My latest audio book that I’ve been listening to is Quit Like A Millionaire. It was about Kristy’s rags-to-riches story from communist China surviving on just 44 cents a day to being a millionaire.
I like how she engineered her financial journey to make optimal decisions in taxation, housing and even her choice of degree. What really interests me though was the three mindsets that she wrote about – scarcity mindset, hoarding mindset and freedom mindset.
Scarcity Mindset
According to WebMD, a scarcity mindset is when you are so obsessed with a lack of something — usually time or money — that you can’t seem to focus on anything else, no matter how hard you try. Her example that we can all relate to is when an upcoming deadline is due and all we can think about is getting past that hurdle. In the context of money, or lack thereof, we get preoccupied with thinking about how to make more, spend less and earn more.
This is bad if it gets to the point of being debilitating to our health and the rest of our lives. But Kristy’s point is that we can turn it into our advantage by constantly thinking about how to use Maths to make better decisions that can save us some, while still getting some joy of it.
Hoarding Mindset
There is some natural progression towards this mindset once people move into some form of middle-class, in which basic needs are met. We tend to think that spending more to own more is generally the normal thing to do. What we fail to realise is that this is precisely what capitalism is all about and what all the marketing out there is trying to get you to believe.
Even money is something that can be hoarded. And while more money is almost always a good thing, it becomes a problem when we are not clear about the state of “enoughness”. Without this, we continue to think that we need more and more and more, like a hamster perpetually running on the hamster wheel till no end. Eventually, we will get burnt out.
Freedom Mindset
To graduate from the hoarding mindset, we need to switch to a freedom mindset. Simply put, Kristy describes this as using money to buy back time. More broadly, I understand this as making money as a means to an end. With money, we can focus on everything else that matters – time for our family, hobbies, passion. Without enough money, like everybody else, we work long hours for it instead.
I recommend everybody to have listen to this book. While it is quite similar to the other FIRE books that I’ve reviewed, such as Your Money or Your Life by Vicky Robbins, this one is especially more advanced in covering specific actions one should take for IRAs, insurance, and even how to actually go about engaging in regulatory or geographical arbitrage. Admittedly, it is has a very specific American or Canadian slant, but it also made me think about my own CPF and SRS allocations for the coming year too.
Towards the end, Kristy also had a chapter on parenthood and whether we ought to seriously consider Worldschooling. It is akin to homeschooling and something that I’m quite familiar with because of the nature of my job in the past. I never quite thought too hard about it, but she did make me rethink two things: first, that FIRE is a lot more difficult with a kid, and second, that a typical classroom education is the only thing we can offer our kid. Those curious and don’t have the time for 10 hours of the audiobook should jump to Chapters 19 and 20 just to think about this alternative perspective.
All in, I like how often she is ”mathing shit up” when it comes to making any decision. It’s something that is worth considering if we want to have a more financially savvy approach to our lives.
Making Cents 