Most of us are so focused on wealth generation that we tend to not dwell on developing attitude and other necessary skills to really become wealthy.
Before you wager your money on different financial instruments and earn your first million, you need to develop a boring, although super practical and effective, mindset. Well, that’s what it took for the following Filipino millionaires to get where they are now.
Rule No. 1: Create long-term plans
No millionaire has ever made his first million out of subsistence. To get out of your day-in-day-out living, you need to have the vision and be able map out your long-term plans.
At 31, Joseph Calata of Calata Corporation became the youngest chairman of a PSE-listed company. But before he became a public figure with his trademark rockabilly hair, unmistakable swagger, and sly grin, his family’s agribusiness venture started out small in a backyard in Bulacan.
Calata envisioned their backyard store to become a big one. So he invested in an accounting software.
“I could not make a new transaction if the previous day’s sales had not been encoded…because I saw how things would pile up. I wanted to perfect the system. I had to know how much we made every day. Was there profit? How much?”
Joseph Calata, Philippine Daily Inquirer
His highly organized system was initially met with resistance, but eventually he won the old guard over after he was able to prove the long-term advantages of using an accounting software.
Currently, Calata Corporation has a market capitalization of P983 million. Surely that wouldn’t have been if he didn’t have a plan.
Rule No. 2: Live within your means
It’s easy to commit yourself to activities that may just be beyond your budget. Whether it’s a weekend beach getaway or a night-out with friends, it’s easy to give in to temptation and spend beyond what you have.
Living beyond your means is nothing new; in fact, it has been discussed many times. But a lot of people don’t discuss actually how to stay within your budget without restraining yourself of some lifestyle expenses.
Personal finance expert Burn Gutierrez encourages people to start with this by getting their net worth.
“To give you a clearer view on the status of your finances, it is recommended that you conduct a net worth analysis: subtract your assets from debts in order to arrive at your net worth. If the result is a negative number, then you are living beyond your means. This means that even if you have a job today and you are earning a salary, you still essentially own nothing.”
Aside from that, his biggest advice to learn how to live within your means is looking at success in a more pragmatic way. “The way you dress yourself, the car you drive, the restaurants you go to, or how frequent you travel to places other people have not been to in their lives” don’t define success. Do not equate these with wealth or you’ll end up discontent, which will push you to spend more even if it means blowing your budget to smithereens.
“There is a big difference between being truly rich and just trying to look rich,” he reminds us.
Rule No. 3: Use your time and energy to generate wealth
The 10,000 Hour Rule, which was coined by author Malcolm Gladwell in his book Outliers, is one of the most misunderstood ideas in terms of self-help and personal growth. After earning a flurry of criticism from different academicians, the Canadian author finally cleared the air and explained himself during his Ask Me Anything session on reddit.
“There is a lot of confusion about the 10,000 rule that I talk about in Outliers. It doesn’t apply to sports. And practice isn’t a SUFFICIENT condition for success. I could play chess for 100 years and I’ll never be a grandmaster. The point is simply that natural ability requires a huge investment of time in order to be made manifest. Unfortunately, sometimes complex ideas get oversimplified in translation.”
While practice will make you adept at anything, mastery of skill requires intense levels of time and devotion, not just allocating a time of your day for practice. In addition, your passion for what you do—be it sports, the arts, or any technical skill—will make you go beyond your borders.
Enter Christian San Jose, founder of digital agency Create.ph. The all-around digital ninja has made beautiful websites for big names like Kobe Bryant, Dwyane Wade, James Harden, Big Sean, Usher, among others. He has also worked for brands like Adidas, Adobe Inc., Mitsubishi, and Nike.
What started as a hobby back when he was 16 paved the way for him to be amazing at what he does.
“I just did these things for myself, and eventually I got better as I put more time into it,” he said in an interview with Entrepreneur Philippines. Practice, indeed, makes progress.
Rule No. 4: Work smart, not hard
Pretty sure you’ve seen this advice before: Turn to multiple streams of income for better cashflow. If you have a standard 9-to-5 job, you may want to make the most out of your day by finding ways to earn money on the side.
Whether it’s direct selling, investing in the stock market, or taking up a side job, grab every opportunity you can–but not without assessing which ones are truly worth the hustle.
Financial coach Fitz Villafuerte says that while having multiple sources of income is not bad, not understanding how it affects you can wear you down physically and mentally. After all, where’s the fun in earning money if you don’t have the time to enjoy life’s greatest pleasures?
“Having multiple sources of income is not bad, I actually encourage it. But this does not mean that one should grab every income opportunity that comes along without doing a proper evaluation of how it will affect you.”
If you already have different sources of income, find out which ones pay the highest per hour. Then you can take the following steps Villafuerte suggests:
• Take care and give more importance to your high-income earners.
• Study and develop income sources that can potentially become passive over time.
• Increase productivity and efficiency by leveraging on technology, processes, and manpower.