Business columnist Margie Grey fired off a very interesting question at bestselling personal finance author Efren Cruz during a radio interview last Monday at DZAR Sonshine Radio (1026). She asked
“Is it really possible for a minimum wage earner or someone who makes just enough for a living to become a millionaire?”
I’ve been thinking a lot about that lately. Someone who takes home P382 per day (which includes the P20 scheduled minimum wage hike in the National Capital Region announced last week) gets P7,640 on a monthly basis on a 5-day week, gross. I can’t even imagine what that paycheck looks like after social security deductions.
Saying the amount doesn’t look like much is the understatement of all time.
Efren Cruz believes it is possible to be a millionaire from this starting point. But it will take more than lotto tickets and candy-colored dreams. In many cases, it will involve getting a second job or extra work on the side and cutting down on expenses (most definitely vices like cigarette, alcohol and tong-its if you ask me). It will take discipline and commitment.
Our personal finance article today “What will it take to become a millionaire?” lists down seven rules that self-made millionaires live by. On their own, they may turn us into better persons although not necessarily millionaires. Together, they can bring us closer to that first million, and we all know the first million is the toughest.
- Treat money as something to save and invest. The minute you receive your paycheck or a windfall (example, an inheritance or a bonus), think of how much you can put away as savings.
- Assume some risk when investing. When you play safe in investing, you’ll get safe (but low) returns as well. Millionaires have gone out on a limb putting up businesses which they hoped would earn — nothing is guaranteed. But it is in taking calculated risks that they are rewarded.
- Live simply. Some millionaires have lived in the same homes they have had for the past 30-40 years. Or they live in the homes they inherited. You can also take a cue from the way millionaires live: not all party every night, nor do they buy every new car model that’s released. Instead, you’ll find these millionaires working at their desks at 8 a.m. and having just two cars in the garage.
- Have a goal. By being specific, you will be more motivated to reach your goal. For instance, make it your goal to have your own home by the time you are 35 or 40. It may be a studio condo unit or a three-bedroom home in a subdivision—it will depend on your income and how you save over the years. Having a goal will help you focus your efforts well.
- Choose good debt over bad debt. Take out a loan only when the loan proceeds will be used to earn you more money. For instance, apply for a bank loan to expand a business that’s feasible.
- Share your blessings. There seems to be a unique mathematical formula at work: The more you give, the more you are blessed back in return.
- Train children to handle money well.
Read more here.
There is nothing on the list that says it will be easy. But it has been done. There are more millionaires around us than we think, and interestingly enough they are the ones who have simple clothes, eat in simple places and drive cars that are not flashy.
May 30th, 2008 at 2:12 pm
@InvestingPinoy, here’s another food for thought. I was speaking with a good friend over the weekend whose business used to rake in millions. He is now at a point in his life where his businesses are failing and if not for a sister, his family would have missed meals. He asks me why this has happened when he was trying to be honorable in his business and the persons who were dishonest were doing so good. What do you say to that?
I say, character, beliefs and thinking ARE very important in our road to financial success. And if that strength of character really comes from inside, whether or not we miss our financial goals this year or not, won’t really matter that much.
They’ll regroup calmly, think about what they are doing that’s not working, and try again. That’s the beauty of it all.
May 30th, 2008 at 2:11 pm
@Get Real, just food for thought. I know a lot of people who are extremely rich AND very spiritual. In fact, they say that they have been blessed precisely because they have tried their best at putting God first! Isn’t that amazing
May 30th, 2008 at 2:01 pm
@ Ria, so true, girl, so true :p. Don’t make me depressed now, hahaha.
May 30th, 2008 at 2:01 pm
@Zarah, I find a lot of sense in Stephen Covey too! In fact, he has a new website that’s being tested. You might want to try it: stephencovey.com.
May 30th, 2008 at 2:00 pm
@Serious Nuts, that’s a great way to do it. The reasons we have for working hard makes a huge difference in the way we treat the money that comes in. Life is really too short to just spend it buying what our neighbors have. What a waste of energy! I would rather spend it planning what I need to have in retirement!