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 22nd, 2008 at 12:41 am
This reminds me of the points in the book “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko”.
May 21st, 2008 at 1:32 pm
Well if you add up your total salary from the time you started working up to now (if you are still on salary) you’ll be surprised that the total might be in 7 figures. The question is, where have the million/s gone :)) So once again it all boils down to how much have we saved from all those earnings.
May 21st, 2008 at 10:41 am
Having to study in a Catholic School for 16 years has taught me foundation, self-discipline, and compassion for others.
Are material things good or bad is among the taboos in my entire schooling life that were not openly discussed during classes. Finally, the great quest is over and i found the answer a few years after my Catholic education.
I have decided that being rich in my Spiritual Life is one aspect. I also have to fulfill being rich physically, mentally, and emotionally.
How to be Rich?
Taken from the 7 Habits of Highly Effective People by Stephen Covey:
Physical ~ Exercise 30 minutes every other day. It will give you vitality and energy.
Mental ~ Maintain the 7 Habits. Review each day that your life is in harmony with your Long Term Mission, Vision, and Roles. Acquire knowledge as much as you can. Learn and improve yourself everyday. Spend time only for activities which are aligned to your Mission and Vision. Start saying NO to activities which will not help you achieve otherwise.
Spiritual ~ Renew your commitment to your well-developed value system and your own philosophy. Read important literature. Engage in spiritual activities providing leadership. Begin with end in mind. What do you want your epitaph to say? E.g. Here lies a man who served his country and loved his family.
Emotional ~ Think and approach Win-Win situations. Seek to understand, then be understood. Synergize. Get into creative problem solving and come up with a better psychological agreement.
It takes a great deal of self-discipline in staying focused. They say it’s not how you fall but how soon you get up and move on.
May 21st, 2008 at 8:17 am
nice post!
May 21st, 2008 at 8:03 am
Striving for wealth should not be a race against others or you will never be contented. For me, I am doing this to provide some security to my family.
Imagine yourself in a situation where your wife had just given birth, your newly born son have some complication, and your dad just had a heart bypass surgery a few days earlier - all happening in one week. Feeling helpless in a seemingly hopeless situation. If there is somebody there in a similar situation yet can still say that wealth is unimportant, I say he is either crazy or lying.