While some economies thrive, the message to many Western workers today is “you’re on your own”. Financial planning is now a much more critical facet of a working person’s life than ever before, and anyone starting out today will have to carefully choose their path to riches.
But all that glitters is not gold. The Great Recession of 2008 clearly demonstrated the dangers of high-risk financial strategy. Many hard workers who relied on the stock market were wiped out and many housing markets around the world still have not fully recovered from the debacle of 2008.
Yet many people still choose to invest in medium or high-risk investment plans because they perceive that higher returns are the only ticket to getting rich or at least remaining financially competitive in a world of ever-increasing prices.
But what if I were to tell you that there is another way? What if I were to tell you that there is a financial theory that could help you reap finaincial rewards without taking any risk? What if you could become a millionaire without ever having to touch a single stock, buy a single bond, borrow a single dollar or lend even a dime at high interest?
Well, there is such a financial theory and it is rooted in Buddhist philosophy. We call it “Sufficiency Economy” and it is a theory of which many self-made millionaires have used and gone on to become local philanthropists.
When used properly, the Sufficiency Economy philosophy can allow for a complete metamorphosis in financial class. The theory can be used on an individual basis but it has even been implemented in complete village communities.
Contemporary Buddhist economics has its roots in the writings of E. F. Schumacher’s book Small Is Beautiful but the Sufficiency Economy philosophy in Thailand was created by King Bhumibol Adulyadej (Rama IX). If you’re interested in the theory, many books have been written about it by other writers than the original theorists. However, many of the newer books lack some key steps that are required to create a maximum outcome.
In this issue of All About Buddhism, we’re going to publish those missing secrets and teach you how to use the theory for yourself. The first secret is simple: managing desire!
Many Sufficiency Economy books teach that the secret to the theory is spending less than you earn or living beneath your means, but this is an oversimplification. The secret first step into making yourself rich is not about reducing spending. Instead, it’s really about altering your desire for physical things and adapting a standard that is based on two key questions: Do I really need this or is there something more practical which would do the same thing?
You see, the world has been generating increasing amounts of wealth on a global scale for several centuries. Despite the pains of globalisation and migration, the world actually still is increasing the total amount of wealth amongst its net economies. It is also increasing the number of consumer goods that we spend our money on.
The key to getting ahead is to understand that there is actually ever-more wealth in the world, but we tend to drain off what could be gained because we fail to control our desire for more. The real secret is to focus on permanency, not productivity or profit.
For example, when I was a child, we were perfectly content with “CRT” (low resolution) colour TV and VHS tape players. Today, a large screen Smart TV and a recording system to accompany it cost about B101,600. But, for those of us who are still content with a 27-inch low-res TV and VHS, the total bill for a brand-new pair would only be about B3,000. That’s a huge saving and, although this choice of technology is a little older and a wee bit slower, it will be just as entertaining and could even be reengineered for more modern times.
This shows the magic of the Sufficiency Economy philosophy. We can do most of the same things that everyone else is doing but at a fraction of the cost.
Hypothetically speaking, if two people had the exact same income and expenses, the Sufficiency Economy philosophy just drew B98,600 ahead with the practitioner’s first purchase versus a non-practitioner.
Examples like this really are all around us. Whether it be clothes, housing, cars or high-tech gadgets, the hidden truth is that “small is beautiful” and “less can be much more”. You make the theory work by strategically altering what you want as a consumer to still have an identical quality of life but at a sharply lower cost.
Small luxuries are fine, though. Once you start piling up savings, there is no need to live like a pauper. Once the savings are piling up, a person should take an occasional night out to do something luxurious. The Sufficiency Economy philosophy is not about living like a miser but rather about paying yourself first.
The next step is to add some questions to everyday spending decisions. When confronted with a significant purchase, the Sufficiency Economy philosophy asks three key questions each and every time: Is it reasonable? Is it affordable enough that I am creating shock absorption from my own savings? And do I really need it?
These are the true keys to the Sufficiency Economy philosophy. The real key to getting ahead in finance is not jumping into risky stocks, but rather in realising that a 20-year-old Cadillac might be every bit as luxurious as a brand-new one. It will do all the same things but at a fraction of the cost. It is sufficient.
When a person lives this way they have what we call “relative sufficiency”. Relative sufficiency means you are making yourself sufficient and resistant to financial shock while still having an unusually high quality of life that is free of major debt.
Relative sufficiency is maintained by three main ideals. First, every major purchase is given due consideration against pragmatic alternatives which could equally suffice. Second, highly moral values are used to make large gains using one’s own personal resources. Finally, a personal surplus is built up which can be shared with others in times of crisis.
The other major secret of the Sufficiency Economy philosophy regards permanence. In a consumer world, many things are temporary and enough has rarely been enough. But the philosophy does not use a “more is always better” mentality. Instead, we simply ask ourselves the question, “What solution would most practically solve the problem on a permanent basis?”
In other words, the second secret to using the Sufficiency Economy philosophy is simply to understand that focusing on productivity and efficiency really are little more than red herrings. The real key is permanence and contentment because once permanence and contentment are established, productivity and labour sort themselves out naturally.
This return to sustainability and change to pragmatic desire very quickly generates massive gains for a knowledgeable practitioner of Buddhist economics. It also quickly results in a low-stress lifestyle because surpluses make life more stable.
In the next issue of All About Buddhism, we will look beyond relative sufficiency. We will look at how entire communities or nations could live using the Sufficiency Economy philosophy as well as how this can make a financial depression impossible. No recessions. No risky stocks. Nobody goes hungry. Less really can be more.
All About Buddhism is a monthly column in The Phuket News where I take readers on my exotic journey into Thai Buddhism and debunk a number of myths about Buddhism. If you have any specific queries, or ideas for articles, please let us know. Email email@example.com, and I will do my best to accommodate your interests.