[This article was first posted on 11 Feb 2008 at Five Cents Ten Cents.]

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.