The amplifier
Start changing your mindset and amplify the new mindset.
AN amplifier, is an electronic device that increases the power of a signal. It does this by taking energy from a power supply and controlling the output to match the input signal shape but with a larger amplitude. This is the reason we have microphones, megaphones, radio and television program, wireless phones and Wi-Fi. All these use the power of amplification to transmit information to us.
When a person starts to earn money, his very first impulse is to spend it because it makes him feel good to enjoy the fruit of his own labor. Later, he will be complaining, but not admitting his own mistake in handling money. Then comes the increase. He is happy and then his lifestyle keeps pace, and then later he complains again. This cycle goes on and on. Then one day, his friend invited him to a network marketing company, where he sees an opportunity and joins. He makes good income and like the uplines who made it good, he was able to buy luxurious things just to prove to his downlines that he made it big in the business. And when the business encounters a slowdown, he is again back to his former financial position of having not enough money to cover his needs.
What happened in the story illustrated that personal finance is always about behavior. The bigger the income of a person, the bigger the chance for him to be an amplifier of his poor money behavior. Earning big money merely amplified his disease we can call “gastositis,” a syndrome where a person can not stop himself from spending unnecessarily.
Instead, he can focus on ways on how to amplify his money to make more money. Below are some guides on how to do it.
Have a will power.
Everything begins with the mindset. As Steven Covey said in his book, “Begin with the end in mind.”
By looking far into the future, he will be able to have a vision of what life or dream he wants to have. Dreams have a price and in order to realize it, there has to be a price. It takes a lot of will to convert his mind to do something that he is not used to do. If there is a will, there is always a way.
Pretend. As income increases, so do our expenses. The trick here is to pretend that income has not increased so that the amount of increase can be safely tucked away into savings or investment. One can also pretend that he has a debt to pay, and that is his debt to himself. So that he will not be able to touch his increase in income, he may opt for automatic transfer from his bank account to investment account.
Delay gratification. Sacrifice now, enjoy later or Enjoy now, suffer later? A lot of people are prone to have instant gratification to the point that when the golden years come, they have to suffer the consequences of their past actions. By sacrificing now, one can build his wealth that he can use to enjoy later without the risk of having to consume everything.
Spend more. Spend more on assets, not on liabilities, to generate more assets. By spending on assets, one can use the power of compounding interest since the money it earns can be plowed back into the system to buy more assets. Examples of asets are real estate, paper assets like mutual funds. In my case, I am much happier to infuse P30,000 into my mutual funds than to buy an android phone worth P10,000. As of this writing, I am still scouting for the cheapest android phone because i am already feeling the need for it to communicate with my oversea clients.
Leverage on time. There is no other thing in the world that can help grow money except time. Use the power of time to make your money work for you. The earlier you start investing your hard-earned money, the better your financial standing in the future will be. Whether in business or employment, we all have equal number of time. It depends on how we use it.
Start changing your mindset and amplify the new mindset. If you will it, you will have it.
Edmund Lao is a Registered Financial Planner of RFP Philippines. A sales engineer by profession, he is an advocate of financial planning.
Source: http://www.businessmirror.com.ph/index.php/en/business/banking-finance/36160-the-amplifier
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