Why People Buy the Stuff They Buy

Choice Overload

I was walking along one of those huge supermarkets today when I made a few interesting observations.

There were a few elderly lady that were simply staring at 1001 different types of can food displayed on the ceiling high shelves.

All of them seemed to be deep in thought and had no idea which to buy. I was standing there and wondering what was going through their heads. What would make them choose one product over another?

Logic Versus Emotions : The Psychology of Buying

Can you remember what was the last item that you bought recently? Was it today? Good!

Now think about the thought processes that went through your head as you made the decision to buy that item.

I believe that certain factors compels us to buy something. However, I believe that LOGIC has nothing to do with it. When it comes to buying stuff, people are totally not logical. Even the most logical person that you know of will become illogical when it comes to spending his money.

I made another interesting observation:

Ever noticed that a 1.5 L bottle of softdrink is sold at say $1.40 while a 0.5L bottle is sold at $1.10 . One just has to pay 30cents more to get 3 times the amount of soft drink.

However, you will most probably find people choosing the 0.5L bottle as it is simply more convenient to carry around. This is especially so if they are not heading home straight and they're just looking for something to quench their thirst.

In the above example, we can clearly see that people buy things based on a host of factors and not based on price and value for money alone. It is what I would term the "psychology of buying".

It is my view that when it comes to buying, people often buy based on emotions and not on logic.
I hope to expand further on this post at some later date.

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How to Achieve Financial Freedom

Over the past one year, I have shared a lot on how one can become financially free. I think I have come to a point where it's difficult for a new reader to find a certain post.

The following are links on certain of my suggestions on how one can become financially free. I hope that you find them useful.

Introduction to Financial Freedom

  • Financial Freedom Number - another method of determining how far you are away from financial freedom is by calculating this number.

  • How to Calculate Your Networth - some people do not want to build up passive income and instead look to increase their overall networth. You can find out how much your networth is and compare it with mine.

  • Are You Wealthy? - your networth alone might not give you a true picture of whether you are wealthy. The authors of The Millionaire Next Door came up with this method to determine whether you are truly wealthy.

Journey towards Financial Freedom

  • Contemplative Thoughts - some of my very own personal thoughts on my journey. It also includes some useful articles from elsewhere. Most of them written when I was thinking of giving up.

Increasing Your Income

  • Income Investing - a 5 part series on the various investment tools that you can use to increase your passive income.

Saving Money

Other Useful Articles

Free Honeymoon

Is your marriage on the rocks?

A Malaysian state will be offering free second honeymoons for couples that are on the brink of divorce. They hope that these romantic getaways can help save their marriages.

Under this plan, feuding couples stand a chance to spend 3 days and 2 nights on a tropical island off Terengganu state.

To be eligible for this plan, couples will have to apply and then undergo an INTERVIEW before being sent on the honeymoons. (I really wonder what kind of questions are going to be asked at the interview....)

The honeymoon package is worth around S$615 and a successful pilot project involving 25 couples has already been carried out.

This is indeed an interesting proposal. I wonder whether they will start giving out free movie tickets and stuff too. Perhaps free movie tickets to watch Michael Jackson's This Is It movie that will be launched soon?

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2 Easy Steps to Build an Emergency Fund

Today, I will show you 2 easy steps anyone can take to start saving money to build up an emergency fund.

An emergency fund is basically 3 to 6 months of income that you set aside which you can withdraw easily. This means that the fund is most probably in a bank account that you can easily tap into should any emergency arise.

Step #1 - Open Another Bank Account

Yes, you heard me right. Why do you have to open another bank account? It is very likely that if you were to start saving money into the same bank account, you will most probably spend the money without knowing it. The most important thing about an emergency account is to keep it out of sight from us so that we do not spend the money!

Many years ago, I wanted to set aside an emergency fund of 6 months income. It was however only 2 years ago that I managed to do so. The reason for the long delay was that I was simply spending all my money in my only bank account which I had. Whenever it reached a certain amount, I would think to myself: "Hey, I've got lots of money....why not I buy this?"

To cut a long story short, I could not succeed in building up the 6 month emergency fund because I had easy access to the account. I started withdrawing money from the fund as it was not kept separate from my other bank account. This is my BEST advice to you: OPEN ANOTHER BANK ACCOUNT.

You will of course want to make sure that this bank account does not have any high charges and stuff for things like minimum balances.

Step #2 - Deposit a FIXED sum of money EVERY month ONCE you get your paycheck

Keeping a separate bank account is Step 1. For Step 2, it requires a certain amount of discipline. The key is to deposit a FIXED amount EVERY month the DAY you get your paycheck.

The day that you get your pay check credited into your bank account is THE DAY that you must deposit that fixed amount of money into your separate bank account (your emergency fund account). Do not wait for a few days because once you procrastinate, you will most probably not do it and end up not depositing any money at all for that month. This is speaking from my experience.

Let's say that you decide to save $500 per month to build up an emergency fund. All you have to do is simply deposit or transfer the money from your normal banking account straight into the emergency fund account the moment you get your paycheck.

Do this EVERY single month. No excuses.

No lowering the amount too. Every month, you will stick to the amount you have decided and deposit it into your emergency fund the moment you get your paycheck.


SgFinancialFreedom is a blog dedicated to help people achieve their financial freedom. This is done through the sharing of knowledge, information and experience. Find out more about the author and his journey to financial freedom.

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Please leave a comment. Thank you.


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3 Tips to Survive Job Loss


Alot of people have been asking the question on how I am surviving if I am sitting at home everyday, not working and just blogging.

Well, firstly....I am not exactly unemployed per se. I am self employed.

I am still running in certain things before my business starts. As such, time is what I have on my hands. It does feel a bit like I am jobless though.

So what do I do everyday while I am bumming around?

Here are the top 3 things I do:

1. Trade The Stock Market $$$

I am not really a full time trader. But nonetheless, with time on my hands, I have time to read about books on trading as well as trade the stock market.

The month of October has been kind to me in terms of trading profits =)

9 Oct 09 - Profit $126.14
13 Oct 09 - Profit $237.54
14 Oct 09 - Profit $479.42

I am also still in the midst of combining FA and TA into my investment strategy.

2. Blog and find ways to advertise my blog.


Yep. This is the 2nd thing that I do the most.

That's me on the poster. Not exactly me per se but a manga replication of me.


3. Surf the Net.

Yeah.. I surf the net like a lot. Research shows that people surf the net mainly for education/information & for social purposes (internet messaging,etc). I surf the net mainly for information.

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Limit Supply of HDB Flats Please


It seems that people have been complaining over the lack of flats in Singapore. Many have called on the government to increase the supply of flats so as to reduce the waiting time for flats. Various blogs have also started to give their 2 cents on the matter. While it is easy to give in to populist sentiments, I think that we all should take 2 steps back and look at the issue.

The reason why HDB flats are so popular is this:

1. They are cheap (because of government grants and stuff)

2. They are expected to rise in value over the years and people can sell them at a profit.

These are the two main reasons I can think of on why HDB flats are so popular amongst Singaporeans and Singapore Permanent Residents.

If HDB flats are just affordable but are not expected to rise in value, I for one will not buy them as I will have trouble selling it later should I intend to upgrade to a bigger house.

It is thus very important current supply of HDB flats are not tweaked to cater to populist sentiments.

Instead of increasing the supply of HDB flats, I say that the current status quo should instead remain. 10 interested buyers to 1 flat is a very good ratio I must say.

That means that 9 buyers will have to be looking at the resale market or private property should they wish to purchase their own homes.

This will be good news for people who wish to sell their homes.

Can you imagine that if there is a supply of flats such that every buyer is able to get their flat of choice?

That would mean that there will be less people who will buy resale flats and that means we will all have problems selling our flats in the future! This will make HDB flats alot less attractive and will thus reduce the demand overtime.

Current policy guidelines should remain and the supply of flats should be tightly controlled for the greater good. This will help ensure that HDB resale prices remains high.

Even though it is possible to increase the supply of flats, this should not be done so to tilt the fine balance between supply and demand. Oversupply now will lead to problems further down the road.


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How to Calculate Your Networth

What is Networth?

In businesses, networth or book value of a company is obtained by adding up all the company's assets and subtracting it by the total liabilities. This is known as the networth of the company.

The same can be done for individuals to calculate their networth.

How to Calculate?

To calculate your networth, simply add up all your assets and subtract them by all your liabilites or debt as we commonly call it.

Why is this number important?

Tracking this number is a good way to see that you are building your wealth and increasing your assets. A person's networth should be increasing over time as their income increases.

My Personal Experience.

10 years ago when I was just 18 years old, my networth was only slightly over $1000. That was the total amount of money I had in my bank account. I had no other assets and no other liabilities.

During the 10 years, I have seen my bank account drop close to $0. After experiencing what it felt like to be "poor", I decided that I should never let that happen to me again.

Overtime, I begin to acquire assets like stocks. I also took on more liabilities as I had to purchase a house for my family. All in all, I roughly estimate my family's networth to be slightly above $500,000.

Observations about High Networth Individuals

There are certainly some common denominators when it comes to people of high networth. I think you will find that the most important thing about them is that they are FINANCIALLY SAVVY. In fact, Singapore has one of the highest concentrations of millionaires in the world and this is expected to rise.

They do know about their investments and they do know how to manage their money.

I would like to think that it is the financial education that this people get that helps them to grow their money.

But wait a minute! No school ever taught us financial education right?

You are correct!

Financial education is largely taught at home. Nowadays, I think financial education is obtained through reading of books and surfing of the internet. It is possible to become financially savvy simply by reading more from the internet and learning from the experiences of those who have walked the path.


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