Yes, It's Possible to Have Higher Income Without Building Wealth

Here's a photo that I found on New Money Blog on Instagram. School is almost ready to resume and the big question can be, "Do you have money to pay for tuition fees?" I wrote some articles related to that such as about payday euphoria before the long weekend, one's definition of savings, and the Philippine holiday debt trap. Some people today believe that the "best solution" is to raise salaries. However, raising salaries during inflation will worsen inflation (read here). By now, I should realize basic IQ in business and economics is a real problem in the Philippines. I don't expect troll pages on Facebook to even develop a business IQ. 

It's true that people with a higher income have a higher advantage. That's why some people seek to work in Business Process Outsourcing (BPO) centers. Others even seek to move abroad (which is caused by rampant economic protectionism). Some people believe that if they have a higher income then certainly their lives can be better. However, what can be sadly observed is that there are some OFW families where, even after years and years of remittances, they're still poor. Some people run huge businesses where they get a lot of income but end up getting stuck in financial losses and/or bad debts. They have high income but what really is the problem? I dare say that they think that having a high income "solves everything" but they never really see the bigger picture.

Some people wish that they can get a high-paying job so they can live luxuriously. It's a pain listening to people wishing they owned all the expensive stuff and "look good". This reminds me that I actually wrote about how nobody gets rich by owning plenty of nice stuff. The real rule of money is to check on the quality rather than the quantity. I may not settle for a cheap bag that breaks easily. However, I'll buy an expensive bag if the quality is good. However, if I'm just buying the name than a quality product then no thanks. I could buy a USD 75.00 sturdy bag and have USD 425.00 in it. The same can also go when people overspend on things that they don't need to impress people who don't know how to value money (read here).

The big problem of many people, whether they belong to the average income or high income, is their inability to save money. I remembered laughing while I wrote dumb ways to drain your paycheck. It's payday, right? Some lower-income people start to have a good time than accounting for what they need. It's no wonder why payday tends to be rather traffic. Sure, it's one thing if people on payday start paying bills and that's acceptable. However, when payday arrives and it's the malls, not the billing centers, that are full, then it's time to say, "What about your priorities?" It doesn't matter how big the paycheck's amount was--it can be lost in less than a day if one splurges the paycheck. I guess that's why some foolish people protest at the roads demanding "Sahod itaas! Presyo ibaba!" In English, that means "Increase salaries! Lower down the prices!" That statement is really based on ignorance of basic accounting (read here). Salaries are part of costing whether it's directly related or indirectly related to the cost of production. 

What one does with money really matters. Sure, underpaying employees is a really terrible thing. However, even if employees were paid properly, they will not develop wealth if they don't know what to do with the money. If they decide to spend carelessly and not do some investments, they can't expect wealth. It's like they should focus on the essential payments (ex. utility bills, rentals, tuition fees, etc.) instead of the payday blowout. However, they should also at least try to invest in something like allocating a reasonable sum per month in a stock index fund for 5-10 years. If they don't need PHP 1,000.00 to PHP 3,000.00 then why not allocate some of that money into a stock UITF fund for a certain period of time? 

If business booms then it's not a call to splurge all that money. I'm not saying that the money should be hoarded. Instead, some money should be invested and only a reasonably small amount should be splurged. For example, I decide to buy what I need more than what I want. I've even decided to skip super-expensive places and buy only expensive stuff with good quality. It's because even if the net income is that high, it's easy to overspend a million over a million nonsense. Instead, it's all about priorities and not being like General Tomas Mascardo (read here).

Even worse, people may claim they're "investing". But what are they investing in? They might've tried investing expecting to get rich quick fast. The end result is that they stopped investing in valid schemes for get-rich-quick schemes (read here). Sadly, even as I invest in stocks (through managed funds and UITFs), I never felt the thrill of sudden riches like cryptocurrency does. Sure, cryptocurrency rises fast but it will crash even faster. Stocks may be aggressive but so far, I don't really see it rise or fall as fast as cryptocurrency. I wonder if they decided to "invest" by gambling then that's not an investment at all. Gambling will never be investing. Any money that easily comes easily goes. 

That's why some people who started out with an average income become better. Some people who work as employees can retire better than businessmen who waste their hard-earned income. I might see a business shut down and an employee can either rise up as a businessman or be comfortably retired in their old age. Not everyone can be a businessperson and have that high income. However, with proper finances, anybody can have money for their later years.