Your first step towards financial freedom: taking action!

You've read a couple of books on financial freedom. You've browsed through some of my blog posts as well as other personal finance and investment blogs such as thefinance.sg or forums such as Sgfunds. You are ready to embark on this journey of financial freedom.  Kudos and bouquets to you! What you now need is to take the first step into ACTION.

The new paradigm of change - Taking action

It is very easy to be a passive passenger on this journey towards financial freedom. To read and just let the ideas slide off our minds like water sliding off a duck's back. Without having anything really stick into our consciousness and translated into ACTION or BEHAVIOUR that moves us towards financial freedom.

I love to read books on personal effectiveness. Some of the books I've read include: "The Seven Habits of Highly Effective People" (Stephen Covey), "Think and Grow Rich" (Napolean Hill), "Mind Mapping" (Tony Buzan). These are all good books but these books DO NOTHING for you if you do not put any of the principles in them. I too used to quick read these books and do nothing until I came across Napolean Hill's "Think and Grow Rich" . Hill urges us not to quick read and put it aside but to continually put into practice the powers of goal setting and power of the subconscious mind to channel our efforts towards what we have a strong desire.

Since then, I have gradually tried to put into use bits and pieces of personal effectiveness literature into my life. For instance, I use mind-maps to occasionally flush out the ideas and thoughts onto paper so that I can generate even more ideas and thoughts. Some of the new developments such as the launch of Singapore Fixed Deposits blog was due to a few mind mapping sessions on the theme "Financial Freedom". I also believe in affirmations and have some personal life goals set up in my net worth Excel worksheet in my office laptop to constantly focus my mind on what I am working so hard for.

How to take action towards financial freedom

There is no trick. The road towards financial freedom really consists of:

1. Living within your means
2. Saving and investing
3. Grow and protect your investment capital
4. Go back to step 1.

The hard part is to TAKE ACTION and OPERATIONALISE steps 1 to 3 and to avoid losing what you have saved in step 2. Now that the "secret" to financial freedom is known to you, what you need to do is to prioritise what is it that you are not doing so well and CHANGE it. For instance, if you are living on credit and relying on a TOTO windfall to give you financial freedom, then it is going to be very challenging for you to achieve your target of financial freedom. You need to consider how you can bring your expenses to within your income levels so that you start saving. Or you may have to develop multiples sources of income to be more than your expenditure. Either way, you have to TAKE ACTION and change behaviour that DOES NOT help you towards financial freedom.

Increase your means, grow your returns, protect your capital

If you are already living within your means, but you find that you cannot get better returns than fixed deposits and treasury bills. This means you may have to look at other types of investment which come with their associated risks and rewards. You have to decide if the risk-reward trade off is WORTH IT and TAKE ACTION accordingly.

If you are already investing and getting decent returns over and above risk-free treasury bills but find that the recent market downturn can potentially affect your investment portfolio. You have to consider ways to diversify your risk or consider proper cash management to make sure you can ride out the current storms and risks of US recession impacting major equity and potentially property markets.

Even if you decide that doing nothing, i.e. not buying/selling but just holding on to whatever investments you have now is the way, you can still take ACTION by reading more about other investment asset classes beyond what you are familiar with to give yourself more knowledge for trying out other types of investment.

In short, there is always some POSITIVE ACTION we can take towards financial freedom. We are in control of what ACTIONS we want to take.

One of the actions that I take towards financial freedom is the writing of this and other blogs. It helps me articulate my ideas and thoughts about financial freedom and at the same time helps in a small way towards developing an alternate source of income. I realise that the read-think-write process and feedback loop helps keep my mind on ways to help me move towards my goal of financial freedom.

What action have you taken recently? :-)

Be well and prosper.

Think and Grow Rich(er)

Your brain is the biggest aid to your journey in financial freedom
The biggest tool we have in our journey towards financial freedom is our BRAIN!

"Think and Grow Rich" by Napolean Hill is one of the books that have influenced my approach and thoughts about financial freedom. It is an oldie but a goodie... Napolean Hill does not give you a step by step A to Z tactical plan to reach financial freedom. What his book did for me was to impress upon me of the importance of managing our mindset and our thoughts because our thoughts define who and what we are.

All of us are born with a brain. Our brains and the thoughts that go through our mind determine our actions in life. It is in the mind that the seeds of any idea leading to behaviour and action.

In order for you to stay the course towards financial freedom, you have to consider the commitment to fill your mind with thoughts that help you achieve it. How do we do that? How do we program our mind to be oriented towards thoughts that centre around savings, investments and living a simple life to be less focussed on the materialism and consumerism that threatens to derail our efforts in moving our networth upwards instead of being stagnant?

Master your mind, master your financial destiny
Our senses pick up external stimuli that affects our thoughts and subsequently behaviour. While we cannot control everything that we see, hear or feel, we can influence it by making a conscious effort to absorb material that is conducive in developing a mindset towards financial freedom.

Visit the public libraries, surf the internet for personal finance and investment. Watch CBNC Asia, Channelnewsasia's Money Mind etc. Listen to audio tapes about personal finance. Talk to people who are interested in financial topics but who are not interested in making a commission off you. Visiting and reading my blog helps because you know that I am like you. Interested in saving and investing prudently and living a simple enough life that meets most of my needs, some of my wants and allowing me to still live a life that is reasonably fulfilling. Learn to enjoy a life that is not dependent on achieving material things as the only measure of success.

There is nothing wrong in setting targets for personal networth and a timeline to achieve it. This helps us focus and gives us something to shoot for. But don't beat yourself up and be deflated if you miss some of your intermediate targets because life is a journey to be enjoyed as well as not a series of targets to be achieved.

Your thoughts that go into and circulate around in your consciousness and sub-consciousness affect your mindset towards financial freedom. Before any human endeavour takes effect, your mind will process a thought that will lead you to do it. Sometimes our brains work so fast that you think you just react but your brain's neurons fire faster than you can blink. Hence, train your mind to react quickly and correctly to financial decisions in your life and it will take you to a higher level.

See softdrinks on supermarket shelves, avoid because of health and cost issues. Your eye catches the nice display of diamonds in the shop front, appreciate but file it away as being not practical and requiring you to work another 1-2 months to pay for it. Receive that glossy brochure from your credit card company to spend on Christmas goodies, throw it away after a 5 second glance.

Small decisions taken each day with the mindset to save, invest and grow your net worth will eventually bring you to the level where your passive income exceeds your living expenses. Then you will be able to get out of the time-money trap and use all the time you are given to enjoy your passive income to the fullest.

Be well, think well and prosper.