So we all know that we can get used to more money. We can also get used to less money.
So how do we control all this?
Previously when I was working, I used a very simple tactic to maintain my spending.
I had the company I was working for deposit my salary into my OCBC bank account. Previously, I used the OCBC 360 account cos it was optimal for a working person.
Then I set up a monthly standing instruction to transfer a fixed amount of my salary to my POSB account. This POSB account is my main use account. So I spend money from this POSB account, pay bills from this account, draw money from this account, everything.
So doing this, my "salary" has remained the same for years.
And I never gave myself any increment even when the company gave me an increment.
So I paid myself a fixed amount for years and all the rest went to savings and investments. Even my holiday expenses and stuff needed to be taken from my POSB account. Which means if I wanted to go on holiday, I would need to plan and SAVE up for it.
Even if I have excess cash in my OCBC account, which I always have, I will still keep the discipline to only use the funds in my POSB account.
So why does this work. Well simply, most of the time, if we have more, we spend more. So I always never gave myself more. I just have the simple mentality that. My salary never increased throughout the years and I never missed having more or less money. I just got used to the same salary which I gave myself. It's really simple.
There's no end to upgrading. If you earn more, you will want to spend more. You will feel you are missing out in life if you don't spend more. So by doing this plan, I never earned more and feel totally normal. There is no additional desire to spend cos my bank account is always relatively low on funds. So I keep watch on how low I can have it cos I know I need to live on that amount til the next "pay" which will be transferred next month.
So some financial bloggers and advisers advocate "pay yourself first" where the person will save a portion of their money every month. Like maybe transfer 10-20% of their salary to a fixed savings account.
Instead, I call my plan "pay yourself a fixed amount plan" where you set a payment from your salary account to your spending account. And you work with that amount for the next few years until maybe something changes in your life, like maybe having a kid or whatever. But generally, it's the same idea as, if you used to be able to live on SGD2000 as a fresh grad, why can't you live on SGD2000 now? Maybe you can upgrade that to SGD3000 per month and keep it at SGD3000 per month for the next 5-10 years.
I think its a brilliant idea. It worked for me. Maybe you can use it too.
So all my increment went into my salary account and even my bonus went into my salary account. And during my working years, I only spent that fixed amount every month. Bonus or no bonus. Increment or no increment. And the thing is, I never felt like I was lacking anything. I still went out to eat, went on trips, bought stuff. I was still happy with my level of spending.