Ever wonder why most people are not wealthy? Without a doubt, people would love to have some extra money. Better still, they want to have enough money so that they never need to worry about finances again. However, given the opportunities that most of us have in the countries we live in, why is it that many people can’t achieve financial freedom and retire young?
I believe the biggest reason why people can’t get rich has got something to do with how they spend money. Media promoting easy credit and materialistic lifestyles everywhere are causing many to develop bad spending habits. With so many people spending much more than they can afford, would it even come as a surprise that they need to extend retirement due to insufficient savings? What’s more, there are enough people who are just one pay-check away from bankruptcy!
The world generally classifies people into two categories – the "Haves" and the "Have-Nots." The Haves being people with a lot of money, as compared to the Have-Nots who are those with very little. However, I wish to introduce a third category – the "Have Not Paid For What They Have." After checking the statistics on consumers’ credit card spending and payment patterns, I come to a conclusion that many would fall into this third category.
For a number of years, credit cards in circulation increased steadily, as did the average household credit card debt. Credit card rollover balance, which is the balance subjected to interest charges because it is not settled by due date, also spiraled upwards. Such trends reflect the popularity of easy credit by flashing plastic without paying the debt in full every month. If people continue to spend everything they earn, or worst, spend $2.00 using credit for every $1.00 they earned, how can they ever become rich?
This then, is how you should live if you want to be wealthy…
If you plan to bring your family to Paris for holiday, bring them to Penang instead. Choose a Rado watch when you have the money for a Rolex. Wear a G2000 shirt when you can easily afford a Gucci. See what I’m trying to drive at? Yes, you need to live well below your means! That being said, I’m not against anyone enjoying some luxuries in life, if that is within your means. Life is not all work and no play. You also need to take some time off regularly to rejuvenate yourself. Treat yourself to a good meal, buy yourself that expensive gift you’ve been eyeing for some time, or go on a short holiday. Again I emphasize, indulge in luxuries when it is well within your means. Don't bust your budget to own luxurious stuff. Drive a BMW only if you have sufficient cash to buy a Rolls-Royce! I drive a Mercedes-Benz even when I can afford a Bentley because I live by the maxim of spending way below what I can actually afford. Don’t fall into the debt trap just to keep up with the Joneses. In reality, the Joneses are broke!
If you aspire to be wealthy, live frugally so that you can save more money for investment later. I guarantee you’ll be a much happier person when you’re not drowning in debt. Financial success awaits those who take positive actions to manage their finances wisely.
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Kelvin Wong is a millionaire investor and landlord. He currently owns a multi-million dollar property portfolio in Singapore, Australia and Malaysia. With his assets generating multiple streams of income to sustain his desired lifestyle, Kelvin became financially free at 39. He holds a Bachelor of Business (Dean's List) degree and a Diploma in Business Management. Kelvin writes about building wealth and achieving financial freedom in his free time.
Copyright © 2011 Kelvin Wong
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