The 4 Quadrants of Spending

The Ultimate 4 Quadrants Shopping Guide Especially If You Are 28 and Older

It is getting easier to buy things now. With Shopee, Lazada, Taobao working their magic with their 9.9, 10.10, 11.11, 12.12 sales, consumers like you and me are finding it hard to resist buying. You are not alone in this. Shopee, Lazada, Taobao’s amazing algorithm makes sure that they show us things that are of interest to us and will keep reminding us until we press “add to cart” to achieve our happiness (or end our misery). It is only at the end of the month that we log into our Ibanking account to see that we have already spend over hundreds or thousands of dollars shopping.

 

First thing first

This is not a post to advocate not spending. I believe expenditures are important and necessary to our productive and creative self. It will be quite lame to live a life saving every single cent and not enjoying the joys of the world. Thousand of blogs out there are advocating on “saving money on the Starbucks” or “stop buying the avocado toast”. While it certainly makes financial sense, it is also certain that it will be a miserable life. Let me give you a real life example.

When I was 24, just graduated from University. I was poor and was determined to save every single cent. In the months to come, I only ate at the mixed vegetable rice stall at hawker centers. It costed me $2.90 when I bought a combination of 2 vegetables and 1 meat. I also refused to buy coffee/tea. This saved me a lot of money but I assured you that I was not looking forward for my meals at all. Financially, it make sense. Psychologically, it took a toll. I change a lot after that and you can read more here.

My suggestion in this ultimate shopping guide aims to help you find a balance financially and psychologically. That being said, saving money and investing them is the cheapest way to become financially free.

 

The 4 Quadrants of Spending

After sharing about personal finance for over 8 years, I realised 99% of what you buy will fall into the 4 Quadrants. I will sharing real examples and also for those of you who needs rule of thumbs, I will be glad to provide that for you.

The 4 Quadrants of Spending

The 4 Quadrants of Spending

 

The Cheap and Useful

The cheap and useful is the most straight forward of all. Just buy it. This is because it is going to help you with your pursuit of growth and it is also affordable. An example of cheap and useful will be like a book. A book increases your knowledge in the subject matter. You may get more insights after reading a book. You can even read it again and still get insights for it. I buy books almost on a monthly basis and I can feel myself growing in knowledge. (Sidenote: I’m in the process of getting a affiliate program with bookdepository. I strongly believe in daily learning and hope you can do the same too). In this quadrant, it is your cheapest opportunity to succeed. Previously, I wrote about 3 books to read during COVID-19. I’m probably going to update that soon.

 

The Expensive and Useful

There will be times when the product or services is expensive. However, my advice is invest and buy it. This is because these product or services will probably allow you to be more productive and more effective. Some examples of the expensive and useful are an IPad, a good handphone, a good powered laptop (especially if you are doing video editing) or standing desk. These will increase your productivity on a daily basis. The last thing we want is to create a bad experience when you hustle. Some other products or services includes a gym membership, a coaching or investment class.

4 years back in an feeble attempt to save money. I settled on a Xiaomi 3 phone. The specs were okay and I got it because it was cheap. The phone started to lag after 6 months. It was such a pain finding information on a phone. On one fateful day, my hands slipped and the Xiaomi 3 came crashing down on the floor. When I picked it up, the phone screen was already died. The phone refused to reboot and I spend the next day and a half buying a new phone and transferring all my data to the next phone. I probably missed out a day of text. As a self employed helping clients, the worse thing that can happen is to suddenly become uncontactable. I bought Huawei’s flagship P10 Plus after that and never looked back.

Invest when you need to.

 

The Not Useful (Be it cheap or expensive)

The expensive and the not useful will usually fall into the luxury market space. I once knew a lady who spend $800+ on a pair of slippers. She has worn it once before and she stopped wearing it because she’s afraid the slippers will be exposed to the rain. For those of you who are curious, this is the slipper.

The Ultimate 4 Quadrants Shopping Guide Especially If You Are 28 and Older Expensive and Not Useful

The Ultimate 4 Quadrants Shopping Guide Especially If You Are 28 and Older Expensive and Not Useful

On the other side of the quadrants are the cheap and the not useful. While it seems harmless due to the same quantum, the accumulation of these products will add up. Examples of these are like a low quality shirt (you know you can feel it).

I once when to taobao to buy a pair of jeans. The jeans cost only $5 and I felt that it was “useful” for me. When it arrived, the cutting was terrible and there was this weird smell on it. After wearing it for one time, it went even more out of shape and my pocket had a hole in them. I threw it away and swear by Uniqlo now.

A very general rule for those in the not useful quadrant is to not buy it.

However, like all things in life, you can be flexible. If the part of Hermes Slippers is essential for your happiness (or for whatever reason logical or not), consider buying a second hand one. The second hand market is a big one. You probably will save lots just buying on a second hand market. The best part is that no one will ever know that you got it second handed! Hang on for another tip coming below.

 

Disclaimer: Useful or Not

One of the most common question my client ask me is “How do we know if this is useful?”

The fact remains that the usefulness of the item is subjective and highly dependent of oneself. For example, the gym membership is expensive and “useful” ONLY if you go to the gym and workout at the gym. Otherwise, it is not useful at all. To help you further if you are unsure if the product or services is useful or not, I have created this rule of thumb for you to consider.

If you are NOT SURE that the item is useful, and it cost > 15% of your monthly income, then don’t buy it.

If you are KNOW that the item is NOT USEFUL BUT you know you will feel happy, and if it is > 5% of your monthly income, then don’t buy it. If you still want to buy it, consider a 2nd hand version.

 

Final Thoughts By Wealthdojo

Hopefully, this guide can help you make better decision in your next shopping session. Be it Cyber Monday, Single’s Day, Boxing Day, you will be prepared. Wishing the best in your financial journey.

 

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.

How COVID19 is robbing your wealth secretly

How COVID19 is robbing your wealth secretly

COVID-19 has swept the world off its’ feet. With it still lurking around, are you aware that there are many silent robbers that are robbing you of your wealth secretly? In Wealthdojo 6 Level Wealth Karate, we talk the importance of shielding our wealth from these silent robbers.

In this article, we are also excited to partner with Jocelyn who is a self taught investor in her 40s. Do check out her website below.

Have you saved money while working from home?

How COVID19 is robbing your wealth secretly Working From Home

How COVID19 is robbing your wealth secretly: Working From Home

Since Singapore went into circuit breaker lockdown on 7 April, many Singaporeans have been forced to work from home where possible. Not all jobs are WFH-friendly but for those that are, benefits of a WFH arrangement include zero commute time, greatly reduced transportation costs and reduced weekday meal expenses (assuming you do not live in the CBD). 

For the 7 or so weeks that Singapore was in circuit breaker, most establishments were forced to close and people were advised to leave the house only out of necessity, such as shopping for groceries or if working in essential services. 

If you were working from home during the circuit breaker period, it makes sense to think that you should have saved quite a bit on transport and food expenses right? That may not necessarily be the case. Here are four reasons that may have prevented you from keeping within your budget:

 

#1: Ordering food delivery and “indulging a bit” 

How COVID19 is robbing your wealth secretly Food Delivery

How COVID19 is robbing your wealth secretly: Food Delivery

Instead of getting your weekday lunches from the nearby kopitiam or cooking at home, you may find yourself going for more expensive options when ordering food delivery. This could be to feed a craving or ordering from places that you’re not able to visit in person. 

It is not uncommon for F&B establishments to mark up their food prices on food delivery apps. They do this to offset the platform/commission fee that food delivery platforms charge for listing their menu on the app! This means that even when ordering from the same place, opting for food delivery may cost 5-10% more than physically going to the store to tabao your food.

What to do instead

  • Have a weekly limit on the number of times you order food delivery
  • Cook more meals at home 

#2: Spending more time (and money) shopping online 

Thanks for covid-19, online shopping saw a record boom worldwide. Instead of going to a neighborhood mall or Orchard road for retail leisure, Singaporeans went online instead, clocking record increases in app traffic and transaction volumes on popular shopping apps.  Shopee saw a 40% increase in screen time by app users along with increased sales during the circuit breaker period. 

How COVID19 is robbing your wealth secretly Online Shopping

How COVID19 is robbing your wealth secretly Online Shopping

Online shopping is just a click or tap away, with a lot less friction to carting out a purchase. With people being cooped up at home and spending less time outside, some have also turned to online shopping as a way to pass time. This can lead to impulse buys or spending more on non-essential purchases! 

What to do instead:

  • Move your online shopping apps to a folder and away from the first page of your phone, and unsubscribe from marketing emails. Out of sight, out of mind. 
  • Start an affordable hobby to spend your time more meaningfully! Eg. Exercising outdoors, reading, cooking
  • Create a budget for your shopping needs and stay committed to it. Remember to prioritize needs over wants!

#3: Paying for convenience

How COVID19 is robbing your wealth secretly convenience

How COVID19 is robbing your wealth secretly convenience

The rise in door-to-door delivery makes it incredibly convenient to buy groceries or choosing to dine in, with food delivery. The trade-off for this convenience is the delivery fee. An additional $2-3 to have a meal delivered to your doorstep may not seem like much but if you’re ordering meal deliveries multiple times a week/day, those delivery fees can add up very quickly. 

What to do instead: 

  • Consolidate grocery orders to capitalize on free delivery and/or save on delivery costs
  • Watch out for promotions and discounts so you can save on these necessary purchases 
  • Consider walking to a nearby kopitiam to tabao your meal instead of getting it delivered. 

 

#4: Paying for comfort 

With most people forced to work from home, many have turned to buying desks and chairs for a more comfortable working experience. This makes sense if your existing tables and chairs are not suited for long hours of desk work. A quality table or chair may be a good investment in the long term, but take care not to let these “investments” become white elephants once COVID-19 is behind us and offices reopen!

What to do instead: 

  • Get creative with your WFH setup!
    • Repurpose your dining area for work during the day,
    • If you have a small fridge, use it as a “standing table” when you feel like you need a stretch
    • Hunt for office furniture bargains on FB or Carousell. Businesses that have to downsize or close their offices will often need to get rid of their furniture. 

 

Stay committed to your cause

If you are already managing your expenses and/or budget tracking, you probably have a good reason for doing so. You may be saving up for a house, or a new family member or just trying to make ends meet with reduced income. Reminding yourself about this goal can help you refocus and double down on keeping to your budget. 

Sometimes, having a better picture of your money flow can help you manage your expenses and budgets. Create a sankey budget diagram of your monthly cashflow (check out mine here) and use that to guide your budgeting decisions!  

Guest writer: Joce
A self-taught investor working towards her goal of achieving financial freedom in her forties. Check out her blog here: Financial Freedom by 40

 

Final Thoughts By Wealthdojo

Congratulations for reading thus far. COVID-19 seems to be here to stay. The journey ahead seems like a scary one and I want assure you that you will definitely get through it.

Special thanks for Jocelyn. Thank you for your special appearance. I really enjoyed your article.

Join my Telegram Channel for a tip a day! In Wealthdojo, we dedicate a small amount of time daily for learning new things. Continuous learning is one of the greatest secrets of success.

For those of you who want to turbocharge your journey, contact me at chengkokoh@gmail.com. I would like to hear from you what your experiences are currently and from there, we develop a plan specially catered just for your journey.

We wish you all the best! Stay Safe and Take Care!

Chengkok, Sensei of Wealthdojo.