Financial Revolution

Source: Financial Revolution Workbook, by Tung Desem Waringin (one of the most successful businessmen in Indonesia)

I attended his seminar which was titled "Financial Revolution" during spring holiday in 2009, and was so enlightened and inspired by his wisdom. I wanted to share his wisdom to my English-speaking friend, so I translated the Indonesian workbook into English.

Why is it necessary to learn how to be rich? It is not a sin to be rich, and in fact we can do more good things, and do less bad things. The concept of win-win relationship :) Poverty is one of the core problems of many societies in the world. Learning to wisely manage and grow money might prove to be helpful to have an organized, peaceful personal life, and also to solve many people's problems when the wisdom is widely shared. Moreover, this is something that is fun and exciting to do :) In the end, with a good control over our own money, we can have one less worry in life and take care of the more important things that matter, as well as avoid being the slave of money.

First of all, how do we go through Financial Revolution? (Tung Desem Waringin)

He told us that many people can't become rich because of the MONEY BLUEPRINTS that they have in mind (the beliefs towards being rich and rich people) that subconsciously hinder them from becoming rich in reality. These blueprints come from:

1. WORDS that we have read or heard before, that are somehow programmed into you

2. MODELING people that we see

3. TRAUMA, events which have affected us emotionally

In order to CHANGE our money blueprints and belief system, we need to change our THOUGHTS & EMOTIONS, with:

1. COURAGE eg. to overcome oneself, etc

2. COMMITMENT eg. 20% effort, 80% use constructive emotions--> can be positive or negative or both

3. FAITH, the most powerful, change our identity

After that, we change our DECISIONS. And we change our ACTIONS, developing constructive HABITS through

1. REWARDS

2. PUNISHMENTS

3. TUNING (just like a musical instrument)

4. MONITORING

In the end, we will be able to change the RESULT, through CONSISTENCY.

This reminds me of this quote:

"Watch your thoughts. They become words. Watch your words. They become deeds. Watch your deeds. They become habits. Watch your habits. They become character. Character is everything" (Ralph Waldo Emerson).

Tung mentioned 102 common blueprints, but I would like to share the ones that struck me the most:

Money can't buy love

People with a lot of money are not really religious

People become rich because they take advantage of people

I am a good giver, not a good receiver

I can't be rich by doing what I love to do

I am an honest person so it's hard to be rich

If I ask for help, that means I am weak

In order to be rich, we need too much hardwork and sufferings

To get a lot of money means taking others' rights

Actually, money is not really important

The most important things in life are happiness, health, and love. Money is not important.

Working hard to find wealth makes people suffer from heart attack, stroke, and stress

It's better to be poor but happy, than rich but unhappy

It's better to be poor and have God, rather than rich but far from God

It's better to be poor and have a harmonious family, rather than rich but have a broken family

Commonly, rich people are dishonest and cunning

The above-mentioned sentences might seem to be correct and logical. In fact, they are widely said and accepted. Those sentences existed in my subconscious mind, and I only became aware when he pointed out in the seminar. In the seminar, he challenged the blueprint one by one. For example, there might be subconscious perceptions of trade-off relationships between being rich and being happy, being rich and being close to God, as well as being rich and having a harmonious family. However, instead of putting OR between the two variables, Tung taught us to use the power of AND. We can be rich and happy at the same time, be rich and be close to God at the same time, be rich and have a harmonious family at the same time. It all depends on our own beliefs.

People think that money is the root of all evils. But the Bible says, "For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs" (1 Timothy 6:10). It is not the money itself that is dangerous, but the greed for money is the source of evil deeds. Instead of being the slave of money, we need to know how to manage money. Many tend to blame money for evil deeds, and subconsciously avoid having so much money because they are afraid that it will be a source of evil.

Furthermore, Tung said, "The only way to change your 'outer world' permanently, is to change your 'inner world' permanently. If you want to be rich, you have to destroy all of your money blueprints that are consciously or subconsciously hindering you from wanting to be rich" (Tung).

Also, according to a concept in organizational behavior theories, "People's behavior is based on their perception of what reality is, not on reality itself. The world as it is perceived is the world that is behaviorally important (Robbins & Judge, 2010).

"If you think you can do a thing or you can't do a thing, you are right", Henry Ford.

Tung said that we will act according to our BELIEF, not according to 'WHAT IS REALLY HAPPENING', which will either ENABLE us or DISABLE us to achieve our goals. We will take actions (or not take actions) according to the belief that dominates your HEART and MIND, and these ACTIONS will produce RESULTS.

21 Ways Rich People Think and Act Differently from Poor & Middle Class People (Tung):

1. Rich people add value. Poor people doesn’t add value/add a little bit of value.

2. Rich people have/use multiplying factor. Poor people doesn’t have/use multiplying factor.

3. Rich people make sure that other people WIN, and then they can win. Poor people: Lose-Win, or Lose-Lose, seek to win first then after that win people.

4. Rich people are always resourceful/try to find resources. Poor people are full of excuses.

5. Rich people take responsibility of their lives. Poor people blame circumstances, situations, environments, other people and fate.

6. Rich people play with money to win. Poor people play with money not to lose.

7. Rich people commit to be rich. Poor people want to be rich. “Genius is one percent inspiration, ninety-nine percent perspiration” Thomas Alfa Edison.

8. Rich people think big. Poor people think small.

9. Rich people focus on opportunities. Poor people focus on obstacles.

10. Rich people admire other rich people and successful people. Poor people are jealous to rich and successful people.

11. Rich people make friends/mingle with positive and successful people. Poor people make friends/mingle with negative and unsuccessful people.

12. Rich people are willing to promote themselves and their values. Poor people think negatively about sales and promotion.

13. Rich people are larger than their problems. Poor people are smaller then their problems.

Example: Super Mom (a single mom who doesn’t even have arms and legs takes care of her son faithfully, independently)

14. Rich people are extraordinary receivers. Poor people are bad receivers.

15. Rich people choose to be paid based on results. Poor people choose to be paid based on time.

16. Rich people think “both”. Poor people think “one of/or”

17. Rich people focus on their Wealth Style (their Massive and Passive Income). Poor people focus on their Life Style.

18. Rich people manage their money well. Poor people do not manage their money well.

19. Rich people make money work hard for them. Poor people make themselves work hard for money.

20. Rich people take actions to overcome their fears. Poor people let their fears stop them.

Example: Loretta Claiborne, a marathon runner. “He who has overcome his fears will truly be free” Aristotle.

21. Rich people continuously learn and grow as long as they live. Poor people think that they know enough already.

III. PURPOSE/GOAL

A goal must be:

1. WRITTEN

2. SPECIFIC

3. POSITIVE

From now onwards, it is the summary of the main part of the seminar.

The most important concepts in this part are passive income and financial independence.

6 financial conditions that we can achieve (from Wealth Master by Anthony Robbins):

1. Financial Protection

When you have enough money to cover your monthy expenses minimum 2-24 months.

2. Financial Security

When you have got a lot of investment (which are secure) and the returns can cover the following needs without you having to work anymore (unless you choose to continue working)

a. Credits for houses

b. Food

c. Electricity, gas, and water

d. Transportation

e. Insurance

f. Taxes

3. Financial Vitality

When you have a lot of investment (and secure) and the returns can cover all the needs mentioned in Financial Security plus the following needs without having to work anymore unless you choose to do so.

a. Children’s education

b. Entertainment (minimum 50% of what you’re enjoying now)

c. To buy new clothes/ one or two luxury goods within common sense

4. Financial Independence

When we have a lot of investment (and secure) and the returns can cover our current lifestyle completely without having to work anymore. In other words, you are free from work for the rest of your life.

5. Financial Freedom

When you have a lot of investment (and secure) and the returns can cover whatever lifestyle that we want to choose.

6. Absolute Financial Freedom

When your returns of investment allows you to really do anything, whenever you want, wherever you want, with whoever you want, as much as you want. (still with the ways that win other people).

Financial Independence = Passive Income > Lifestyle

Passive income is the money that is generated without having to work.

eg. Investment, passive business income, royalty/license/patented ideas.

(A detailed model of calculation is written in the book, but I omit the part here)

To attain Financial Independence as soon as possible

1. Increase passive income

2. Reduce expenses: simplify our life, postpone pleasure and enjoyment

For a frugal lifestyle, I found Warren Buffet to be an excellent role model.

He still lives in the same small 3-bedroom house in mid-town Omaha , that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence. Also, he never travels by private jet, although he owns the world's largest private jet company. He even does not have a cellphone or access to internet. Furthermore, he does not socialize with the high society crowd. His past time after he gets home is to make himself some pop corn and watch television.

His advice to young people: "Stay away from credit cards (bank loans) and invest in yourself and remember: Money doesn't create man but it is the man who created money. Live your life as simple as you are. Don't do what others say, just listen them, but do what you feel good". Also, he encouraged people not to buy more than what you "really need" and encourage your children to do and think the same.

I am very inspired to know that the richest man in the world keeps his modest standard of living while he is enjoying life by doing what he loves everyday. He does not need to increase his expenses along with his increased income in order to be happy. In fact, he tries to eliminate any unnecessary expenses as much as possible.

As a saying goes, "Happiness is a state of mind". Before we knew it, we have been made to think that we need to increase our consumption when our income increases. In economics class, we are taught that rational consumers in general would be willing to spend more when their income increase. If we are among the general population of consumers, that means we are still trapped in the rat race. Awareness of self is the first step to enlightenment. We have the power to choose how we are going to act upon it. Tung summarized: success is to get what we want, while happiness is to want what we have got.

What I need to do is to keep track of my expenses, to make sure that I only spend money on what I need (with some reasonable rewards of being successful to stick to plan). I will read up on passive income and how to best invest my savings :) Which means, there is a need to further study about various types of investments :)

At the end of the day, by God's grace, my passive income will be greater than normal life expenses. Thus, financial independence. :)

Last but not least, this verse is to be kept in mind in all hard work in pursuit of financial success. "But seek first His kingdom and His righteousness, and all these things will be given to you as well" (Matthew 6:33).