Building personal wealth

By just looking around, you can understand why the lack of wealth cripples a person’s ability to enjoy life. (An indigent person will always be thinking of his day to day survival. This means that comfort and pleasure is treated as a rare luxury. )

Is building wealth really as difficult as most Filipinos say?

Well, that depends on their definition of wealth.

I don't care much for luxury cars, huge houses or flashy entertainment components. As far as I know, I just want to live life on my terms, and that doesn't take much.

Most Filipinos probably feel the same way I do, the problem is that they don't know how to achieve it.

Financial advisers say that wealth creation isn't really all that complicated. In fact, they believe there are just four vital steps for an ordinary Filipino individual to achieve personal financial security:

Save first and refrain from buying unnecessary items. This can be difficult for compliant Filipino parents who want to please their demanding kids; but learning to say no can work wonders to the family coffers. (one of my pet peeves is someone who makes a habit of asking money or treats me like an Automatic Teller Machine).

More often than not, financial growth is incremental, with our personal net worth increasing steadily over time. Savings cover a significant role in wealth creation.

Most rich people are quite conservative in what they buy. This habit is what enables them to become wealthy in the first place, but even after they have achieved financial security they tend to appreciate the value of saving (and buying assets), rather than purchasing luxuries.

As research show, many people who buy expensive watches, clothing, cars and homes are, in fact, not yet wealthy. Rather, they want to appear wealthy. By spending money on items that do not produce income (liabilities), wealth remains elusive for most of these individuals.

Take the case of Filipino Overseas Contract Workers. Most consume all of their earnings to buy consumable items for “pasalubongs” to their family and relatives, easily burning a hole in their pockets. They end-up as poor as before they left to work abroad.

Buy assets, not liabilities. Asset means: something that will put money in your pocket over time such as investing in stocks. Liability means: something that will cost you money over time such as buying a luxury car which depreciates and expensive clothes (and even “ukay ukays” if done to the extreme) which become rags in a year.

Be very careful with handling loans. An official of a credit information provider once said that for Cebu to become the “next big thing in Asia,” Cebuanos need to change their views on handling debts. This means that Cebuanos must learn discipline in their use of loans and must pay their basic obligation.

“Non-payment of loans when these are due causes an increase in the cost of borrowing, thus resulting in a slowdown of the economy and the inability of most companies to expand their business.”

Continue to learn how to earn money and find new ways of managing it. Enroll yourself and your kids to schools that teach investment or overall financial know-how.

I believe that kids as young as five years old should be exposed to knowledge on wealth creation and management, especially here in Cebu, a hub of trade in the Visayas-Mindanao area, where everyone is expected to be entrepreneurial. “Today's global economy demands a constant upgrading of skills, and a general overall knowledge of investing.”

Financial security is within everyone's reach; it just takes knowledge and discipline.