While it’s good to live below your means, being a cheapskate won’t give you financial security. We all know a few extreme cheapskates. They’ll reuse tea bags three times, live off their colleagues’ snacks in the fridge, and spend hours collecting vouchers. In theory, they should be loaded with money because they scrimp so much. So why don’t they get rich this way? It’s all about the mentality.

Working within limitations versus breaking your limits

We don’t mean to put down people who save money. It is a good habit, and everyone’s first priority should be an emergency fund worth six months of your income. However, that alone isn’t enough. The problem with the cheapskate mentality or over-budgeting is that it only helps to work within limitations. It doesn’t help to break out of them.

For example, say you earn S$2,500 a month after CPF. You usually spend S$1,500 a month ...