Here’s an insightful post from Allan from The Philippines. He shares with us his story about growing up poor and working his way up. It’s always great to read about international perspectives. Hope you enjoy!
They say we are creatures of habit. This is especially true when it comes to money. When the going gets tough, it is easier to resort to what’s comfortable. When that happens, your own money habits take over. The only question is – will your money habits get you through and make you rich?
Money Habit # 1 – Playing with money
Learning my money habits started when I was still a young kid playing outside the house on a sunny afternoon. The first money habit I learned was playing with money. Yes, literally. But not with actual money. My friends and I would play games betting on carefully folded cigarette packs looking like play money. A red Marlboro is worth PhP 50 (US 1$). A green local brand “Champion” cigarette is PhP 5 (10 cents). A Philip Morris cigarette pack is worth PhP 100 (US $2).
It was all play money then. And it was easy to get. I only need to wait for my father to finish his cigarette pack and I’d be on my way to earning my (play) money for the day. Sometimes, we even played with coins, taking turns and rolling them on the floor like a dice. Playing with money was fun!
Somewhere between playing with other kids and being conscious on what’s cool, I learned that money can buy me things. But since we were poor, I had to make do with my worn out clothes. After some time I’ve already outgrown it so much, I already looked like Winnie the Pooh.
It’s not so much about other kids having better clothes. It was more because I was not able to play outside as much as the other kids. My mother would always remind me to do my house chores. Wanting to go out and play instead, I would reason out “how come the other kids are not doing any chores?” To which my mom lovingly responded,
“Because we are not like them. They can do whatever they want because they are rich. We are poor. ”
That was the first time I realized we were different from other people. We were poor. I began to notice how worn out my clothes and shoes are. I remember even going to school with no shoes on.
That’s one lesson I took to heart. If you don’t have money, you are poor. If you are poor, you need to work to have some money.
Money Habit # 2 – Working for money
Growing up with a family of farmers, I knew how hard my parents worked just to put food on the table. My mom would sometimes ask me to help out in harvesting tobacco leaves at a nearby town. She’d motivate me by paying for every tobacco leaf I was able to harvest. With promise of a paycheck, I willingly agreed to go.
The next day, I woke up early in the morning, went with her to the farm, and started plucking tobacco leaves left and right. After hours of standing under the grueling heat of the sun, I managed to harvest loads of tobacco leaves. That day, I went home enduring an aching back and torn muscles. But I was happy. I was able to help out my mom and it also made me PhP 100 (2 US $) richer. That’s actual money, not a Philip Morris cigarette pack. :)
It was hard work. I was so tired I thought I was going to get sick the next day. Good thing I was able to watch my favorite TV show that night – a Japanese game show called ‘Takeshi’s Castle’. I was able to laugh it off and sleep soundly that night.
One thing was clear from then on. I must first have to work before I can expect to earn money and get paid. If I don’t get paid, I don’t have any money to spend.
Money Habit # 3 – Spending money
After graduating from College, I was fortunate enough to get hired by a multinational IT company as a Mainframe Programmer for a monthly salary of PhP16,000 (about US $320). It was big money for me then, coming out straight from College without any working experience.
When I got my first paycheck, I was so thrilled. I thought it was the best time of my life. Why shouldn’t it be? I had money to buy what I could not afford before. Even if it’s just a new pair of shoes. Even if it’s just occasional dinner out with friends. Even if it’s just a nice shirt or two. After all, the money I earned was finally my “own”. It was liberating.
But not for long. The more I consumed, the more I realized I wanted more. I wanted more money to buy that new mobile phone. So off I went and tried the only way I knew how to make more money then – work hard on my job. As a result, I got promoted almost every year and my paycheck steadily increased. Sooner than later, I realized that even with the higher pay, it seemed like it was still not enough. I was still always short of cash.
That’s when I realized, there’s actually another way to get more money – borrow.
Money Habit # 4 – Borrowing money
Once I started earning quite a bit, I got comfortable spending for stuffs. It got to a point where I bought something even though I didn’t have the money to pay for it. I only had to use my new credit card.
In one day, I bought a new washing machine, a refrigerator, a gas stove and a new pair of shoes all at the same time. Worse, all the balance had to be paid off at the end of the month. I didn’t know there’s a thing called “monthly installments” then so I never bothered to ask. All I cared was showing off, pretending to have a lots of money using my new credit card. Looking back, it was one of the most stupid thing I’ve ever done in my life.
Even if I wanted to, I couldn’t pay ALL of the balance after a month. In the first place, the reason I used the card is because I didn’t have the cash. I tried to pay as much as I can but after months of painfully paying a little bit above the minimum I was getting nowhere near paying the balance off.
To make matters even worse, I got myself in deeper trouble by doing cash advance on my credit card just to have the cash to pay for my rent. I paid the hefty cash advance fee with a sinking feeling in my stomach. I had no choice. I could get thrown out of the apartment if I didn’t pay up. It was a humiliating and painful experience for me. From then on, I bowed not to allow myself to experience the same thing again.
Money Habit # 5 – Saving Money
The next day, I went straight to our company’s cashier and signed-up for an automatic savings program. The program automatically deducts a percentage of my paycheck and transfers it into my savings account.
I started with only 2% of my paycheck enrolled into the savings plan. After 3 months, I increased it to 5%. Another 3 months and I increased it again to 10%. After a year I felt comfortable enough to increase it further to 20%. In my mind, if the money does not reach my hands, I won’t be able to touch it. I won’t be able to spend it.
I was still paying off my debt at this point but the automatic savings plan was a big help on my confidence. It was liberating to know that I had some money saved somewhere, even if I don’t see it.
After years of saving, I was finally able to pay up my credit card debt. I was so scared of debt, I immediately had my credit card cut off the day I paid the whole balance. I felt finally free after a really long long time!
Months of saving through the automatic savings plan was a big help in building my emergency fund for around 6 months worth of expenses.
This proved to be a great thing since a few months after, my sister slipped while walking through our staircase and sustained a head injury. I was shocked. With adrenaline rush kicking in, I managed to bring her up to the hospital. To this day, I still thank God that this happened when I already had a bit of money saved up. I was able to buy the necessary medicine. I was able to pay for the hospital bill. I was able to pay for the operation. More importantly, my sister got well without any complication. I can’t imagine how it would have turned out had this happened while I was still heavily in debt.
Why these 5 habits will never make me rich
Looking back, I certainly have come a long way as a young kid playing with cigarette packs pretending they’re money to now a debt-free IT professional with an emergency fund able to help out his sister in an actual emergency.
In all honesty, I really think these 5 habits alone will never make me rich. I’m still a long long way to go from financial freedom. Saving money is good, but making it grow is another thing. At least it’s a good starting point. I’m eager to learn the money habits of investing and starting on my journey to becoming truly rich. When that happens, I’ll have another 5 money habits to share to you.
About Allan: Even with the insider knowledge of working as a mainframe programmer for a credit card company over the past 7 years, he still got burned with credit card debt. Alan is trying to learn better money habits and sharing them through his Rich Money Habits blog.