How to be RICH if my salary is just P20,000 per month?

James Ryan Jonas

Here’s a question from one of our readers:

“I’m single, in my late 20s, and currently have a stable job. But I’m planning to pursue an MBA soon, maybe buy a car, and then purchase a condominium unit so I can live near my work. But with my salary of just P20,000 a month, I don’t know if I can achieve all those. Any advice?” – Gerard

What advice would you give to a person who’s trying to live by with only P20,000 income per month?

Here are our tips.


How to be rich with just P20,000 monthly salary

1. Set specific goals and plan the time frame to achieve them.

I’d encourage Gerard to start identifying the specific monetary value of the goals he wants to achieve. He plans to enroll in MBA, buy a car, and own a condo unit — assign a number to these items. How much exactly would all of these cost? P3 million perhaps, P5 million, or more?

Having an actual cash figure can give Gerard an idea if he’s way far off his savings target, which means either he’ll have to save and earn more or revise his personal goals because they may be unrealistic at the moment.

Still, what’s more important is that he has to identify a time frame when he plans on doing all of those things. He must set a schedule when he’ll enroll in MBA (probably in 1-2 years’ time?), buy a car (in 2 years, perhaps?), and purchase a condo (in 5 years?). With specific goals that already include a monetary value and time frame when they shall be executed, Gerard can now actually compute the exact amount he needs to be able to achieve those goals.

We have a really insightful article about how much money you need to save monthly in order to get P1 million by a certain date. Check it out here: How to achieve savings of P1 Million?

2. Start saving more money.

Gerard would likely say that he’s already saving some money. But most likely as well, he hasn’t saved enough. He’ll need to save more in order for him to actually realize the car, condo, and MBA degree that he plans on getting.

Here’s a savings suggestion: try allotting a fixed percentage of your income, say 20% or 50%, as savings, and spend only the remaining portion. This is similar to the 80-20 savings formula which became popular some time ago.

If the initial percentage would put too much constraints on your finances, try a smaller percentage first then work your way up after some months. To be able to grow your savings, look for ways on how you can cut down on some unnecessary expenses. For example, the weekly Starbucks coffee, the daily yosi, or the daily fastfood take-out have to go in order for you to achieve more savings.

3. Earn more money.

Gone are the days when only one job would suffice to sustain one’s living. Find other means of making money!

Some ideas: start selling some of your old stuff. Be a prepaid load retailer or reseller of items on Facebook Marketplace or OLX or Carousell. If you have extra time on your hands, look for a part-time job or sideline online or offline. There are a lot of income opportunities if you just know where to look and if you’re interested to do additional work in the first place!

4. Invest and grow the money.

Once Gerard’s savings has grown, he should now start moving some, if not all, money out of savings and time deposit accounts into relatively higher yielding investment assets, such as Bonds, Treasury Bills, Mutual Funds, or Unit Investment Trust Funds. These investments can help exponentially grow savings. Of course, do research before you begin investing. Some might not be appropriate for your risk appetite.

Here are additional tips we can provide regarding investing in the Philippines:

Indeed, for Gerard and most salaried employees, it’s seemingly impossible to become rich if you’re only earning P20,000 per month. But that doesn’t mean it cannot be done. Follow our four suggestions above and we’re sure you can change your life soon and you’ll be able to be reach your goal of being rich someday!

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.