properties are usually the safer bet because at least you would have a place to stay if things go wrong. Its non-liquid nature means it takes a lot of work to buy and sell, hence people generally tend to hold them on a long term basis. As long as you get the big picture right, over time your property should increase in value. Properties in busy cities usually also have no lack of tenants. Once you secured your money generating property to rent it out, you are effectively reaching financial freedom. All that is left to do is to pay off any outstanding loan to the bank and to your parents using your rental income. Your parents most likely will not charge you any interest, which is actually a very big advantage.
Just like in the game when you found an item crate when exploring and got a lucky sum of money, you are able to cut short a lot of time at the initial stage when building your army. And just as it is with the y=ex curve, getting through the most time-wasting initial stages quickly will allow us to save a lot of precious time because all of us have only a very limited lifespan to achieve what we set out to do. Many people have difficulty getting past the initial stage of capital accumulation, ie the first pot of gold.
I understand that in many cultures, getting assistance from parents as an adult is a shameful thing. But do not think that way. You are not gambling away the money, nor saying you are not returning them. You are just borrowing, with every genuine intention to return as soon as you can. Most of the rich people today had help from their parents. From Bill Gates to Elon Musk to Mark Zuckerberg, the rich of today gets all the help they could from their parents.
As a side note, for the parents, if you can, help out your children. Do not wait till you are dead to give out the inheritance. Helping out your children does not mean you unreservedly give them everything and depend on them. No, you should still have a sum of money and a few assets with you. Human nature is something one should never test.
If however, you are like me and can only depend on yourself for everything, then the only way out was mentioned in the last article - slave your ass off and save as much as you can. Live like a slave for the first 10 to 15 years so you can live with your head held high for the rest of your lives.
Married Couples With No Children
This is in fact about the best combination for people who have no strong family background. I will assume here that the couple have a healthy relationship and worthy of each other's 100% trust. A couple that has no trust should not even be married in the first place. Not only does it drag you down emotionally, but also financially.
When 2 people work together, their income can be pooled together, and while one cannot cut away the initial stages of consolidating capital, the couple can expedite the process. In this case 1+1 = 3, because with a common goal and double earning power, the couple as a unit will have more resources at their disposal. Double income, double network, double experience etc. Basically a double of resources, though a portion of them will be duplicates.
In the games we call it having an ally. Once you allied yourself with another player, your offence and defence goes up significantly and both of you has a higher chance to take down more territories. The core of all these is trust. Because without absolute faith in the relationship and in each other's character, many things cannot move forward.
That being said, it is also essential that both couples have the same mindset and intention of rushing towards financial freedom, even if it means sacrificing comfort at the present moment. The catch here is that your true love may be good at every other aspect but do not have the same goal as you. Many simply subscribe to the idea of living in the present and let tomorrow worry about itself. If this is the case, then the most important thing is to talk it out with your other half and work out a balanced plan that can satisfy both parties. It will be slower, but it can still be done.
Married Couples With Children
Your expenses are high. Raising children in a decent environment and providing even the basic resources require a lot of money. Many parents see a big drop in their savings and also have to cut down on other comfort expenses after having children. For couples who have poor planning, their multiple children effectively sink them below the poverty line. This is like playing the game on hard mode. Still playable, but more prone to failure and requires more time. One of the typical handicaps in hard mode is that for the same machine or building that you need to build, it cost more for you than for the enemy.
In this case firstly you have to relook at your expenses and the way you spend your time. For example, in Singapore, it may be better to hire a maid. A maid in Singapore cost about $1000 per month all in, but she will do all the housework for you and help with the children, such as bringing them to school if the children are not old enough. This will free up more time and energy for you to pursue a sideline or even just to go out and get a full time job. As long as the freed up time and energy allows you to earn significantly more than the cost of hiring a maid, then it is a financially sound decision.
Secondly, spending time with children outside of the house need not involve spending money all the time. For younger children, chances are you have very little time and energy left to do a sideline. So your main objective should be to save as much money as you can from your income. When you bring your child out for activities, consider the many free attractions around. The beach, the gardens, hiking trails and even playing soccer together etc are healthy free activities to bond with your children. For older kids who need allowance from you yet are too young to join the labour force, the good thing is they are old enough that you do not be beside them all the time. You have more time to do a sideline. At this stage, you should consider expanding your income sources.
Many will give excuses such as they have no more energy nor time after taking care of the family, and it is definitely a valid reason. But precisely because it is such a legitimate reason, that people tend to feel justified not working on it. And precisely because they do not work on it, they can never reach their goal. The heavens is not going to drop $10m on you simply because you do not have time to strive for financial freedom as you take care of your family. You reap what you sow. You sow the seeds of a happy family, you reap the rewards of it. You did not sow the seeds of financial freedom, you simply do not get it. Note that I am not telling you to sacrifice your family for money. As mentioned many times, health and family is important. But it is also important that you have proper time management, balance everything and consistently work even if you feel tired or feel like giving up.
That being said, among the 3 categories, married couples with children are the most difficult group of people to forge ahead in the path of financial freedom. Single parents with children would be a worse off version of the third category though.
Everybody has different circumstances. The logical decision to make may not be the ideal situation your heart dictates. Whether it is borrowing money from parents, or hire a live-in maid which will sacrifice your privacy, many hesitate to make the logical choice which will advance their goal of financial freedom. As I said in one of my earlier articles, success is a series of correct simple decisions, not a series of rocket science decisions. You just need to know what is your goal and work towards that consistently, reflected by every decision and action you make.
I am unable to go through every specific circumstances, but the above 3 categories should fit the majority of the people. Tweak whatever above to fit your own situation, and if need be, leave a comment. I may not be able to answer your every question, but the internet is full of other smart people who may be able to help.