Recently a friend posted this on facebook. It is about a Singaporean guy called Adam Khoo. He became a millionaire at the age of 26. One thing that caught my attention is always this phrase:" Millionaires are frugal and they only spend on what is necessary of value. That's why they are millionaires". Read on below:
A Blog Post by Singapore's Youngest Millionaire Adam Khoo
Some of you may already know that I travel around the region pretty frequently, having to visit and conduct seminars at my offices in Malaysia, Indonesia, Thailand and Su Zhou(China).
I am in the airport almost every other week, so I get to bump into many people who have attended my seminars or have read my books.
Recently, someone came upto me on a plane to KL and looked rather shocked. He asked, 'How come a millionaire like you is travelling economy?' My reply was, 'That's why I am a millionaire.' He still looked pretty confused. This, again confirms that greatest lie ever told about wealth(which I wrote about in my latest book 'Secrets of Self Made Millionaires'). Many people have been brainwashed to think that millionaires have to wear Gucci, Hugo Boss, Rolex etc. (I shop at G2000 by the way) and sit on first class in air travel. This is why so many people never become rich because the moment they earn more money, they think that it is only natural that they spend more, putting them back to square one.
The truth is that most self-made millionaires(not those lucky who inherited money) are frugal and only spend on what is necessary and of value. That is why they are able to accumulate and multiply their wealth so much faster. Over the last 7 years, I have saved about 80% of my income while today I save only about 60% (because I have my wife, motherin law, 2 maids, 2 kids, etc. to support). Still, it is way above most people who save 10% of their income (if they are lucky). I refuse to buy a first class ticket or to buy a $300 shirt because I think that it is a complete waste of money. However, I happily pay $1,300 to send my 2-year old daughter to Julia Gabriel Speech and Drama without thinking twice.
When I joined the YEO(Young Entrepreneur's Organization) a few years back (YEO is an exclusive club open to those who are under 40 and make over $1m a year in their own business) I discovered that those who were self-made, thought like me. Many of them with net worths well over $5m, travelled ecomony class and some even drove Toyota 's and Nissans. I noticed that it was only those who never had to work hard to build their own wealth (there were also a few ministers' and tycoons' sons in the club) who spent like there was no tomorrow. Somehow, when you did not have to build everything from scratch, you do not really value money. This is precisely the reason why a family's wealth (no matter how much) rarely lasts past the third generation. Thank god, my rich dad(oh no, I sound like Kiyosaki) foresaw this terrible possibility and refused to give me a cent to start my business.
Then some people ask me, 'What is the point in making so much money if you don't enjoy it?' The thing is that I don't really find happiness in buying branded clothes, jewelry or sitting first class. Even if buying something makes me happy, it is only for a while. It does not last. Material happiness never lasts, it just give you a quick fix. After a while you feel lousy again and have to buy the next thing which you think will make you happy. I always think that if you need material things to make you happy, then you live a pretty sad and unfulfilled life.
Instead, what makes ME happy is when I see my children laughing and playing and learning so fast. What makes me happy is when I see my companies and trainers reaching more and more people every year in so many more countries. What makes me really happy is when I read all the emails about how my books and seminars have touched and inspired someone's life. What makes me really happy is reading all your wonderful posts about how this BLOG is inspiring you. This happiness makes me feel really good for a long time, much much more than what a Rolex would do for me.
I think the point I want to put across is that happiness must come from doing your life's work(be in teaching, building homes, designing, trading, winning tournaments, etc.and the money that comes is only a by-product.If you hate what you are doing and rely on the money you earn to make you happy by buying stuff, then I think that you are living a life no better than a prostitute.
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Principally correct ... BUT
ReplyDelete1) I question to how much he practices what he preach.
2) To address the issue of contentment and satisfaction in your life, making 100% and spending 20% of it is painful ... especially for middle income workers making 2-3k a month.
Hi so1trg,
ReplyDeleteI can't comment on how much he practices what he preach as I do not know him personally. But I do know that his income is very high as he's a businessman who owns businesses and also a a best selling author of many books. For him, spending 20% of his income may amount to thousands of dollars.
I do agree it is painful for a middle income worker who earns 2-3k a month to save 20% of his income especially when he has a family. But I believe this worker can earn more if he finds the way. There are many ways to earn more money and I always believe in having multiple sources of income. Its up to a person whether he wants to take control of his own financial future.
Hi SG Young Investment,
ReplyDeleteAdam Khoo is definitely not the youngest self-made millionaire in Singapore. It's just a puff. I know of at laest 2 Singaporean self-made millionaires below 26.
It is true that his income is high due to the high charges on the courses he conducts.
By being a member of YEO, he would have been earning more than $1mil a year. Saving 60% would thus bring his annual expenses to $400k... that's not extravagant?? Even spending 200k a year is extravagant to me.
Assuming he travels twice a week. SIA 2-way economy class within ASEAN is less than $500. By travelling twice a week, thats $500 per 2-way x 2trips per week x 52 weeks = $52,000. Where does the other $150k go??
Hi Matthew,
ReplyDeleteMaybe he was the youngest millionaire at that time? That I won't know. He stays in a landed property and has a Ferrari and a porshe. I guess he spends a lot on really expensive stuff now coz he can afford it. We can't really say anything. But most millionaires are frugal in their daily expenses.
A trainer in his school say their trainers all drive power cars. So is that necessary or a complete waste?
ReplyDeleteAre they earning so much that they can drive power cars? I'm jealous now :p
ReplyDeleteThose are not necessity but a luxury. It's a matter of whether you can afford it. For me, it would have been a complete waste.
Hi SG Young Investment,
ReplyDeleteAlways be critical on what you read and don't be so quick to believe what you read online. After all, you don't know how Adam Khoo really made his wealth. But I must say the value of being frugal resonate in my blog, SG Wealth Builder.
Regards,
www.sgwealthbuilder.com
Hi Gerald,
DeleteI agree with you that we should be critical of what we read. I can say Adam Khoo made his wealth mostly from his books and courses. By the way, his courses are mostly packed at every sessions. I have many friends who attended his courses before. I also attended one of the courses in his training centre.
how much does adam khoo's course cost?
DeleteI think it's in the range of $3000 to $4000.
Delete