How to Be Rich: A Full Guide to Live in Prosperity

Everyone, if not most people, want to have financial security and prosperity. Yet, learning how to be rich isn’t only about monetary abundance; it’s about having a balanced life, emotional well-being, spiritual growth, and the freedom to pursue your passions in life. 

This comprehensive guide is designed to provide Filipinos gain expert insights on wealth building and financial literacy. Being in the finance industry for over a decade, I want to help you lay that foundation to build wealthy and passive income in the Philippines.

How the Rich Live Their Lives: A Deeper Dive into True Wealth

When most people hear the word “rich”, they instinctively think of sprawling mansions, luxury cars, and opulent lifestyles. While it’s undeniable that financial abundance can afford such luxuries, the truly rich, in essence, lead lives that are grounded in principles far beyond material acquisitions. Here’s a closer look.

1. Prioritizing Growth and Learning Over Lifestyle Inflation

The wealthy have a unique mindset: they prioritize self-improvement and lifelong learning. This is not just about accumulating degrees or attending courses, but it’s an innate thirst for knowledge and personal development. They understand that their most significant asset isn’t their bank account but their mind and the breadth of experiences they gather throughout their life.

In stark contrast to this growth-centric approach is the trap of lifestyle inflation. As income increases, it’s all too tempting to elevate one’s lifestyle at the same pace. While there’s a joy in indulging and celebrating financial successes, it becomes problematic when every raise or bonus leads to increased expenditures, leaving little room for meaningful investments and personal growth. The truly rich ensure that while their wealth grows, it doesn’t come at the expense of their learning or personal development.

2. True Riches Beyond Monetary Measure

Being rich isn’t just about the numbers in a bank statement. It’s a holistic wealth encompassing emotional, spiritual, and physical dimensions. Here’s how the genuinely rich view these dimensions:

• Emotional Wealth: Richness in life is also about having deep, meaningful relationships and emotional stability. The emotionally wealthy can navigate life’s ups and downs with resilience, draw strength from their relationships, and find joy in small, everyday moments.
• Spiritual Wealth: Whether it’s adhering to a particular faith or finding solace in personal beliefs or practices, spiritual wealth offers a sense of purpose. It provides the truly rich with a compass to navigate life’s challenges, find meaning in adversity, and remain anchored amidst external chaos.
• Physical Wealth: Health is often said to be true wealth. Without health, even the most abundant financial wealth loses its sheen. The genuinely rich understand this and prioritize their health, investing time and resources into maintaining their well-being, and pursuing activities that nourish their physical selves.

3. The Luxury of Time Freedom

A coveted aspect of true richness is having control over one’s time. Financial abundance can provide the means to pursue passions, spend moments with loved ones, or even take breaks to rejuvenate and reflect. The genuinely rich value time as their most precious resource and strive for a life where they can allocate it as they see fit, without being shackled by endless obligations.

Rich vs Poor Mindset: How the Wealthy Think

Understanding the intricacies of wealth isn’t just about counting dollars and cents; it’s about the mindset that paves the way to financial abundance. The way we think, perceive opportunities, and react to challenges can significantly shape our financial journey. 

Here’s a comparison of the mindset between those who often find wealth and those who might struggle, regardless of their current financial status.

1. Long-term vs Short-term Vision

• Rich Mindset: Long-term Vision — Those with a wealthy mindset are frequently future-oriented. They set long-term goals, understanding that true wealth and success don’t happen overnight. Their decisions are made based on how it will benefit them in the long run, rather than immediate gratification. Whether it’s about investments, career moves, or personal growth, they’re in it for the long haul.
• Poor Mindset: Short-term Vision — In contrast, a short-term perspective might focus more on immediate rewards and gratifications. This might lead to impulsive decisions without considering the long-term implications. It’s the allure of instant pleasure over future benefits.

2. Embracing vs Avoiding Risk

• Rich Mindset: Embracing Risk — Wealth often comes with taking calculated risks. The wealthy mindset understands that without stepping out of one’s comfort zone, significant rewards might remain elusive. They evaluate risks, prepare for them, and see failures as learning experiences rather than setbacks.
• Poor Mindset: Avoiding Risk — Over-caution will often cause missed opportunities. While it’s essential to be wary of potential pitfalls, avoiding all risks can result in stagnation. A mindset dominated by fear might miss out on potentially lucrative chances.

3. Saving vs Investing

• Rich Mindset: Investing — While saving is essential, the wealthy know that the real growth of their money comes from smart investments. They educate themselves on the best opportunities, whether in stocks, real estate, or businesses, and understand the power of compounding and how it can amplify their wealth over time.
• Poor Mindset: Saving — Simply stashing money away might give a sense of security, but inflation and changing economic climates can erode its value over time. Relying solely on savings without considering investments might lead to missed wealth-building opportunities.

4. Improving Lifestyle vs Income

• Rich Mindset: Improving Income — Instead of just elevating their lifestyle with each financial increase, those with a wealthy mindset focus on increasing their income streams. They look for new opportunities, ventures, and ways to diversify their income. The goal is sustainable and scalable wealth.
• Poor Mindset: Improving Lifestyle — Immediate elevation of lifestyle with every small financial gain can lead to a cycle of living paycheck to paycheck. While it’s essential to enjoy life, doing so without ensuring a steady and increasing income can lead to potential financial pitfalls.

Ten Key Principles for Building Sustainable Wealth

1) Set Clear Financial Goals

Effective wealth building begins with setting clear, well-defined financial goals. These goals serve as your roadmap, providing direction, motivation, and a sense of purpose in your journey toward financial prosperity.

Reflection Question: Have you defined specific financial goals that guide your actions and decisions?

2) Manage Your Expenses

One of the cornerstones of wealth building is strategic expense management. Minimizing wasteful spending frees up resources for wealth accumulation. Every peso saved brings you a step closer to the ultimate goal of financial freedom.

Reflection Question: Have you defined specific financial goals that guide your actions and decisions?

3) Learn How to Consistently Save

Setting aside a significant portion of your income regularly establishes a solid foundation for your financial future. This consistent effort lays the groundwork for achieving your financial aspirations.

Reflection Question: Do you regularly set aside a portion of your income?

4) Pay off Your Debts

The burden of debt can impede your journey toward wealth. Prioritizing debt elimination through systematic and informed strategies liberates resources that can be redirected toward wealth-building endeavors. 

Reflection Question: How might focusing your resources to debt payments accelerate your progress?

5) Build Your Emergency Fund

Life is full of unexpected twists and turns. An emergency fund acts as a safety net, providing financial security during unforeseen challenges. It ensures that you’re well-equipped to weather storms without derailing your overall financial progress.

Reflection Question: Have you prioritized and set up an emergency fund that can provide you with peace of mind during unexpected challenges?

6) Start Investing As Early as Possible

Time is a powerful ally when it comes to wealth building. Initiating early investments allows you to harness the compounding effect, which amplifies your returns over the long term. This means that even small investments made early can yield substantial outcomes. 

Reflection Question: Have you started on any  early investments to build on your long-term wealth?

7) Diversifying for Risk Management

A critical principle in wealth building is diversification. Spreading your investments across various asset classes helps mitigate risks associated with market volatility. Diversification optimizes potential returns while minimizing the impact of any single investment’s underperformance. 

Reflection Question: How might diversification help you mitigate the risks associated with market volatility?

8) Create Multiple Income Streams

Relying solely on a single income source can limit your financial growth potential. By creating and nurturing multiple income streams, you insulate yourself against economic downturns and create a stable foundation for wealth accumulation. 

Reflection Question: Do you have multiple income streams set aside from your current income?

9) Invest in Financial Education

Empowerment through knowledge is a key aspect of wealth building. Investing time and effort in financial education equips you with the insights and understanding needed to make informed investment decisions and manage your finances more effectively.

Reflection Question: What role does ongoing financial education play in making informed investment decisions?

10) Avoid Get Rich Quick Schemes

I believe that everyone should build wealth on a foundation of patience, strategy, and disciplined effort. Get-rich-quick schemes may promise instant riches, but they often lead to disappointment and financial setbacks. Avoiding such shortcuts is crucial to your long-term financial success. 

Reflection Question: Have you lost some money in investing in wrong business and investment opportunities?

Crunching the Numbers: A Savings and Investment Blueprint

Maybe you’re thinking: “Can I really become financially rich?” You’ll be surprised how your wealth can grow with the right habits of saving and investing. 

To illustrate the impact of disciplined savings and investments, consider two scenarios over a ten-year period:

Scenario 1: Saving and Investing 60,000 Pesos Annually

Scenario 2: Saving and Investing 72,000 Pesos Annually

These scenarios offer practical insights into the transformative potential of consistent contributions and compounding interest.

If you saved and invested 60,000 a year (or 5,000 a month). 

Year	Savings at the Beginning of the Year	Interest Earned	Total Savings at the End of the Year
1	60,000	4,800	64,800
2	124,800	9,984	134,784
3	194,784	15,583.52	210,367.52
4	265,367.52	21,229.40	286,596.92
5	336,596.92	26,927.75	363,524.67
6	409,524.67	32,761.97	442,286.64
7	484,286.64	38,742.93	523,029.57
8	561,029.57	44,871.57	605,901.14
9	639,901.14	51,148.09	691,049.23
10	721,049.23	57,570.34	778,619.57
11	804,619.57	64,135.56	868,755.13
12	890,755.13	70,839.61	961,594.74
13	959,594.74	76,677.18	1,036,271.92
14	1,036,271.92	82,642.15	1,118,914.07

If you saved and invested 72,000 a year (or 6,000 a month). 

Year	Savings at the Beginning of the Year	Interest Earned	Total Savings at the End of the Year
1	72,000	5,760	77,760
2	149,760	11,980.80	161,740
3	233,740	18,699.20	252,439.20
4	322,439.20	25,795.14	348,234.34
5	417,234.34	33,378.75	450,613.09
6	517,613.09	41,409.05	559,022.14
7	623,022.14	49,841.77	672,863.91
8	732,863.91	58,629.11	791,493.02
9	847,493.02	67,730.64	915,223.66
10	967,223.66	77,102.69	1,044,326.35

The CHIP Method: Your Comprehensive Wealth Management Strategy

The road to financial success isn’t solely about amassing money; it’s about how you manage, grow, and protect that wealth. This is where I want to introduce you to the CHIP method, a framework that provides a comprehensive plan that helps you experience financial success and escape financial stress.

Let me explain this framework to you: 

1. Creating Wealth

Foundational Principle: Before managing wealth, one must create it.

• Generating Income: The first step is to have a stable source of income, whether it’s from employment, a business, freelance work, or other entrepreneurial ventures. Exploring multiple income streams can accelerate wealth creation.
• Saving Prudently: It’s not about how much you earn, but how much you save. Prioritizing savings, even when the income is modest, can accumulate significant wealth over time. Following the age-old advice of “paying yourself first” ensures that a portion of every earning is set aside for the future.

2. Handling Wealth

Foundational Principle: Effective money management ensures that wealth grows rather than stagnates.

• Budgeting: Crafting a well-defined budget and adhering to it helps allocate resources efficiently. It ensures that expenses don’t overrun income, and savings goals are consistently met.
• Responsible Spending: Adopting a frugal mindset doesn’t mean depriving oneself. It’s about discerning between needs and wants and making purchases that offer long-term value.
• Avoiding Lifestyle Inflation: As income grows, there’s a temptation to upscale the lifestyle proportionately. While it’s natural to want to enjoy increased earnings, unchecked lifestyle inflation can quickly erode new wealth.

3. Investing Wealth

Foundational Principle: Money should work for you, not the other way around.

• Educate Before You Invest: Jumping blindly into investments is risky. Before channeling resources, one should understand the venture, its risks, and potential returns.
• Diversification: Not putting all eggs in one basket reduces risk. Spreading investments across different assets—stocks, bonds, real estate—ensures that if one underperforms, others might compensate.
• Aligned Financial Goals: Investments should reflect one’s financial objectives, whether it’s early retirement, buying a home, or building a college fund for children.

4. Protecting Wealth

Foundational Principle: Wealth preservation is as crucial as its creation.

• Insurance: From life to health and property insurance, having the right protection ensures that unforeseen events don’t decimate hard-earned wealth.
• Estate Planning: Effective estate planning ensures that one’s assets benefit their loved ones in the event of their passing, rather than being caught up in legal complexities.
• Risk Management: Beyond insurance, this involves understanding the financial risks in one’s life and taking steps to mitigate them. This could mean diversifying investments, setting up emergency funds, or avoiding high-interest debt.

If you want me to coach you on the CHIP method, I want to invite you to be a part of The Yayamanin Life Coaching program. This online coaching group is an exclusive club of Filipinos dedicated to becoming financially wealthy and debt-free. 

When you join this program, you will get access to: 

• Dozens of high-value trainings and courses from me and many other financial experts and coaches in the Philippines. Some include: 
  • Marvin Germo
  • Bo Sanchez
  • Maj Custodio
  • Randell Tiongson
  • Carlo Ople
  • And so many more!
• A monthly coaching session with me— Wealth Coach Chinkee Tan. Together, we’ll unpack lessons and practices that help you become truly wealthy.
• Accountability groups to help you reach your financial goals. 
• Ask me anything groups so you can get more insights, learnings, and clarity. 
• An online community ready to keep you accountable and collaborate. 
• And so much more!

Click Here to Join the Coaching Community

Frequently Asked Questions (FAQs)

Is wealth-building feasible on a modest Philippine income?

Absolutely. With discipline and strategic planning, even a modest income can lead to substantial wealth accumulation over time. But you can reach your financial goals faster if you also learn how to grow your income. That’s why I believe you should create more wealth.

What secure investment opportunities exist in the Philippine market?

The Philippine stock market, real estate, and mutual funds offer viable options. Thorough research or professional advice is crucial before investing.

How can I initiate financial literacy with minimal prior knowledge?

Begin with freely available online resources, attend financial workshops, read reputable literature, and follow respected financial experts. Feel free to visit my YouTube channel to get more financial tips. 

Can franchise businesses genuinely yield passive income?

While franchise businesses can provide passive income, success hinges on factors like location, brand reputation, and effective management.

How can I shield my wealth during economic downturns?

Diversify investments, maintain a robust emergency fund, and consider assets historically resilient during economic challenges.

Final Insights

Your journey of wealth building needs unwavering dedication, disciplined action, and an informed strategy. Through setting precise goals, managing expenditures wisely, making prudent investments, and adopting a prosperity-focused mindset, you can chart a course toward financial well-being. 

Wealth goes beyond monetary gain; it empowers you to lead life on your own terms. Take the first step today and lay the foundation for a future marked by financial security and abundance.