The first strategy is to get as close to your target at the earliest opportunity. Once people perceive that they are closer to their goal, they work faster and harder to wards achieving it. In your quest for financial independence using the dividends approach, one way to push closer to your goal immediately would be to take your upcoming year-end bonus and start buying dividend counters with it. Just begin with a bang and don’t wait for the new year to set your new year resolution. If you can immediately attain 30% of your first financial objective, it would be easier for you to save your next paycheck to hit your target of financial independence.
The second strategy would be to find ways to convince yourself that it is easier to attain your target. In fact, it is recommended that you shape your goals to have at least 70% chance of success within a resonable period of time. One way of doing this would be to break your financial goals down into micro-goals. Financial independence is a daunting goal that takes decades to achieve, but attaining $100 per month of dividend income is fairly easy. At 7% yield, you will only need a portfolio size of $17,500 to get $100 a month to offset part of your utility bills. This is something that can be achieved within one year of graduation for most local graduates. Having $100 coming into your bank account will create the motivation to save more and attaining the next $100 per month would be very much easier.
The third strategy is to manage your personal energy so that you can focus on attaining your goals much faster. This is powerful approach towards achieving greater focus on goals that truly matter in your life. We are all limited by our willpower that gets sapped when we are forced to make decisions. The key is to routinize as many decisions as you can and focus only on a few important decisions every day. One advantage of my new vocation is that men have really one work uniform and I have already started wearing only black and white for my lectures and tutorials. I do not have to agonize over what to wear everyday. Amazingly, uniformity in the way lawyer’s dress is more extreme than in IT. We had one day when all WINTEL engineers in my team came to work in a blue shirt and the admin staff can’t stop harping about it. Great engineers think alike, get over it !
Similarly, I try to use simple heuristics for food, such as choosing vegetarian for every breakfast whenever possible and plain black coffee.
This third strategy can get really complicated in practice. Some issues like minimizing regret when searching for a home to buy can be resolved quickly through an algorithm like the solution to the Secretary’s Problem. Other issues can be resolved via economic Tit for Tat strategies. The more mental models you develop and internalise, you reduce the mental burden required to process the issue.
Anyway, my willpower is saved for decisions that only matter - like whether to unload my Religare Health Trust in light of the discussions of asset disposal that was announced today.
After a day of painful consideration, I decided that there is some way to go for the counter if the negotiations succeed and we our well deserved exit.
And what a tiring decision that was !