Of wanton spending and little buys
When I was 19, I had the great fortune of stumbling into the world of investing. I was enthralled by the idea of compounding interest, and the ability to become decently wealthy with a disciplined dedication to regular savings and a bit of luck in making the right trades. This idea resonated greatly since I have always considered myself to be a frugal person, especially with regards to big purchases. Fortunately, I had a simplistic mindset towards my everyday needs, and I required very few amenities and devices in order to function.
I had no desire towards purchasing designer product brands, service subscriptions such as Netflix, Spotify or gyms, and until today I have not bought anything on any E-commerce platforms (Including Shopee and Lazada). I fortunately did not have any medical obligations or outstanding financial commitments as well. This was a perfect scenario through which I could build up my portfolio and get on the steady path to attaining my goal of $1M SGD in stocks, through which I would be able to use the dividends and earnings from covered calls to fund my travel desires.
However, upon taking a deeper look at my daily spending habits, I conclude that I am far from disciplined in my expenditures. Most of this wanton spending comes from what I would classify as “small and unncessary expenses” which I spend as I go about my daily life. These include Grab rides, small snacks, bottled/canned drinks, purchases of expensive frozen seafood from the supermarket to cook, and the overwhelming need to spend extra on meals at the coffeeshop (Adding ingredients such as $3 extra prawns or $4 extra eggs). These are expenses that are totally unnecessary, yet I justify to myself that because I am not naturally predisposed to big purchases, I should be allowed the excuse of enjoying those little purchases. Because of my free cash flow, I was not personally obliged to have a personal budget for certain types of spending, which contributes to the problem.
Cumulatively, the average value of these “small” purchases would add up as such on a daily basis:
- Grab Ride – $24.00
- Small Snacks – $4.00
- Bottled Drink (Honey Lemon) – $1.50
- Seafood (Twice a week) – $4.00
- Extra ingredients at lunch – $2.00
- Miscellaneous – $2.50
That would amount to $38.00 for an average workday, which multiplied by 21 workdays a month would amount to $798.00 of wanton unneccesary spending that could have been used to purchase 100 shares of BNGO to sell covered calls on. The step to solving any situation begins with the recognition of the problem, and I am glad that I have now found the motivation in order to being a change.
It would be difficult, but not impossible to cut out of all of these spendings immediately, but i do believe that it is a good start for me to reduce this amount to somewhere around $25 a day. This would free up $13 * 21 = $273 of extra savings a month to invest, which is still a decent amount. While one may argue that food is a necessary spending, I still believe that the extra ingredients are superfluous because if I am still hungry, in the words of my friend : You could eat Gardenia bread and peanut butter. This comment, ludicrous as it sounds, does have its point after all.