What Does It Take To Become Wealthy?

 “Wealth gives you freedom to make choices” – Oprah Winfrey

Wouldn’t that be great?

Having the freedom to choose whatever you want, to spend time with your family and loved ones, to travel to exotic places all over the world, to enjoy the lifestyle of your dreams or to pursue your interests… without worrying about the money or trying to find time off work commitments.

Yet to many people, wealth seems elusive and a distant “if only”

So what does it take to become wealthy, is it really that unattainable?

Actually the keys to wealth creation lies in 4 simple steps. These 4 steps may appear seemingly simple and so commonsensical that you may think “I know this already, what’s the big deal?”. Yet these are the very fundamental steps which are practised by the world’s wealthiest people and advocated in numerous personal finance and wealth management books.

So, what are the 4 keys?

1. Earn Money

  You must first earn money, in order to have something to start with.

There is active income, or earned income, which comes in the form of salary for an employee or income for a self employed or business owner.

Active Income involves exchanging your time for money, for example-putting in 40 or more hours a week at your workplace in exchange for the monthly salary. The return on per unit time spent at work depends on the nature of work, e.g a lawyer would generate a higher return per unit time on his work compared to a secretary. 

One way to increase active income is of course to try to increase your salary through promotions or looking for better prospects. The unfortunate thing I notice however, is that the higher one climbs in the corporate ladder, the more time spent at work, and the less time for leisure. So the nett return on per unit time may not actually be higher ultimately.

There is another type of income known as Passive Income, which means your money is working for you, instead of you working for money.

Passive income can be generated outside of your waking hours and not be limited to the 24 hrs/day. Examples of passive income could be investments e.g stocks or property that generate returns/rental, businesses that you own but do not have to run personally e.g franchise, automated machines such as online businesses or affiliate marketing websites that generate money for you while you sleep. 

One of the most efficient ways to increase your income is to start building multiple streams of passive income. The harder your money works for you, the lesser you have to work!

2. Spend Less Than You Earn a.k.a Save

Which do you do first? Save before you spend or Spend before you save?

If you usually spend whatever you need and try to save what’s left, chances are there wouldn’t be much of it left at the end. Have you noticed how some expenses somehow just arises to use up the balance funds, like a irresitable sale, stuff to get or just some emergency?

So what can you do to counter this effect? The trick is to set aside a fixed amount of saving each month to pay yourself first before you spend the rest. This can be easily automated through a regular savings arrangement with the banks or other financial institution.

How much of your income should you save?

Generally financial experts recommend setting aside 10% to 20% of your monthly income as savings. This percentage can be adjusted according to individual’s financial status, the key is starting the habit of paying yourself first, because that’s the fundamental step for achieving wealth. Once you have developed a consistent habit of saving, the next important key is to


3. Invest The Money You Save

Why invest?

Think about it, if you are saving hard and setting aside $500 a month in the bank, earning an interest of 0.2%p.a, while inflation kicks in at 2%-3%, the nett effect is that your money is evaporating with time, even if you didn’t spend a cent.

Do you know your $10,000 will be worth only $5,438 in 20 yrs time at an inflation rate of 3%?

I too feel the effects of inflation on my money’s purchasing power. 10 yrs back, a movie ticket costs me only $5-6, but now a ticket can easily cost $8-9,  back then I can have a proper meal at the food centre for $2-3, now it can easily come up to $5-6 in the food court.  

Many Singaporean women have a good savings habit, but saving alone will not be enough for our retirement, let alone building wealth successfully. Before we can talk about wealth accumulation, we have to make sure our money is at least matching up to inflation. 

The question then is – How do you get started with investing? 

Investing in itself is a extensive and interesting topic which I will share more of in subsequent posts. Stay tuned for the keys to successful investing and tips to getting started.



4. Protect Your Money

Many people overlook the importance of protecting their hard earned money and the financial world they have created for their family.

In Singapore, most people have some form of insurance, yet studies have shown that Singaporeans are grossly under-insured, with an average Singaporean requires life insurance protection of $494,851, but only insured for an average life cover of $165,628.

Imagine working so hard to earn money, saving and investing for a brighter future, only to have a disaster e.g illness or disability take it all away from you.

Protect yourself and the financial world you’ve built so that a disaster – big or small doesn’t take it all away from you. Ensure that you have the necessary insurance such that you and your family will be well taken care of.

There are only 4 essential types of insurance you need

1) Hospitalisation Cost coverage – to pay for your medical bills for hospitalisation

2) Critical Illness protection – to pay for your treatment and income replacement during illness

3) Family Income protection – to take care of your dependents

4) Disability Income protection – to replace your future income in the event of disability

Review your insurance coverage periodically and especially when there is a major life stage change e.g getting married, starting a family or job changes to ensure that your coverage is up to date and meets your needs.

By protecting your money, you can get wealthy and stay wealthy!

In summary, the four keys to wealth is simply

Earn + Save + Invest + Protect Money

Wealth creation is simple. Many people are constantly searching for the next Big thing or Secret formula to success, when in fact the solution is already right before our eyes and all you need to do is to apply them and take action consistently!

“The journey of a thousand miles begins with the first step” ~ Confucious

Wealth happens one step at a time, take the first step today and start creating the wealth and freedom you deserve!

To your Success and Happiness,
Yong Hui


  1. Great article. Simple and to the point.

    Got comments on the insurance part though. I have been struggling with how much I should insure myself for. As I am in the chemical industry, chemical exposure puts me in the high risk group for cancer and other CI. So in principle, I should be boosting up my CI coverage but the issue is not so straightforward.

    1. Early detection is of vital importance but an early stage cancer does not allow us to claim from any of the life insurance. If the cancer was discovered late and chances are slim, there is probably little point in claiming the cash.

    2. Medical coverage will cover more than 90% of the medical bills. Medical bills are the most vital of all costs. So IMO, the whole coverage of CI is overrated. There is probably no real need to get half a mil of coverage when chances of claiming them are slim. More importantly, by the time we can claim, chances of recovery are already compromised.

    3. The claims are mostly geared towards income replacement but no amount of coverage will be enough to replace income forever. So I guess the whole point is that if we ever get to claim the coverage, we ought to be able to grow our cash on a consistent basis. That is more important than just paying high premiums for high coverage.

    4. Last but not least, I always tell my friends that insurance is something that we cannot buy when we need them. It can be an annoyance to pay for it every month but it is vital to know that paying the premiums is essentially a way of hedging ourselves.

    PS: You forgot about accident coverage.

    • Thanks Zhaosheng for your insightful comments.

      Yes, it is true that early stage cancer cannot be claimed under most standard critical illness insurance today.
      In fact I recently wrote a blog post about this issue and what to take note of in your critical illness insurance, have a read here.

      Good news is that we can now insure ourselves against early stage critical illness. There are specific insurance plans in the market that will pay out a portion of the sum insured at various stages/ serverity levels of illness e.g stage 1/2 cancer. I’ll be happy to share more with you.

      You are absolutely right about taking ownership about our finances and the need to grow our cash consistently.
      Insurance is useful as a hedge against unexpected events and to minimise the impact on our lives and family. The strategy is leveraging our money to get the highest coverage with the least amount of money; and to grow the rest of our money wisely for our future.

      I remember this quote once shared by a trainer about insurance:
      “You gotta get it when you don’t need it, so you have it when you need it” =)

  2. Hi Yong Hui.

    I am not sure if the early payout plans is worth our dollars considering that they do not have any cash value and that the hospitalisation plans will cover for all medical fees. To be sure, this is something good to have buy i would not put it in the category of essentials. There are many stuff out there that is desirable to have but the only limit we have is on the resources we own. And working on a limited resource is always the challenge.

    Instead of overdependence on insurance, what we could have done is perhaps take note of our lifestyle and diet .There is a wealth of good information out there that teaches us how to take care of our own health. The Food Revolution, Healthy at 100, In defense of Food, just to name a few.

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