In a recent Q&A, I had the pleasure of posing some questions to author Michael Gilmore, also known as the Seven Dollar Millionaire and author of Happy Ever After: Financial Freedom Isn’t A Fairytale and The Little Book of Zen Money – A Simple Path to Financial Peace of Mind.
Based in Singapore, Michael has spent over two decades in finance and serves as Research Director at Albizia Capital. He also promotes financial literacy through various initiatives, including the Money Awareness and Inclusion Awards (MAIAs). Read on for the Q&A with Michael, and enjoy!
Financial Freedom Doesn’t Happen Overnight
What inspired you to write your first book, Happy Ever After: Financial Freedom Isn’t A Fairytale, and what critical message do you hope readers take away from it?
That book was written for a target market of just one person: my daughter. I knew she hadn’t learned what she needed to know about money, and with one year left before she went to college, I wanted to make sure she knew how she could become financially independent – and what the path toward that might look like as opposed to getting lost in the woods.
Because it was just for her, she helped me work on it, “editing” it (i.e., telling me when it was tedious or confusing) so that I needed to re-write it in a way she could understand.
What is the Seven Dollar Millionaire concept, and how did it come about?
When we discussed compounding and the amount of money you would need to save and invest, my daughter asked me what was the smallest amount she would need to save to become a millionaire. Well, to be the smallest amount, it would need to be daily, over an average career of 50 years; that would mean saving $50 a day at least. But if we invested it, and it compounded at 7%, we might need as little as $7 a day. And that’s how the Seven Dollar Millionaire was born.
Can you share some of your biggest financial mistakes and what you learned from them?
I think I can probably highlight two. The first was starting to invest late. I started in my 30s, but perhaps 10 to 15 years later than I could have done. The second was taking more risk (lack of diversification) than I should have done once I started, out of wanting to catch up and over-confidence.
In your experience, what are some of the most important financial lessons that parents should teach their children?
The most important lessons aren’t taught; they are shown. If you try to teach your kids in a way you don’t behave yourself, they won’t learn or follow. But if you involve your kids with what you’re doing and how you’re thinking about it, then it becomes possible.
Perhaps the best inspiration you can give your children is the encouragement to invest, as the earlier they start, the more time compounding can work its magic. Still, I also think something like “Gifting Sense,” the website that encourages kids to pause before they purchase, is another helpful tool.
You founded the Money Awareness and Inclusion Awards (MAIAs) to recognize individuals and organizations that help promote financial literacy. Can you tell us more about the MAIAs and why you decided to create them?
The MAIAs acknowledged that the work I was doing by writing and teaching about money wouldn’t be the solution. The problem – that two-thirds of the world’s population can’t answer even the most basic financial questions – is too huge for one answer.
Instead, I thought an “Oscars” ceremony might help us find an answer. Or lots of answers. From academics and influencers and teachers and fintech. For children, seniors, underprivileged groups, and developing countries. The goal is we hope that we can find, encourage, support, and promote financial literacy projects so that they reach broader audiences and we can accelerate the solutions.
What is people’s biggest misconception about personal finance, and how can it be addressed?
There are so many, but let’s start with three.
First, people will push back, saying they’re not interested in money. Nor am I. That’s why I want to be independent of it. Financial freedom is not worrying about money.
Second, people think money is complicated, but that’s because they haven’t had basic training. Too many people come at a money problem without learning the language – and wonder why they don’t understand.
But most sadly, I think, people confuse money and enjoyment. They say, “I don’t want to save. I want to enjoy myself now.” But take a piece of paper and write down your ten happiest times and then your ten most expensive times. If they’re not the same, then money and enjoyment aren’t precisely the same. Optimize for real enjoyment and save money when you need it.
Your latest book, The Little Book of Zen Money – A Simple Path to Financial Peace of Mind, has been praised by many as an excellent resource for achieving financial peace of mind. Can you share some tips or principles readers can take from the book?
I think I just gave you one there – journalling about your happiest times – but writing things down is essential. The cheapest thing you can do, even if you don’t have any money to save, is to track your spending. Know for a fact where your money is going. Guessing equals uncertainty equals stress. Once you know, you can begin to optimize.
But perhaps the most significant principle is understanding that money is a path. We need significant milestones here and there, learning to invest, for example, but moving down a path isn’t done one huge giant stride at a time: we take small steps to get where we want to go. Do this with money, and it will change your life – and that’s why we put 49 steps at the back of the book, suggestions for making small, immediate changes.
What are some of the biggest financial challenges facing millennials today, and what advice would you give them?
The biggest financial challenges facing millennials are that costs are constantly increasing, that information is becoming more complex, and if they don’t start saving and investing now, they will be left further and further behind. The best advice I can give them is to go back to basics, make sure they understand precisely what they want to achieve, how to do that, and start, in the smallest of ways, right now.
What role should financial education play in schools, and how can it be effectively incorporated into the curriculum?
We need to get this into schools. All truly financially literate parents already teach their kids about money – this is already happening – only schools can teach kids whose parents don’t know enough. Rather than put more work on teachers, at no benefit to them, we need to teach them about money too, so they feel more confident about it. That would be a win-win. One of the MAIA winners in 2022 was a project run by the financial regulators in Peru that do precisely that – and the teachers love it!
Can you share some tips for individuals who may not know where to begin investing?
I’ve got two tips. Everyone should start investing in large index-tracking funds, whether exchange-traded or otherwise. This will match your exposure to the whole economy – which is what you want. But two, once you’ve done that, go back to the basics, and understand what you want from your investments, your needs, your future, and how your investments can match those. Don’t look for advice online but learn the fundamentals of solid investing.
Thanks again to Michael and his team for taking the time to coordinate this and respond to our questions! Hopefully, this was helpful to you in your investing journey, and be sure to check out Seven Dollar Millionaire for even more helpful tips and advice!