Monday 29 January 2024

F.I/[R.E] and relationships

Financial independence can be distilled down into a simple formula.  

Income >= Expenses. 

There are different degrees of F.I. but the common notion is that you are only really F.I. once your level of passive income surpasses your expenses to a certain degree. 

In any case, consider a fresh graduate out of school trying to get to a state of F.I. 

It is really quite formulaic - 1) maximize your income and replace income that is earned trading your time with that which is earned via capital; and 2) reduce your expenses.   

There are many ways to go about part 1) but the focus of this article is on the fundamentals of part 2 above and the main factor that drives it. 

In my humble opinion, in the context of Singapore and discussing this purely from an expense point of view, whether you can get to F.I./[R.E], how fast you can get there and remain there will depend on certain major factors described below, not whether you can suffer on S$3.50 cai png vs the need to consume S$20 avocado toast. 

Sure - it all adds up, but I believe these 3 factors are the big ones that can cause massive impact on your journey. I think the pareto principle holds true here. 

Key Factors

1) Your partner in life - Basically the person you will be living with in a long term relationship, whether its through a marriage or just a simple long term partnership. 

2) Your accommodation - I believe everyone needs a base of operations. Some prefer HDB which goes for a minimum S$300k, but others prefer a private apartment which will be at least 2 to 3x the price. 

3) Your transportation - Need to own a private vehicle? If you want one with four wheels, that's at least S$10k per annum in running costs. Two wheels might start at S$2.5k per annum. Unlimited public transport in Singapore will cost you S$1.5k per annum. 

What is the one major factor that will drive your F.I./[R.E.] process?

My own personal experience is that the choice of your partner will not only drive your path of F.I./[R.E.], but will also determine whether you will remain F.I./[R.E.]. 

This is because your partner will generally have a say (I guess for chauvinists it might be different) in the lifestyle aspirations for the both of you. And these aspirations will revolve around: 

1) Housing aspirations - Where and what kind of housing do you both want to stay in? 

2) Lifestyle consumption aspirations - Do you want to travel and how flash you both want to go? Where do you want to do most of the boring day to day eating? How do you want to get around Singapore? 

3) Children - Do you aspire to build a nest for 2 or do you want to play the game of life on hardcore mode and build a family in Singapore?

4) Career aspirations - How ambitious are the both of you in rising to the top of rat race? Do you love your jobs or are you the sort that work to get paid to live ? Do you want to set up a business of your own which requires a heavy infusion of capital? 

5) Familial obligations - Do you or your partner need to support your immediate family? Maybe you have ailing parents who actually require financial support, or perhaps a younger sibling whom you need to help foot their education expenses? 

6) Others - The list can go on.

Qualities I look out for in a partner

So what do you look out for in a potential partner? 

I'm not an expert in this field, though I have been through a couple of relationships since my junior college days, and in my experience, I found the below qualities to be important attributes:

1) Compatibility of aspirations and values - Are your aspirations largely compatible? How about your financial values? What is your lifestyle consumption habits like vis a vis your partners'? How about thoughts on contribution to household and life expenses - do you go 50-50 or you have to take it all on your chin?

2) Conflict resolution style - How do you both resolve conflict, which will invariably come up. Is there a mechanic which you can find some common ground in how such situations are taken care of? Basically can you work together as a team to face life? 

3) Openness to experiences - Do new experiences generally invigorate your partner, or does it cause terror and fright. Does your partner prefer routine instead of trying to deal with new experiences, whether sought after or imposed upon?   

5) Ability to learn and adapt - Is there a desire and ability to learn new tricks? How adaptable is one to changes, such as work requirements or lifestyle changes, especially in a situation where income is not exactly regular and subject to the vagaries of the stock market?   

Personal experience

Readers who have been with me from the start would probably know I only found my partner 5+ years ago in 2018 when I left banking - certainly helps when you have a clearer head and more control over your time. 

We dated for a while and decided to get married in mid 2022 - I have my own views on marriage in Singapore but that is for another topic. 

In all aspects, I must say I am a really lucky guy for being to find a gem like her, what more through one of those dating apps - a really curious personality who is open to new experiences with an ability to adapt and desire to learn and improve herself, and I am very grateful that she is in my life. 

From a financial standpoint, although her income levels then was slightly below the median in Singapore (creatives really do not get rewarded financially (at least at the start) in our society), I found the following behaviors to be positive and helped to give me the green light: 

1) Contribution to expenses - An early indication was her desire and actual contribution to lifestyle expenses on a joint and equal when it comes to eating out and traveling. 

2) Living below her means - Although her income was not high, she still managed to save money no matter how small the quantum.  

3) Ability and desire to learn - She is open to learning and improving herself in life. Be it financial knowledge and investments, budgeting works, etc, she is always looking to learn new things which might be helpful to her

4) Openness to experiences - Let's just say she has an open mind especially when it comes to how people live their lives, otherwise she would not have dated a "guy on extended sabbatical". I think we both have the shared belief that as long as you are financial responsible for your own expenses, you can choose to live the way you like. 

Perhaps for the single folks who are on your on financial independence journeys out there, maybe this list of qualities might be helpful if you are actually looking out for a partner, because this will help to mitigate any conflicts that might arise down the road. 

Maybe the other topic of interest is how do my wife and I live well together and share the financial burden, despite having different lifestyles - she is currently working full time, having found her groove in another industry that pays well, whereas I have been on an extended sabbatical for 8 months and counting. 

But that is another topic for another time. 

Remind me again - what is the one constant in life? 

Having said all that... the kicker for the spiel above is that such aspirations and values can change even though it might initially be green lights on all fronts. 

That is because your partner will change. 

You will change. 

Say maybe you start off working and think to yourself - all jobs suck balls, fuck I really want to hunker down and get F.I./[R.E.] ASAP.  

But after 10 years of living like a monk and working your job you realise hey maybe I have a bit more autonomy now and it is more tolerable and I enjoy this and that aspect, what the heck... 

Or you both started off not wanting kids, but 5 years down the road, suddenly you want a human kid and not just a fur-kid. 

Or maybe your partner didn't mind a HDB flat last time but upon seeing all her friends upgrading, she decided she wants to stay in a private apartment now?  

The list of potential conflicts that could arise is endless. 

What do you do then? 

The simple truth is I do not know - I am simply making life up as I go along, but I suspect such situations will resolve according to your individual priorities and how you work together as team in melding those priorities, so it comes down again to values. And I do find that it does help to be on the same pages in those aforementioned items at the start. 

But perhaps the wiser and older people with more relationship experience can help shed some light in these aspects? 

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