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 2:00 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!
May 30th, 2008 at 1:59 pm
@frappo, you said:
“after aquiring our goals we long for something more to overtake somebody.”
I assume you’re talking about people who want to keep with the Joneses, or in our case the Juans next door. I’m guilty of that sometimes too in my mind! But sometimes people do it not out of envy but out of a sense of responsibility for their children, or for themselves so that they don’t have to ask their children to support them in old age. Just my two cents
May 30th, 2008 at 1:57 pm
@Zeitgeist-freud, I believe in predestination but I also believe that one has to work hard to get what you are predestined to have in your life. The concept is closer to “potential” than something that is given without any requirement. So, some people may be blessed with the potential to be blessed with material riches so that they can help others, but they have to learn how to be disciplined and money-smart so that they can get there. In my book, striving to be well-off is not bad or evil. How can you help a man who is hungry if you yourself doesn’t have money to buy food?
May 22nd, 2008 at 11:25 pm
Nice post! For me, goal setting and sharing your blessings are the most important. Goal setting because I believe that financial success starts in the mind. First, you have to decide that you want to be financially successful. Next, you have to believe it’s possible, you deserve it and that you can achieve it. Then you begin with a plan and must focus on it by setting goals. If your mind is set for financial success, then there will be no problem when it comes to avoiding bad debt, budgeting, saving and investing and getting extra job for extra income. I believe that our character, beliefs and thinking are very important if we want to become financially successful.
May 22nd, 2008 at 11:39 am
I agree with Serious Nuts. “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.” …
We all need money or why else do we have jobs, why else do we work hard for a promotion.
Being rich or having lots of money will make our and our families lives better and fuller.
If we surrender to the idea of “fate”, consider wealth building as “ungodly” or worse, believing that God decides who will be rich or not (helloooow! heard of freewill?) then we will STAY exactly the way we are now…poor, miserable and blames almost anything and everything for our seemingly unhappy lives.
I say we should TAKE RESPONSIBILITY of our own lives!
I am NOT a rich person…not yet at least..but I am doing everything I can to build wealth for my family’s sake. If I die poor, then no one else can be blamed but me…not Pres. Arroyo, not corruption, and certainly not because of God’s Will… but me.