Money as an Instrument of Change

Money makes the world go round.

Money is the answer for everything.

Money is not everything but everything needs money.

Save money and money will save you. 

You've probably heard of some of the abovementioned quotes, probably also hold maybe one or two of them as part of your life's principle. We all have opinions of money and it's power or lack of to us. 

I've recently watched a YouTube video featuring Chamath Palihapitiya: Chamath Palihapitiya, Founder and CEO Social Capital, on Money as an Instrument of Change and some of his views on money, social media and some other interesting questions that had been raised. A lot of his views rings true to my own beliefs with the exception that I have never really penned these thoughts down. 

One particular trait that I found fascinating was the focus on money as a minority and being able to influence decisions through amassing wealth. Oftentimes, I have heard and seen people ask really "smart" questions, to prove to people that they are indeed a genius and to impress others. What I really enjoyed about Chamath's talk was that throughout his talk, he didn't respond to the crowd's response, i.e. their laughs, their reactions, their opinions, if I may say so myself, although you could see him scanning the room. This particular interview really impressed me because it is what I am trying to achieve. As an individual, you've been raised, especially in an Asian household to obey to be a "good person" and this is what we'd like to call people pleasers. A larger proportion of Asians become people pleasers at least from my observation (I unfortunately don't possess the data to support this) rather than in Western households where you're allowed to voice your opinions and disagree or agree with an idea. Chamath paid no mind to that and he answered very honestly in retrospect to his opinions at the time, which he pointed out is ever changing.

The idea of a people pleaser is being someone who compromises their own happiness to please others. It could be that growing up, we were praised for this kind of behavior by people around us. So, we think that being agreeable is good and being disagreeable is bad. You've heard about it, the person that goes against the status quo, the rebel, the "naughty" kid in class, always get punished or are unlikely the teacher's favorite. When we see these types of scenarios in our daily life, we are conditioned to think that being loud, opinionated, disagreeable and anything that doesn't measure up to society's yardstick is bad. But in reality, what we are really doing is limiting our minds to please others, not speaking our truth for fear of offending others and at the end of the day, this also robs us off our own happiness. You will see that people who are always agreeable tend to be loved more, but also get the more difficult tasks when put in a situation where they are surrounded by more opinionated individuals. How do we resolve this? Stop caring about what other people think about us and start caring about ourselves, refuse going to a restaurant that is further away from you when it is inconvenient for you just to please others. The path of least resistance isn't always the best or only option.

Growing in a poor household really impacts people in a way that they amass their finite wealth through laborious means, by trading their time for money and this is where personal finance knowledge lacks. The idea that the only way to obtain wealth is through trading your hours for money which predominantly is what we are taught at school. Go to school, obtain a degree, then find a good job, incur debt through purchase of a house, a car, build a family and retire. The idea that retirement is when you enjoy your life is so limiting that you're constantly sacrificing yourself and saying that you will live tomorrow, that you will enjoy your life when the time comes, which leads us to living for the future and looking forward to retirement or in an immediate sense, FRIDAYS.

The reason why this self-limiting belief is so dangerous is because we're ultimately saying that the 8-9 hours on average that we spend daily from Monday to Fridays are not considered real life and that is why we look forward to the weekend. We tend to spend most of our money on unjustified spending behaviors because of that "YOLO - You Only Live Once" mentality. We also are really bad at financial planning because, 

1. We lack the knowledge on financial planning/personal finance

2. We tend to be influenced through decisions that are made in the spur of the moment

3. We're pressured by our peers to spend the same way that they do (i.e.it's shameful to split the check based on your order rather than splitting it equally)

4. We're addicted to social media which has so many pitfalls of it's own - we look to please/impress people that we don't care about for the instant feedback (likes/views) and dopamine injection, we're constantly pushed marketing ads and constantly consuming media

5. We're looking to be entertained, most of us lack that growth mindset because it's easier to "relax after a long day" rather than to spend your time learning and being challenged

There are so many other reasons why we're limited, I'm sure if I were to go into the details, we'll have an exhaustive list of things that limit our personal growth, but my intention is to get the point across that we are sabotaging our own success. 

Why is getting a job bad? It actually isn't. A job is actually a great way to experience and be paid for it. I would actually urge for people to go out and get a job especially if you are younger - this being, once again through my limited knowledge that a job helps you to learn things that are considered best practice within the professional realm. I do believe that my experiences have helped me grow as an individual as well as a professional. 

What are you saying then? What I'm saying and urge you not to do is to rely on a single source of income. Some of us were taught that saving up is the best thing to do. We have many sayings in Malay (my native tongue) which I will loosely translate what it means:

Sikit-sikit, lama-lama menjadi bukit : a little adds up to more

Sediakan payung sebelum hujan : preparing before the storm

These proverbs were taught to us as a child to inculcate the habit of saving up. As a child, our parents would give us a piggy bank and ask us to deposit our loose change into this pot. 

What is inherently wrong with this idea?

1. We save the remainder of what we have instead of prioritizing savings and investments

2. We save money and hoard cash which at the end of the day, we know that cash is a depreciating asset, due to inflation, our money will be worth less in the future than it does now

3. We are taught that debt is bad and we should do everything in our power to get rid of debt. I'd even go as far as saying that we were taught to pay off our debts before we bought ourselves food.

I should probably caveat this third point as I'm aware this might stir some unnecessary controversy. When I say that our focus is to clear debt first before buying our bread and butter - our sustenance, I'm not saying that it is an entirely bad thing, but I'm saying there's a need to prioritize debt and need. When you're in debt, if you pay your debtors and are left with nothing, struggling to buy yourself a proper meal, then do get in touch with your bank, or whoever you're in debt with to buy yourself some time, prioritizing your essential needs. However, if you're in debt and you choose to spend money on items like new shoes, new workout gear, or whatever it is that you do, then you should be prioritizing your spend in clearing your debt especially with people, because uncleared debt, like a credit card debt can do two things, inflate the amount you owe and ruin your credit score. If it's with a person, you're damaging the trust that you've built with the person. You may not see it now but essentially, everyone in this world is connected and as much as people say things like "It's lonely at the top", it does not need to be and it shouldn't be. Truly successful people and truly successful leaders have followers and are good with people and that is an asset to be good with people who in turn would be able to open doors of opportunity for us.

Coming back to the topic of the way we are taught about money, we should be making intelligent allocations of our income, to build our net worth, utilize good debt and remove our past limiting beliefs on money. 

Some of the ways that I can think of are as follows:

1. Build an emergency fund (This can be a cash reserve that is untouched and easily accessible should there be an emergency such as an accident, a broken windshield or whatever it may be)

2. Invest with debt (This may seem like a contradicting idea, but if you take the money that you have and buy a rental property for instance, you're building yourself a source of passive income, where you own the asset and you have your mortgage taken care of by your renters, you could also borrow "on margin" for stocks and reinvest the interest which you then aren't taxed for (T&C applies) to name a few ways of incurring good debt)

3. Invest your retirement savings in a high-yielding retirement account

4. Maximize your tax returns for items that you're already planning to purchase (This can be done through a little planning on items that are tax-deductible and spacing your replacements so that you're maximizing your yearly tax returns)

5. Invest in stocks (Research has shown that investing in the S&P 500, can yield you an average return of 7%, in your country look up the average rate of inflation on a yearly basis, you want to make sure you're not keeping your money in a low yield savings account, because if your saving account is giving you a return that is lower than the inflation rate, you're essentially losing money)

6. Invest with a Robo-Advisor, if you know nothing about the stock market, one of the easiest ways to invest would be through an automated investment account and surprisingly, robo-advisors are gaining popularity due to the fact that it can provide better yield compared to a carefully selected and managed fund. I personally use StashAway (link to get your first RM30,000 managed for free for 6 months)

7. Invest in an Exchange Traded Fund (ETF) or Mutual Fund (they are really just a bunch of different type of stocks, etc. that are bucket in one fund, the specifics can usually be found on the page that the fund is listed on or the managing fund's website) - I've spoken about it here

These are just some of the ways to save money. 

Chamath also spoke about how the only way to change the types of individual that are included in an area, and get specific topics invested in is to do it through amassing wealth and investing in the ideas that you want to see come to fruition. I've never really thought about it that way, but the thought about taxing the rich as a form of punishment has always been something that liberals push for, but alternatively, why are we seeing that as a bad thing, rather, work towards being at that table, sure, the system is unfair, but how do you beat that system and sit with the big boys? I like how Chamath also mentioned that there's a certain demographic that sits at the 2% and the way that policies are shaped are also very much to favor their progeny, but that does not mean that there are no means to join these crowd, sure, you may need access but there are ways to do it and for me, I'm learning on a daily basis. How do I get out of that "hustle" or "grind" mentality? How do I focus on what is important? How do I escape the "desperation" of wanting to be liked?

What's really interesting is in trying to rewire your brain chemistry to not crave the "likes" and the comments that you get from being on social media. I personally feel social media is a way for me to be connected to the world. I have friends from all around the world and I can't always pick up the phone and ask them how they are especially not at this point (and I may be wrong) of my life where I'm chasing growth, so the easiest way that requires the least effort is to keep updated through their social media postings and shooting a comment or like their way which is my way of "keeping connected". 

I do believe that we are constantly being socially conditioned but instead of doing away with social media, which I do believe can really isolate us from thoughts that vary from our own when we are too deep into our own. A solution might be to limit our social media consumption from consuming everything and anything to being selective about our consumption, but even then because of algorithms of social media that pushes similar content to what we have viewed before to keep the "addiction" and increased screen time, there might be a better way to consume content and this is a journey that I suppose all of us have to go on to try to find a balance. I'm not sure, I don't have the answer to it yet. 

However, I do believe that it's so important to remove the distractions, which essentially is how I view social media and try and focus my energy and efforts to gaining knowledge and challenging myself. I also find myself sometime fatigued by learning and there are times where I just want to zone out and enjoy music during my runs instead of a podcast. However, I do want to learn how to overcome that feeling of fatigue because the reason why something usually feels like a chore is because we're not enjoying it as much, and I wonder at what point am I hitting the point of not enjoying something. How can I rewire my brain to enjoy something or take little breaks instead of shutting things out completely before getting back onto the same momentum. 

They say to build a habit, it takes consistency, and I suppose, it's trying to visualize the end goal while still taking small actionable steps so that the progress is continuous.

These are all food for thought that I think we should all reflect deeply upon to understand our values and how we think we can use money as an instrument of change. If asked what would you do with a million dollar right now, can we all come up with an immediate answer that is well thought through or do we scramble to just name our heart's desires. Is that lack of game plan also the reason why we don't currently possess a million dollar? Think about it.