Monday, 21 December 2015

You don't save your way out of poverty

Remember those days when air-con buses were first introduced in Singapore?

They cost several cents more over the traditional non-aircon buses.

There were a time when I would let these new air-con buses pass while I waited for the normal non--aircon ones.

Those were bittersweet days of "austerity" due to modest salary. And leaving school at 16.

Thankfully, I subscribed to the earn more motto of my fellow brethren with modest means.

The save more strategy is more suitable for those who are already in a more comfortable situation who suddenly had the epiphany that they had been a tad too extravagant or spendthrift in their lifestyles...

This is nothing new. I've written an old piece on this "Earn more or Save more" topic 2 years ago.

When I look back and at the people around me - especially those who grew up in HDB 1 & 1/2 room, 2 room, and 3 room housing estates - how many managed to escape the poverty trap by saving more?

Why do Asian families focus so much on education? Intellectual pursuit? No right? It's study hard so we can earn more, am I right?

What happens if you are born into modest means and with little or no academic papers like me?

You crack your brain and bust your ass off to earn more first!

There's all the time in the world to work on save more when there's actual real money to be saved!!! 

This is purely anecdotal evidence now what I'm going to share. Bite me if you want empirical evidence! 

I see 3 main strategies that worked for us former street urchins:

1) Start your own business

2) Go into "no basic; pure commission" sales path - real estate, insurance, remisier, etc.

3) Climb the corporate career. (We have O' levels become Colonel, CEO, MD, etc. Don't look at me! Big daddy says one hor! You never watch our National Day rally? True lah!)


No investing or trading examples?

Well, I have not met any yet. The closest I've observed are those who start their own businesses selling financial freedom courses and seminars. Can get listed some more! Wink.


My first pot of silver was from corporate life.

Making money when we have money - that's a whole another ball game.

Yes. Hidden in that little statement is something much deeper and profound. No worries. You'll stumble to the truth all in good time...

And I'll not spoil that moment for you.


  1. Hi SMOL,

    Let's address the peripherals first :) I've been to both camps, so I know what I'm talking about, haha! I am in the save more camp first, but after I realised that there's nothing else for me to cut already, and I still want to save more, then I have to jump to the other camp of earning more. I think saving more is more comfortable to me, because I can just change my habits. Earning more is not so easy for me, which explains why it took a longer time to psych myself up to that task.

    Now for the hidden menu: There are some people who tries to earn a passive income from stocks with very little capital. Doing so is like trying to pull themselves out of poverty by saving more. The better way is to go out there, spend more time and effort earning that first bag of cash. Once you have capital, yield is quite easy to get. So the first 20 yrs of your life, you should focus on getting good yield on your human capital. Then for the next 20 yrs, you should know if you have a chance to reach the top ladder, so you can plan accordingly for your financial assets to take over your waning human asset.

    Don't focus doesn't mean don't care. Just focus more on career and worry less about the passive income stream that is sputtering out from the tiny capital. Some pple do it in reverse. It'll be hard to 'save yourself out of poverty'.

    Hope I'm barking up the right tree, haha

    1. LP,

      We are pretty much on the same page ;)

      I am more coming from the no papers perspective.

      When I went back to part-time retail sales 2 years ago, I was earning per hour not very far from flipping burgers at our fast food outlets.

      Let's use the current rate of $7 per hour. How to save more to achieve escape velocity from poverty?

      (Perhaps that's why Singapore Pools so attractive to the masses?)

      If we are earning the going rate for giving tuition, then we can consider the save more option ;)

      Sometimes I do feel a bit guilty when I realise the profits from my one winning trade can be several months of what my full time retail colleagues earn...

      But the moment I got stopped out with losses, I banish such silly sentiments...

      One is human resource input; the other is putting capital at risk. Cannot compare.

      I shouldn't be ashamed of being a nano capitalist.

  2. Our human asset will yield the best return before our 40s or 50s. Whoever read this, take note!

    Why there is no audited statement available on how I made my millions on investing/trading method? LOL!

    1. CW,

      Land owners and shepherds always trust but verify.

      That's because we never trust a statistics that we have not manipulated ourselves ;)

    2. Reality is not soothing to ears and eyes, deceptions are!

  3. No doubt if one can earn more, one can save more. Money doesn't drop from the sky (people who buy Toto always hope for that).
    Aiyo cham la... I am at none of the above 3 strategies currently. Time to review myself in the mirror le.

    1. Rainbow girl,

      The 3 strategies were written from a man's perspective.

      Girls have a fourth strategy and you all intuitively know it.

      A lot of hard work and sacrifice involved though - there's no such thing as ugly girls; only lazy girls.

      Then you have earned the right to tell the men, "If you want it, put a ring on it."

  4. Hi SMOL

    I gamed the system a little. Sometime, if you can't change the rules of the game, you have to figure out how to bent it to win it. Not to break it (illegal).

    Example, society need a degree. I give it to them...with a 1 year course at $12k doing part time studies during my 1st job. happy? climb faster.

    What else? Every obstacles are there to overcome. Just that what are worth our attention to.

    Be it save more or spend less, i think both are important. Why must choose 1. Do both, meaningfully. Find the balance.

    1. Frugal Daddy,

      What you have done is within the ambit of "earning more".

      It requires imagination, creativity, a bit risk taking, and a dash of courage in walking the unbeaten paths ;)

      Just like those who treat CPF as real money and do their best to squeeze blood out from the CPF stone.

      They are least likely to go to Hong Lim Park to shout O$P$ ;)

      Similarly, those who treat their HDB flats as investments would be more likely to play the 2 bites of the cherry, upgrade, downgrade game better than those who parrot the "no cashflow means not asset" refrain.

      If you view HDB with 99 year leases as "worthless" when the lease expires, pray tell how you evaluate REITs with similar leases and businesses with concessions?

      "Earing more" demands more brain power.

      "Saving more" is more dependent on discipline prowess.

    2. Brother SMOL,

      Very insightful post, but aren't you contradict yourself with the title "You don't save your way out of poverty" since you earned your first pot of silver from corporate life? Perhaps it would be more true to say " You don't save your way into Financial Freedom".


    3. Bang,

      I had to re-read your comment a few times to find the contradiction ;)

      I did say I "earned", not "saved" my first pot of silver...

      Then I finally see what we you see :)

      Talk about my selective perception! LOL!

      I'm sharing my perspective from modest background with little or no papers. People like me don't think about financial freedom; we have more pressing issues to focus on when we were young - getting out of "poverty".

      OK, poverty is too strong a word, but I guess readers know what I meant.

      Contrast this with a graduate (with ABCs behind their names), lives in a condo, earning $10-12K a month, making plans for financial freedom before 35 ;)

      Cheers and Happy Winter Solstice to you too!

  5. haha i am right its you.

    knn market already holiday mood, wishing you merry christmas and HNY first hor.

    1. by the way you are right, saving can't really get you anyway, the key is how to make it big. its takes a lot of patience, preperation, and most of all, courage.

    2. coconut,

      Ah ber then?

      Who else likes to argue with the stop sign and poke at people who say they can "see" the Emperor's new clothes?

      Lucky I not a bleeding heart. Although there are times I feel like screaming to those newbies who focus so much on "saving" by using StanChart...

      The focus should be to grow our account and position size bigger since our brokers will give us volume discounts.

      With better platforms, better service, prettier customer service, and freebies (that bleeding heart likes to share about his free movie tickets) thrown in for "free".

  6. well it depends if your income is scalable or not. if yes (commission based), earn more. if no(salaried worker, no much career prospect), save more. if also takes these 2 to clap.
    if you earn more and dont save more, you dont really have more :)

    1. Jimmy,

      It's not a binary decision ;)

      You have answered your own sitting on the fence answer with:

      "well it depends if your income is scalable or not."

      If my income is not scalable (euphemism for career kenna stuck), then "saving more" is the ONLY option. Let's not pretend its a "choice".

      I prefer to fly with BOTH wings :)

      Earning more can be something as mundane as giving tuition during NS or undergraduate time by earning more; while others are trying to save more of their allowances from daddy & mommy to fund their opportunity funds.

      That's why some young financial bloggers have a sizable opportunity fund when they graduated; while some of their peers are still paying down their student loans ;)

      Then there are those like Frugal Daddy who flips the equation on its head by working full-time and studying part-time - Look ma! No student debt!


    2. nowadays young adults have very strong backing or mountains - their parents. heard real life stories that some of their parents bought car & house for them
      hmm how come my time everything i have to do by myself? hehe

    3. Jimmy,

      Don't be envious. We are the lucky ones!

      We are the ones who don't have to live under the long shadow of great expectations ;)

      Nor do we suffer from self-doubts and always questioning whether we can survive on our own without using the family name.

      I can still feel the joy and pride in paying for my own watch without using my parent's money.

      Needless to say, I was over the moon with my resale HDB 3 room flat - never mind its the smallest "S" version" type.

      So what if it's a dog kennel? I rather be the owner and top dog in my own hole in the wall, than to be known as that freeloader living in a palace ;)

      How's my cheerleading?

  7. Hi SMOL,

    I think most people understand earn more important and underrated savings more.
    Why do I say this? You can see parents giving all sorts of tuitions to their kids/ young adults right. Come on, 18 years old still need tuition? But it's the norm now. Why, all for that last grade to get into those lucrative faculity( medicine, law or even accounting)

    If u compare the zest of parents to give that possible future earning powers of kids and how they advice their kids on frugality, u will understand they deem earnings or savings as more important.

    If a kid wanted a gift, what would the parent said?

    A) how about you saving enough for it yourself?
    B) if u get an A for Chinese, it will be your prize?
    C) it is too ex. And u dun play for long before u get sick of it anyway
    D) ok. Darling !!

    B) C) will directly or indirectly tell the child the importance of earnings
    D) will spoil the child, so in order to lessen the guilt, we will add" remember to work hard for your studies" or study hard next time you can pay for this yourself

    I said all the above before. I ask this toy is worth 50 stickers ? Worth it ? Stickers are rewards ... Sometime my son says no

    Then sometime I act poor and say if I buy this I will need to work OT and less time for you during weekend ... Ok? KNN sometimes he says papa work weekend lol

    1. Sillyinvestor,

      Hit your head! Don't spoil market for our tuition giving friends OK?

      And don't you dare follow coconut. What KNN? You're a teacher! You're not former Geyland pia kiah ;)

      Go wash your mouth with Colgate! Go!

      You always have some interesting alternative viewpoints. Make me look very mainstream...

      I think earning more and saving more is lot like exercising more and dieting more.

      When we want to lose weight, what do most people do first? Don't lie!

      Of course the best is do BOTH.

      Only helicopters can fly with NO wings :)

    2. hello, better listen more from me if you want to be financial freedom ok!

      save so much for what? you becomes a stingy guy and everywhere you go and what you do you only see money money! you call that financial freedom?? freedom your head!

    3. I think this helicopter metaphor most young people may not get it.

      It means you don't have to earn more or save more if your daddy or ah kong rich "dao"....

      (Must say it in a Malaysian Chinese accent for full effect)

    4. smol, don't worry, i'm on your side, put in more brain power and see if you can earn more, not save more!

    5. if you can't increase your income, or if you invest, you can't increase your portfolio or trading account size, you will stuck in the present enviroment and that is not freedom. how much can one save to increase his financial freedom? go negetive??

    6. coconut,

      See? Talk like "sum seng".


      You want to sell trading newsletters or courses?

      Appoint me as your marketing agent OK? I'll do anything for a drink! I cheaper than Desker Road!

      Lai lai!

      Come listen to dungeon-based trader how to achieve financial freedom!

      Don't you want to know the secret of making $1 million dollars in trading?

      Start with $10 million dollars.

    7. and if you like CW, save a lot and put them into your portfolio to generate more incomes, thats not saving, thats one way to increase your income and thats should be the way.

    8. as for a trader, i put all my winnings back into my account, that will gives me more firing power so that my account size will increase, you don't call it saving.

    9. sorry very free, market not moving haha....

    10. coconut,

      No worries. I understand.

      Holiday mood mah.

      I in a relaxed mood too. Squared all my trading positions. Now sitting on the sidewalk trying not to get distracted by the skirts walking by.

      If got opportunity to ride the window dressing trade, I'll hop on for a quickie.

      If not, I'll just close the book for the trading year next week :)

      Black is a nice colour. I hate red ink.

    11. SMOL,

      Between u and me, u are the one always like teacher, not me. I GTO. Lol tug out shirt play basketball, until my P roll eyes!

      U not mainstream, just that i am "emerging" lol

      Today is the 2nd week my gastric giving me problem, ask the TCM that see my child to look at me too. He said its the liver, and I am too stress.

      I ask how to destress ... He just LOL


    12. i still open to trading hehe
      any consistent winning trading method?
      share leh haha
      dont let your strongly guarded secret disappear leh

    13. Jimmy,

      Go teach "white papers" how to trade.

      All upside; zero downside :)

      Competition is rife though.

      Do you know of any entry barriers?

      OK, that will be one drink on you.

      I'll put it on your tab.

    14. Sillyinvestor,

      Ah... GTO first TV series... Nanako Matsushima (松嶋 菜々子)... What a beautiful actress...

      Medicine can only treat the symptoms in your case.

      You may need to ask whoever put the ring on your neck to remove it...

      If not, each time the bell rings, you'll jump!

  8. Hi Jared,

    We are on the same page and same non-aircon bus! 

    I also written a similar post “to be a successful investor start earning first” .

    Link here

    Of course saving is important, but earning more is “more” important, which is supported by financial management knowledge. The larger your wealth size, the more important it is for financial management.

    While I live through almost all types of HDB flats, I must admit, I never subscribe to the motto of save more! Simply because I have nothing to save with a meagre pocket money. If I don’t earn, JIALAT!

    Since pri school, I am always thinking of earning more. I sold erasers, stickers, spiders and play marbles and cards to earn etc Then in sec school, I sold Burberry polo shirts because my sis is able to get 40% discount as staffs, which I sold at 20-30% discount to schoolmates. I also work part time job after O Levels, and started giving tuition up to when I was 30. But I forget about health, that is my biggest regret!

    While I came from a very humble background, because of the ability to earn, I never feel that I am lacking of anything then, except for my dream of “having a 5-room flat” when I grow up.

    Sometimes I was really wondering if financial blogging is really a good thing or not?

    While spreading financial knowledge is very good, but I am worry to a certain extent, lots of Financial Idols are seriously sending the wrong signals across.

    Luckily, I can tell my kids listen to Papa only!

    1. Rolf,

      Of course you and see what I see; you had an even more "challenging" childhood than me ;)

      Selective perception makes a lot of people blind to the fact Warren Buffet is a businessman first, investor second.

      Warren Buffet invests in companies; retail investors invest in stocks. Some can't tell the difference.

      But not you ;)

      If I earn $50K per year, how on earth am I going to save $100K per year?

      But if I earn $200K per year, with a bit of lifestyle adjustments and changes, its quite plausible to save $100K per year. Is there still a need to "invest" our way to financial freedom?

      Primary school math.

      Success is what we have to sacrifice to achieve it.

      Sorry to hear what you paid in kind. I had to pay my dues too. 7 years away from home wasn't always fun and games.

      The joke is on those who believe all you need is 5 minutes a day. Yeah right...

      You think entrepreneurs got time for their families when they were busy building up their businesses?

      Toys and cars are given as "compensation" for not being there...

      Don't you worry about the diversity of views in financial blogging.

      Newton's Third Law of Motion:

      For every action, there is an equal and opposite reaction ;)

  9. there are trading and investing secrets or formular is the biggest misconception there is.

    is like saying this model is so successful there must be some secret to the way she walk. please la, everyone knows how to walk as long as you have 2 legs.

    1. coconut,

      Young people seeking the holy grail I can understand since it's part of our growth and learning process.

      Been there; done it myself.

      It's when I see men and women in their 60s & 70s using their retirements funds to pay for directions to the holy grail... that's sad.

      Evidently wisdom don't always go in tandem with age :(

    2. Wisdom, Trust and Chants!

      "If you are near the Temple of Cows and keep hearing a bunch of cowboys chanting the Sutra of Milk, soon you will become religious." - Createwealth8888

    3. CW,

      Well, I guess it could also be the processor between the ears.

      In this day and age, if you believe the chant the Earth is flat, enter into the Temple of Cows lor.

      If the cowboys discover you are male and cannot provide milk, there's always beef steaks!

  10. I was thinking more about self-actualisation.

    Maybe I were too polite. Not everyone thinks in terms of ikigai...

    You are perhaps closer to the truth - esteem needs.

    Sometimes it's not enough to wear that Rolex, drive that Mercedes, and live in that landed property.

    Some have a hole in their hearts dying to prove they are better than others.

    Just like those CEOs with little formal education who "bought" their PhDs from degree mills just to have the satisfaction of people addressing them as Dr XXX.

    "Sir, by buying this wholelife policy, you will join a very exclusive club of distinguished customers who can afford paying $1 million in annual premiums.

    Your friends, Dr XXX and Mdm YYY are already our proud members. Do you wish to join them too?

    Yes, just sign on the dotted line here."

    And that's how I would sell ice to eskimos ;)


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