The first time I came across the free benefits they give you with credit cards, I was astounded. What kind of financial alchemy was this, to allow me a bunch of sweet privileges for free?
It seemed too good to be true. And yet it was. I never entered millions of points territory — the hallowed ground where you have enough to redeem iPhones — but I did get close. Two of my Android phones were completely paid from reward points. And of course, I even paid my education loan with credit cards1 — without a single cent of fees.
I’ve always had that maximizer personality. Trying to extract maximum benefit within the rules. On that note, I also have an uncommon interest in tax optimization. The 100% legal type. Sometimes I feel for billionaires who get criticized for minimizing their taxes. If I were a billionaire, I’d work every legal tax benefit to avoid tax too. Wouldn’t you? (I’d also pay fair wages and donate to charity, if that makes you feel any better about me.)
The 23-year-old Aaron thought the way to get rich was to extract as much benefit from the world as possible. At the lowest cost. Better if free.
The Scarcity Mindset
If that sounds cringeworthy, I get you. I’m asking “WTF Aaron?” as I write this. But looking back, I don’t think I was particularly evil or selfish. If anything, it came from a place of insecurity.
What do you do when you’re young, feel like girls have no interest in you, and have no money to buy a fancy car? Yeah, sign up for a Platinum Credit Card and get an RM 200 Lazada voucher for free. “Hey bitches, I’m the man now.”
If I can nail my behavior down to a single root cause, I’d say I had a “scarcity mindset.” A belief that good things in life are limited, so you have to fight for them. For me to win, someone else has to lose. I’d better maximize my gains — take everything — before someone else gets the good stuff. Eat or be eaten.
At some level, this scrappy, competitor mentality works. It’s natural. In the 2006 movie “The Pursuit of Happyness,” Will Smith’s character has to line up for a homeless shelter every evening. Get in line a few minutes late, and you sleep in the streets. Or a public toilet. Yeah, if you’re struggling to survive you probably don’t philosophize about mindsets for long-term success. You just fight for the next available resource.
This isn’t to say all rich people are free of the scarcity mindset. Ever met a selfish uncle who hoards money but never gives back anything? That’s someone who never learned to see the world beyond scarcity.
A scarcity mindset might lead you to be rich in material stuff, but be poor in happiness. A blocker to the greatest rewards in life. Like the guy who peaked in university and never graduated.
The World Is Full of Possibilities
Where I hope everyone eventually moves to is an abundance mindset. The belief that there’s more than enough for everyone. And we can create a better world by trying to help each other, instead of trying to screw the other guy.
It is possible for all of us to win. For example, if I create an app that makes your life better. I charge reasonable fees that help me build a company, hire employees and take care of my family. This is good for everyone: customers, employees, business owners, even the government. Our modern economy2 is supposed to work this way.
If this sounds too impractical-cheesy-motivational-speech, here’s an oversimplified example on getting discounts.
Win-Lose Negotiation vs Win-Win Negotiation
How I used to think about price negotiation. Win-Lose:
- I’ll bargain down to the lowest possible cost.
- Even if it causes financial losses to the other guy. He can figure out his business himself — I’m not responsible for that.
- The best negotiation is where I get what I want and the other guy gets screwed. Better if they don’t realize they’ve just been screwed.
How I think about price negotiation now. Win-Win:
- I’ll pay fair price (yeah, I’ll still negotiate it down if I think it’s too high).
- I’ll even pay a tip if you’re excellent. We need to support good businesses.
- The best negotiation is where everyone gets what they want.
You can get temporary (small) wins from a scarcity mindset. But what happens when you develop a bad reputation — someone who deals in bad faith? Good people eventually don’t want to deal with you.
For long-term success, an abundance mindset will serve you better. Because the best way to get rich is not by extracting value, but by creating value.
Real Wealth Comes From Creating Value
What does “creating value” mean? It can be hard to define, so one shortcut way is to estimate it in dollars and cents.
Consider Zoom, the video conferencing platform. Zoom’s always had a great product, with strong finances. But in 2020, because of the COVID-19 pandemic, that’s when things went BOOM 🚀.
Suddenly Zoom morphed from cool software used by tech-savvy executives into something your average grandma was forced to use. There was no better way to see your kids’ faces.
The financial results have been staggering. In 2019, Zoom reported adjusted profits of 101.3 million USD. Last year, that number grew almost 10 times — to 995.7 million USD. In a locked-down world, Zoom created value and was rewarded handsomely.
Good to hear of a company doing well during these challenging times. But what about our personal lives? The same principle applies — create value and you’ll be rewarded.
A useful question to ask: When I charge for my services (even if you’re an employee like me, your salary is basically what you’re charging), am I creating enough value to justify it?
How well am I serving my customers? Am I a good team player? Do I make projects move faster or slower?
Of course, value is not directly correlated with money. Money’s just the easiest way to measure it. Some extremely valuable things make no money. On the other hand, there are extremely high-paid jobs which are bullshit jobs. You probably know who and what I’m talking about.
Creating Value in a COVID World
How do you find balance between all this?
You don’t want to be a parasite, constantly taking and never giving. On the other hand, it’s heroic to give and never take — a martyr — but I imagine it’s not very comfortable. Surely there’s a balance where you take enough for yourself, and still be a good contributor to society.
I can only guess. Some ideas:
- Take care of yourself and your family first. Put on your own oxygen mask before helping others breathe.
- Work on projects that tackle important problems. (Nothing wrong with a temporary bullshit job if you need the money, but to be truly rich, you need meaningful work.)
- Be a source of new ideas. Not just a consumer, but also a creator.
- Experiment with business models to create new sources of income. Whether it’s for your company or your personal finances. (Did you know people are making money playing Blockchain-NFT games nowadays?)
- Support local businesses — buy from them. Small and medium enterprises are the backbone of our economy and need cashflow to survive. In turn, they support many other employees and their families.
- Share whatever extra we have with the needy. Here’s a list of Malaysian aid initiatives to support during this pandemic.
- Vote for the right politician. 🙂
On that note, here’s my public fuck you to any politicians and businesspersons who’re trying to extract more from people during these difficult times. Instead of trying to create value. I hope the parasites get crushed.
Is all this too idealistic? Maybe. But just like how an idea in our minds can grow into a belief, change our actions, and lead us to a different destiny — hopefully this concept of creating value inspires people to build a better world. Not just for themselves, but also for their people. I’ll try my best too.
Maybe then, instead of just an exclusive group of rich people at the top, we can have a fairer society — with richer lives for all of us.
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1. Not that I recommend following me. Lots of people have problems with debt, I know. Maybe a good analogy for credit cards is a Samurai Sword. Dangerous for many, but powerful in the right hands.
2. In today’s world of income inequality, one could argue that capitalism is failing. On the other hand, it has still worked better than other systems like communism. I say it needs improvement, not replacement — but maybe that’s a story for another day.
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