The Psychology of Money IV: Freedom and Reasonable > Rational

The last part of my takeaways on the book The Psychology of Money. The previous parts are as shown below.

Chapter 7 Freedom

The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want today.”
– page 83

What a romantic sentence! Reading it makes you feel like falling in love. With life.

What are you going to do? was often asked of me when my friends and acquaintance knew that I am leaving the service. The general reply I gave then was “I do not know, I will deal with it when the moment comes.”

Four months into the new lifestyle, I would say I have been pretty much going with the flow. While I don’t decide what I want to do only after waking up every morning, I do have quite a bit of flexibility with my time. It does feel nice but I also realised that if I carry on to go with the flow, I might waste the time that I wanted to have in the first place!

I am not unhappy or bored but the danger of aimless drifting is there. One month. One year? And before I know it, a decade might have passed by with little growth.

So going forward, I would be adding a bit of structure so that I can make better use of my available time. Having said that I would have some days when I can wake up and say, “I can do whatever I want today.”

Chapter 11 Reasonable > Rational

“You’re not a spreadsheet. You’re a person. A screwed up, emotional person.”
– page 113

“Do not aim to be coldly rational when making financial decision. Aim to just be pretty reasonable. Reasonable is more realistic and you have a better chance of stick with it for the long run,”
– page 113

No matter how people have perceived me as a calm and rational person, the emotions are within me. They just seldom make it to the surface. I have learnt over the years, it is not about suppressing my emotions but to accept them. That allows me to feel, yet not overwhelmed by it. I remember what a friend wrote in a Whatsapp group, “feel what you need to feel, then move on”.

Let me share two examples of me being more reasonable than rationale.

I paid my HDB loan in five years. On hindsight, I could have stretched the loan and I would have gotten a much higher return than my interest paid. However, given a chance to do it again, I do think I will still clear the loan as soon as possible. It does not make sense financially but the peace of mind of not having a debt is more important to me.

Working for another two years would put me in a much better financial state. By my own projection, that additional two years of active income should secure my retirement. Yet, I do it earlier with a higher risk of running out of money in my later years. It’s not rational but it is reasonable as I long for a new lifestyle more than the security.

You get the idea. Finally, reasonable is subjective.

What is reasonable to me might not be to you.

Enjoy the June holidays!


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