In the midst of the daily grind, between meeting KPIs and satisfying bosses, clients and colleagues, it is easy to lose sight of the big picture. Everyone dreams of being financially free, being rich, having choices. However, few actually reach the goal.
What are some attitudes necessary to cultivate a rich mindset?
[Free Ebook] How should you invest your first $20,000?
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
1. Lose the hourly pay mindset
As much as your job pays the bills, you must lose the ‘hourly pay’ mindset. You should not be in your job just for that $x per hour (after dividing your pay by the number of hours you work a month).
With the majority of living hours spent on a day job, you should look for opportunities to:
– Learn transferable skill sets like negotiation, analysis, writing, making pitches, handling office politics and managing egos which can be applied anywhere.
– Take on assignments that will help you to level up in your next role.
– Seek a mentor whom you admire, preferably successful bosses close to retirement. They are not only generous in sharing their perspectives and experiences; they may very well open up opportunities for you by connecting you or speaking up for you.
2. Have a long term perspective (versus survival mode)
It is said that the poor live from day to day, the pseudo poor live from paycheck to paycheck, while the rich live in the realm of decades. Are you struggling to pay off your credit card balances from month to month? Are you waiting anxiously for the next paycheck to blow on another luxury item? After a while, the realisation hits that this is a never-ending hamster wheel that gets you nowhere. Dependency on your next paycheck guarantees that you can’t quit a job that you hate or pursue your dreams.
3. Build multiple streams of passive income
Instead of just focusing on your job, look for ways to build other streams of passive income. Having multiple streams of income will help you build your wealth faster. Passive incomes are the best to focus on, as they do not need much maintenance once started and it should ideally be scalable as well . For example, building a well-balanced and diversified portfolio of REITs and dividend-paying shares is quite easy to achieve. For more ideas on building passive income, see how to invest for passive income.
4. Aim for financial freedom (versus financial security)
Do you crave financial security? Does financial security for you take the form of a regular paycheck and year-end bonus? You should try to aim for financial freedom instead. Which means the steady state whereby you have sufficient income each month to meet all expenses without actually doing anything.
Financial security is only secure as long as you work month in month out. Which isn’t all that secure as the economy could turn, your bosses could change, your life situation may alter etc. In this day and age where job security is scarce, for those inclined towards starting your own business, the risk-reward ratio for taking the leap has never been better. This is especially in Singapore where the startup ecosystem is developing rapidly, with multiple government grants and funds available as well as venture capitalists to support startups.
5. Look for inspiration and look to leverage
Do you find yourself resenting wealth people? This could perhaps be a mental block towards you becoming wealthy yourself. A more useful way of thinking of wealthy people is to see them as an inspiration. Many of them started from scratch, so there is no reason why you cannot do the same. Many wealthy people use leverage, be it leveraging on banks to invest in property or leveraging on smart people to grow their business. Leverage is basically using external resources to multiply the output of any effort, speeding up the process of creating wealth.
6. See opportunity in problems
Find yourself waiting a long time in the queue to get your morning coffee? Or to get a table at a popular restaurant? The average person complains while the rich mindset sees opportunity to create a solution that could speed up productivity and customer satisfaction at every restaurant and café in the world.
Feeling faint at the thought of taking a blood test? The average person procrastinates on his annual health check while the rich mindset goes on to create a new disruptive method to run multiple tests on a single drop of blood at the fraction of today’s prices, sans the pain of having tubes of blood drawn from you.
To the opportunist, every problem faced is a potential business idea. The more people suffering from the same problem, the bigger the market.
In the corporate world, it is common to guard everything you know and take as much as possible from everyone around you and give as little as possible in return. This is actually the poverty mindset. One of the best books of 2013 sheds valuable insights that givers are actually the biggest ultimate winners. The rich mindset gives because it lives in the realm of abundance.