The right ingredients for wealth
Ann Wilson is a multimillionaire and the author of The Wealth Chef, a book that helps ordinary people achieve financial freedom. She presents money management and investment workshops all over the world, but like most South Africans, she wasn’t born with an innate understanding of money.
Finding herself in debt by her late twenties, despite her comfortable engineering salary, she realised that her lifestyle was keeping her from becoming truly wealthy. She managed to dig herself out of debt and get her spending under control, but her money woes were not yet over.
“I had gone from binging on money I didn’t have to thinking if I held on to it really tightly, I wouldn’t feel vulnerable.” She got married, but money remained a contentious issue throughout the relationship, which eventually ended in divorce when Wilson was in her early thirties. “I ended up watching both my money and the marriage walk out the door! At this point I felt like a complete failure. After all these years of working hard, I was back to zero financially.”
She realised that she didn’t understand the difference between saving and investing and had no idea how much was enough. “There was always this fogginess around my financial plan. I started looking at stock market investing and reading up on all the great value investors of the time. In the process, I fell for a few of those get-rich-quick schemes because there was still a part of me that tried to find that one, key investment that I could tick off the wealth box.”
By this point she started to realise that income was the least important ingredient in creating wealth. “It’s not what we earn, but what we do with it that creates the wealth. It took me eight years, from that day of feeling like a complete failure and starting all over again to achieve my own financial freedom.”
WHAT IS THE MOST IMPORTANT THING PEOPLE HAVE TO KEEP IN MIND WHEN TRYING TO GET OUT OF DEBT?
Even when people are taking care of debt, they have to focus beyond just getting debt free or being f inancially free. Part of that is learning skills on how to get money working for them. While taking care of debt I recommend starting a very basic stock market equity investment to get confident and to get into the habit of paying themselves first. In South Africa you can start with R300 per month.
WHAT IS THE SINGLE BIGGEST LESSON YOU LEARNT IN BECOMING FINANCIALLY FREE?
Creating wealth is a process, not an event. We celebrate the lottery win or the business that was sold for millions, but when we let go of believing that wealth is this one, big event, we start to realise that every cent is a seed. So many people keep waiting for that big bonus to start, but tomorrow never comes. You create wealth through repetitive, wealthy habits of reducing our debt, of getting assets, of compounding.
WHAT IS THE BIGGEST LIE PEOPLE TELL THEMSELVES ABOUT MONEY?
It’s that there isn’t enough. When we start saying, “How can I get what I want with what’s available to me?” we unleash the greatest asset that we have, which is our own potential and our own mind. When you really start understanding how to pay yourself f irst, you can decide how to cover the rest of your expenses with what’s left. Then we start getting creative! If you wait and see if there’s anything left at the end of the month, you’re actually telling yourself that the DStv contract is more important than your dreams. Money is a disastrous master but a fantastic servant!
WHAT IS THE ONE QUESTION ABOUT MONEY THAT YOU GET ASKED WHEREVER YOU GO?
“How can I earn more?” That is the wrong question. We ask ourselves poor money questions and that is part of the problem. The question you should be asking is, “How do I live the greatest life right now with the money I have available to me?”
Often, when we start talking about equity investing, people will ask, “How can I f ind a safe investment?” Again, the quality of the question is poor. The greatest risk is never learning about money. Risk is purely a matter of f inancial literacy. Most of us don’t understand that no one popped out of the womb a financial genius.
WHAT’S THE WORST FINANCIAL ADVICE YOU’VE EVER RECEIVED?
“Trust me, I’m a financial planner! This is really complicated. Just trust me and sign here on the dotted line and buy this product.” I believed that this is scary and complicated, and through naiveté and fear bought into some really disastrous f inancial products. My mission is just to get people more f inancially literate and more confident so they can ask the questions and be a great custodian of their money to work for them and not for anybody else. Wilson will be offering advice on how to set up an investment plan at the popular etf SA.co.za Stocks for Frocks events, which will take place in Johannesburg, Durban and Cape Town in November.