Why Asians Aren’t Drowning in Debt (But North Americans Are)
This is what wealth means to me and my personal perspective on building it.
I’m a first generation Filipino-Chinese immigrant to Canada. My parents have a successful business that allowed us to live a comfortable, upper-middle class life in a country where minimum wage employees have to work a full day to make what their Canadian equivalents made in an hour.
We weren’t Crazy Rich Asians. But we were more than comfortable in our little condo in Manila’s Chinatown.
We had two cars. We went on vacations outside the country multiple times a year. My sisters and I even went to private school and had maids who cleaned, cooked, and laid out our uniforms every day.
Then in 2012 when I was 17, my family left the Philippines to immigrate to Canada for good. But before we left, my parents’ equally upper-middle class friends posed this crass question:
“Why are you going to Canada? To clean your own toilets?”
That stuck with me over the years. In this essay, I discuss why my parents left their status, their network of influential lifelong friends, and their business to emigrate to a country where they were nobodies. And yes, you’ll learn why it was worth going to a country where my mom cooks, my dad does laundry, and I clean the toilets.
You see, my parents have a different perception of wealth than the North American version. For the past 25 years, they drilled into me that wealth isn’t just about vacations. Or about having a certain amount of money in the bank. Or driving a Tesla just because you make enough money each month to pay it off.
They taught me that true wealth is about having the cash and the financial skills to pay off your credit statement in full each month, not just the minimum. Never just the minimum.
True wealth is about having a long-term plan for your financial status that hedges you and your loved ones from unforeseen circumstances — like a worldwide pandemic — and unsavoury people.
Finally, true wealth is about having peace of mind and freedom to prioritize the things in life that are the most valuable to you, whether that’s family, experiences, or — sure — driving a Tesla.
Take a look at this pyramid I made, patterned after Maslow’s Hierarchy of Needs:
I call this the True Wealth Pyramid and in this essay, we’ll dissect it from the bottom, up:
Why you should build a liquid profit-first company
Why financial wealth isn’t enough
Why true wealth is about protection & preservation
Why you don’t need to “prove” your wealth
And we’ll start with the vehicle by which my parents built their financial wealth: their cashflow-heavy business.
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Why You Should Build a Liquid Profit-First Company
Company growth shouldn’t be measured by vanity metrics like daily active users (DAU), team size, or even annual recurring revenue. A company should only be measured by how much more cash is flowing in, versus flowing out.
Sure, you can use other metrics to support cashflow, like DAU, accounts receivable, and revenue. But they’re all secondary to profit.
Why would you ever run a business at a loss? Would that even be called a business?
I can never get behind the Silicon Valley “business model” of fundraising as a source of capital. I should know. Because business is in my blood.
I grew up watching my parents build a B2B personal care packaging business from 0 to 7 figures in Canadian dollars of annual recurring revenue, with a conservative estimated profit margin of 60% and a team of less than 10 people.
They didn’t build a company then scrabble to find clients. They went to China to source suppliers only after people told them exactly what they wanted to order.
They never borrowed a single cent from anyone. They saved up while working for my uncle’s business, before starting theirs. They turned a profit from the very first sale.
And the kicker? They started the business in an insanely bureaucratic third world country — in 2003.
This was 5 years before Tim Ferriss’ The 4-Hour Workweek popularized the ideas of lifestyle design, being a digital nomad, and testing demand before ordering inventory. This was pre-Shopify, pre-Flexport, and pre-remote work.
And this approach carried over to our family life, too.
While most families talk about sports and school around the dinner table while avoiding the topic of money, my parents wanted to make sure that their wealth didn’t stop with them. Over adobo, rice, and Jollibee, they gave my sisters and I a practical MBA on human relationships (a.k.a. HR), thriftiness, profitability, and management.
One of their guiding principles continues to be liquidity. You never overreach your spending, so you can keep yourself out of debt when an emergency happens. And when the market falls, you buy low and sell high. Here’s more:
You spend what you made last month, not what you think you’ll make next month
If you can’t buy something twice, you can’t afford it
Never invest what you can’t afford to lose
Oh, and you know what my mom said when I proudly told her I had a 30%-50% savings rate? “That’s it? You’re living at home. You should save more.”
You probably chuckled. Now if you’re thinking my parents are just relics of a bygone era of old-fashioned, pre-internet Gen X businesspeople, they’re not.
For example, Commonthread Collective (CTC) is at the cutting edge of ecommerce media buying, and they focus on profit and cashflow, too.
CTC is a direct-to-consumer (DTC) agency that helps ecommerce brands grow sales. In the DTC world, you need cashflow to pay for more product and advertising, usually every 30-60 days. They calculate the value of each customer by how much cash each customer spends with their brands in the first 60 days, also known as a 60-day lifetime value (LTV). Focusing on this, instead of a traditional God-knows-how-long customer LTV, lets them have cash on hand when they need it (and not 6 months down the road when they’re already out of business).
Because who cares about changing the world and building unicorns when you startle awake at night, sweating because you can’t make payroll that week?
Why Financial Wealth Isn’t Enough
I believe building a profitable business is the fastest way to build wealth. But what is it?
Thanks to my parents’ dinner table MBA, I know that wealth, as defined by having a lot of money in the bank, is just one definition.
Wealth is also about having an abundance of valuable possessions, beyond money. It’s about the state of being rich, not a fleeting moment of prosperity. It’s about having copious amounts of a specific resource, whether that’s power, influence, skills, or intimate relationships.
Beyond material possessions, true wealth is sustainable, scalable, and defensible.
Sustainable — Can you do this month after month, for years?
Scalable — Can you ratchet your wealth up (or down) at will?
Defensible — How much of the flow of resources is within your control, independent of outside influence?
True wealth is about having an inner confidence in what you’ve built inside and outside yourself. It’s about having a deep reservoir of skills and sturdy relationships that can pick you up, whether you get laid off, lose all your clients, or file for Chapter 11 bankruptcy.
True wealth is a hedge against future social, economic, or financial crises, including another pandemic. Turning a material profit, building savings, and buying more property... These should just be pieces in an ever-compounding phalanx of protection against situations outside of your control, around you and those you love.
New York Times bestselling author James Clear put it well when he said,
“Don’t let a proxy become the target. Don’t optimize for the wrong outcome.”
Don’t optimize for profit and financial wealth when what you want is true protective wealth.
Why True Wealth Is About Protection & Preservation
Beyond protection against the unforeseeable future, wealth is a moat against people outside of our control. True wealth is a barricade so we don’t bend the knee against motivations, worldviews, and values that run counter to ours.
In one of my favourite Korean dramas, Itaewon Class, the protagonist builds a restaurant chain from the ground up, just so no one could force him to compromise his principles or could mess with his friends and employees.
Similarly, most of my parents’ friends questioned their decision to run a multimillion dollar business remotely. But my parents worked (and continue to work!) evenings in Toronto to keep the Manila-based business going for the staff.
And their efforts paid off. Even during the pandemic, no one got laid off. The company hired day labourers and paid them, even when they had to run a skeleton workforce and cut everyone’s hours. And the shiny new office building that started construction in late 2019? No financial hiccups.
Part of this sustainability was because my parents had trustworthy people around them. The other factor was that their war chest of business savings allowed them to stand by their staff and their principles, in spite of a worldwide pandemic.
Unfortunately, others aren’t so principled. Historically, powerful people have used their wealth to build invisible-but-potent guardrails into society to help them stay rich. Today, we call these guardrails inequality. But as this study on informal entrepreneurship found, inequality isn’t just a divisive factor. It’s also a characteristic that binds us as a society and is a force that drives its victims to build organizations to dismantle the system that held them back.
To combat inequality and uphold principles, you need wealth that gives you the influence and power to remake the world as you see fit. It gives you the ammunition to fight for what you think is right, whether that’s to wrestle for responsible journalism, like billionaire Peter Thiel did in Ryan Holiday’s book Conspiracy, or to dismantle systemic inequality completely.
Why You Don’t Need to “Prove” Your Wealth
Since childhood I have been taught to think that if I don’t run a company or a business, that I can’t accumulate wealth.
Through no pressure from my parents, I’ve always preferred business to anything school tried to teach me. I saw how it gave my parents the freedom to spend more time with us, to travel whenever they wanted (my mom was the original digital nomad), and when we came to Canada, to settle into a new life without having to beg for jobs at Costco.
But I’ve been thinking.
After all this talk about business and what motivates born-and-bred entrepreneurs like us to do what we do, I want to pose a derivative question to you:
Do you really want to build a massive business?
Are you ready to withstand investor pressure when all you have is your gut-feel?
Are you ready to take responsibility for the families of dozens, hundreds — maybe thousands — of people in your company?
Are you ready to wake up in the middle of the night, anxious, because one wrong word could tank your reputation and get you cancelled on Twitter?
As Ryan Holiday says,
“The reward for success shouldn’t be that you don’t get to do the thing that you like anymore.”
To put this quote in North American terms: my parents and their low-key wealth lets them do whatever the hell they want, without giving a rat’s a** about what other people think.
Unlike the movie Crazy Rich Asians, my parents never postured their money with Prada purses, Range Rovers, or the latest iPhone. My dad, actually, is really into buying and selling stuff on Facebook Marketplace, even when he could afford to buy everything brand new and his time is worth more than the profit he makes selling there. My mom had an iPhone 6 — not even a 6S! — for 5 years. She hesitantly passed it down to me, only after we bought her a used iPhone 7 Plus.
In stark contrast, we have family friends who were kidnapped for ransom because the kidnappers knew they had money to pay. Some lost their hair — and their families — because they were hell-bent on putting up another hotel or buying another business. A couple of them were assassinated by their own family members over the business or money.
On the flip side, time and time again I’ve seen my parents play down their success in favour of time with us and a quiet life. In fact they kept everything a secret so well, that we had well-meaning friends offer to help pay my premature youngest sister’s hospital bills. They thought my parents were penniless because they chose to drive a Toyota Revo, not a Ford Expedition or a Cadillac Escalade. My parents politely declined.
And I’d like to think that these priorities have carried over to me as well.
Like my parents in Canada, I’m a nobody. Here, I’m not the one whose parents could send a text message and instantly get her job interviews at the most elite companies in the country. I’m not the kid who calls some of the most influential business people nationwide, uncle/auntie or ninong/ninang (Hokkien for godparents). I’m not the girl other parents talked about when she was offered an academic scholarship and a full-ride swim scholarship for the top university. (No, my parents did not pull strings for that.)
Crazy Rich Asians or not, many of my friends in Canada have bigger houses, nicer cars, and more prestigious university degrees and job titles. Most of my friends back in the Philippines swam in the Olympics, work for multinational CPG companies, or are being groomed to take over the family business.
But they’re my friends because they don’t want anything from me. They don’t need anything from me. Ironically, I know they’re real ones because they don’t think much of me beyond ... Well, me.
And I prefer it that way.
Unlike our North American counterparts, my sisters and I don’t have trust funds or RESPs. We do have fully-funded TFSAs, thanks to Mom, but we haven’t touched them, even if she said that that’s her version of giving us trust funds. She’s trained us to forget that money even exists. In fact, one of our running family jokes is that us kids are probably not even in our parents’ will.
My sisters and I would howl and die in laughter if you called us heiresses. If anything we’re the knock-off Dollarama versions — another running family joke. My sisters go thrifting. I’m a bit classier: I buy all my clothes brand new on sale (only on sale) at UNIQLO. Honest to God, your sneaker-collector boyfriend probably has more shoes than all four of us put together.
But I digress.
I didn’t mind working multiple co-op jobs (paid internships, for you Americans) to pay my way through university. Even now, I like being a writer, doing marketing, and quietly building (minding?) my own business. I enjoy the process of making a name for myself without relying on my family’s reputation.
And one day through my own hard work, maybe — eventually — I can be just like my dad who paid for his dream car in cash for his 50th birthday. One day, I’ll buy a Tesla and a house with my own hard-earned cash from my business.
But even then, I’ll probably still clean my own toilets.