Wealth & Wisdom
Defining Moments Series
As you apply Defining Moments to your everyday life, you may experience a financial change that you will be able to feel and see. The Defining Moments in your life will not take years to develop. You may start to see financial changes very quickly. The results of applying the Defining Moments to your life can help you achieve the four basic goals:
1. Increase your money supply.
2. Create more or better benefits for you and your family.
3. Reduce the element of risk when trying to increase your wealth and also reduce the amount of future taxation you face.
4. Achieve these three goals without spending one more dime than you are already spending.
Developing a philosophy and a thought process using the Defining Moments will point you to the goals you can achieve. These goals are the result of controlling your money and understanding how money works.
Having money is essential in almost every aspect of life. For those who have it, or are rich, they feel a certain sense of security. When you have money, you have the luxury of worrying about other things in life. For those who have very little or no money, you live in a different world. A business without money has very little chance of surviving, even charities. In fact, most businesses fail in their early years due to a lack of capital. In many American households, it’s no different. In a family setting, a lack of money or large amounts of debt can bring a family to its knees. Many times the financial troubles in a family can result in depression, desperation, or divorce. This impacts the social fabric of our society and creates secondary problems like crime, drugs, and a lack of education. The lack of money creates dependency on the government, which is not supposed to be in the family business.
Any way you look at it, a lack of money has the ability to strip individuals and families of their pride and sense of self-worth. Many Americans also have the fear of knowing that they may be only two or three paychecks away from being broke.
For many, not having the sufficient cash flow to live a comfortable life is due to a series of financial decisions that they made in the past. These decisions cause problems financially and have a compounding impact in their life today and into the future. This is why I have chosen to focus on the “money supply” of an individual or family first. Having a money supply and having the ability to increase that money supply are far more important than investing in a stock tip, and they have better results.
Increasing Your Money Supply
To increase the money supply in your life, you may not have to change the way you live life, only the way you approach life financially. Everyone should learn the defining moments and pay attention in their daily lives when it comes to their money. The answers for improving your financial life are right in front of you. You need to be more reactive when you see an opportunity to improve your money supply.
The Defining Moments, The Three Types of Money, and Things You Can Do With Your Money include a discussion about the transfers of your wealth. This is money that you unknowingly and unnecessarily may be giving away. Transfers of your wealth rob you of your ability to save money, invest, or improve your lifestyle. Recapturing the money you’re transferring away now can increase your money supply.
If you are able to keep this money now, it can compound the amount of wealth you will have in the future. Some financial thought processes you had in the past may have to change, nothing else, not the car you drive, the house you live in, or your vacations. If you can increase your money supply by just changing a thought, would you do it? You may need to rethink the way you’re buying your house, paying for your car, or the way you manage debt. You may need to rethink the way you’re saving for retirement, your 401K, your investments. You also may need to rethink the way you buy things and pay for them. If your home is paid off, you may want to examine options you have.
You see, to have the ability to increase your money supply right now, all you have to do is think. It will be important to discuss these issues with a professional who has been educated regarding the transfers of your wealth. Once you have discovered that you can increase your money supply now, make the necessary changes and simply keep more of your money. Having more money can change the way you think, feel, and live. Making decisions today can increase your money supply, but in order to maintain that money supply you will need to be aware of the impact that the demographic changes in our country will have on you financially. If you’re successful in your life or live a comfortable life – taxes may go up. Due to inflation, your buying power may go down; costs may continue to rise, and benefits you thought you would have may disappear. This is not a doomsday scenario, but a fact. You must understand that the cost of government must go up. About forty percent of incomes in America rely on government jobs. These workers get pay increases and benefits. On top of that, the government continues to spend more than they take in.
Once you increase your money supply by recapturing transfers, you will need to pay attention and possibly rethink what to do with this money. There is no sense using the same traditional thinking with this newfound money that created transfers in the first place. Understanding, You Can’t Do The Same Things Over And Over Again And Expect Different Results is another Defining Moment in your life. When it comes to developing a new thought process in your life, you may be amazed how much of your money is being given away simply to benefit others. Learning What Is True And What May Not Be True, is a Defining Moment.
When looking to invest the recaptured money you now control, look to the things around you, the things closest to you. Look at the wealth potential and life value of your family, your whole family, grandparents and parents included. Look at investing in your business or using the money to increase your lifestyle. All of these issues – your family, your business, and your lifestyle – are things that you control. Family inheritances are something that should not happen by accident. They should be discussed, planned, controlled, and leveraged to create the greatest amount of family wealth.
With proper planning, much of the family wealth avoids future taxation to the next generation. Remember, taxes remain one of the largest transfers in everyone’s life. Working with a strong loving family is a financial tool no one should overlook. Get professional help when discussing family opportunities and creating family wealth. Simply establishing a will or a trust doesn’t create family wealth; it is simply an attempt to protect the wealth that is already there. Don’t be confused by this point. Wills and trusts are important, but it is not a plan to strategically increase family wealth. So, it is important to also look beyond an accountant or a lawyer for a professional who can have these discussions with you. Look for the right answers, not simply the generic ones. Whatever you do, recapturing transfers will create more freedom to do the things you want to do in life and more control to do them. There may be less financial pressure and a greater ability to enjoy the best life you can right now.
Your mind is somewhat like a computer. If you put bad software in your computer or allow a virus to infect all your programs, then the computer will be of little use. Your mind is the same way. If you fill it with basic information, you are going to get basic results. Too many people are sold on the “get rich, it’s easy” schemes and the “everyone can get rich in the marketplace” thought process. Unfortunately, very few take the time to learn and understand how money works in their everyday lives. Once again, the inability to save money by the average American is a major concern. Over a period of time, the lack of savings may stop economic growth in our country. Much of today’s economic growth can be attributed to a tremendous increase in personal consumer debt. In our country’s history debt has never been so large. Over the last few years, more Americans have dipped into their savings just to pay their everyday lifestyle bills. Hopefully, you can sense and feel the value of reducing transfers in your life and increasing your money supply.
Creating More Benefits
Creating and understanding ways of increasing your money supply can give you options and opportunities in your life. There are many things in your life that you probably want to do and many things that you should do to improve your quality of life. Unfortunately, many of the things you should and want to do are simply not affordable. Benefits are often thought of as something you receive at work, such as medical coverage, disability coverage, and a retirement plan. In today’s world, more and more of these benefits are disappearing or are provided with some expense to the worker. These benefits are good things, but their costs continue to increase. More and more families are “going without” or “reducing” their benefits because of affordability. The government’s own accountability office warns that social benefits provided by the Federal Government may have to be reduced by as much as 60% because they are no longer affordable. The GAO considers the overall direction of the government’s financial position as a “crisis” with no real exit strategy. Relying on government programs, as we now know them, to be there in the future is the wrong platform to plan your future. Creating and controlling our money supply can help you provide the security and protection you and your family will need in the future.
There is an odd thought process that has filtered throughout our society. A benefit is a great thing UNLESS you are the one who has to pay for it. As an example, let’s say tomorrow when you get to work, your company notifies you that they will provide and pay for one million dollars of life insurance coverage for you and your family as a benefit. All you have to do is say yes to receive the benefit. That’s great. That benefit assures your family a future, a means of not only surviving, but also maintaining the lifestyle they now enjoy, in the event of your death. What is the price of financial security? You willingly sign up for the benefit. Nine months later the company changes its mind about providing this benefit, but they say you can keep the coverage if YOU pay for it. The cost is $1,000 per year. You’re upset and tell the company that you’re not paying anything. Why, in the course of one company memo, did the coverage for your family go from a great idea to an idea that wasn’t worth doing? Providing the traditional benefits, health care, disability, etc. for you and your family are important.
By increasing your money supply and reducing your wealth transfers, other benefits begin to surface. Doing the things you want to do in life, increasing your quality of life, taking vacations, traveling, securing education for your children, creating a family legacy, having financial control and financial security – all are benefits of increasing your money supply. With these secondary benefits come a healthy, less stress-prone future and the time freedom, money freedom, and control you need to live the best life you can.
Certain types of risk should only be taken when necessary. A definition of risk is simply this: uncertain results. We take risks every day. We drive, cross streets, and tell our wives we’re going out with the boys on a Saturday night. With these types of risks, we have some amount of control. We can be extra careful driving and crossing the
street and come home early with flowers. When it comes to your finances, risks can be
more difficult to control.
When investing, risk is usually associated with the rate of return, or potential outcome you will receive. Like driving or crossing the street, if you are unaware of the potential dangers, investing is subject to accidents. In one brief moment, your life could change.
As you get older, you move from the accumulation stage of your life to the preservation stage during retirement. Someone who is retired and continues to leave all his money exposed to risks in the stock market could be playing a reckless game with lady luck. The risks are not just the ups and downs of the market but also the value of the dollar, tax increases, and a terrorist attack that would create financial instability. None of these risks are controlled by you. You need to understand the difference between your “savings” and your “investments.”
Unfortunately, you may be surrounded and flooded with marketing from financial companies continuing to follow the traditional thought processes. It is important to remember their solution to your financial problems may be the products they sell. Many times these solutions (product choices) change from year to year. Sometimes planners’ solutions are so complicated that within a week you can’t remember or explain what or how your stock plan works. One rule of thumb when involving yourself with a planner is to make sure he owns the same investments he is recommending to you. Not knowing or understanding your investments’ strategy is a risk in itself. The uncertainty of future tax increases is another risk that can eat away a large portion of your future dollars. It is almost a certainty that future taxes on your money must go up. Even the Government Accountability Office (GAO) states on their website that in order to survive as a nation, future taxes will have to double from the current rates we are paying. Our country’s declining workforce, aging population, and increasing benefits point to one thing: higher taxes. Everyone in Washington knows this. It is not a secret. The politicians’ response is simple (simple minds): blame someone else.
Learning how money works includes the idea of creating as many tax-free dollars as you can for your future and your family’s future. This is not like guessing in the stock market; this is about planned results. If I were to list three columns in front of you – One Hundred Percent Taxable, Capital Gains Taxable, and a third column, Tax Free – which of the three columns would you want to base the majority of your planning? In the One Hundred Percent Taxable column are 401Ks, IRAs, pensions, SEPs, and a list of all other qualified retirement plans. In the second column, Capital Gains Taxable, are CDs, brokerage accounts, stocks, annuities, bank savings, most bonds, etc. The third column, Tax Free, includes family legacies and life insurance. Why does traditional thinking continue to focus on creating more risk and future taxes? Ninety-five percent of all “planning solutions” can be found in the first two columns. Meanwhile, the Tax Free column is, in most cases, not even mentioned. So, in almost all of the discussions about planning today, how can you say yes or no to ideas that a planner doesn’t present to you? How can you be aware of an opportunity that isn’t explained to you?
When it comes to your future, remember these thoughts:
“Did you ever pay a tax you didn’t want to? Did you ever pay a tax you didn’t have to?” Most of your planning energy should be centered on the tax-free element and opportunities that may be in your life. Learning how money works explores all your
financial possibilities. By increasing the tax-free money in your future, you may decrease the amount of taxes you have to pay for the rest of your life. This may be a good time to review another Defining Moment: Rich People Think Like Rich People; Poor People Think Like Poor People.
A Reason to Rejoice: The Fourth Goal
The amazing opportunity in recapturing transfers and learning how money works is that you can increase your money supply, increase benefits for you and your family, and reduce the amount of risk you face in your life. You can accomplish all of these goals without spending one more dime than you are already spending. Money that you were spending unknowingly and unnecessarily on transfers of your wealth is now yours to keep. Imagine all the possibilities and opportunities that may come your way if you can learn to increase your money supply without having to buy a product, or take more risk in the marketplace. Companies have spent billions of dollars to influence the way you think. You are under constant bombardment by marketing companies who are involved in the transfers of your wealth. Meanwhile, the average American household struggles financially from week to week relying totally on what they have been told to think by these companies who make money peddling their services and products.
At the end of the day, and the end of your life, ask yourself one question: What have these companies taught me and did they make more money from me than I made from them? Ask a typical planner in the financial services business, what is financial planning? You will be amazed by the variety of answers you get. Some of these answers can be very technical and focused on the products that they sell. Most likely, a real estate person will tell you that the answer to your financial future is real estate. An investment person who sells stocks might tell you the answer is the stock market. A banker may tell you all you need are the bank’s CDs. All of their stories can be compelling and filled with almost everything they know and have been trained to know and say (and in some cases what not to say) by their companies. The bigger questions are these: What don’t they know? What haven’t they been trained to understand? How can they give you the opportunity to say yes or no to ideas that they don’t even know exist?
So, what really is financial planning? It is wisdom. It is the art form of applying knowledge, logic, and common sense to your everyday life. Knowledge will be the foundation for making better life decisions. Better decisions can help you be more prosperous and create more wealth. All of these results can come from understanding how money works.
The gift of creating more wealth for yourself is inside you. The average person just can’t see it. They are too busy just trying to survive or get by, financially. Their lives are out of balance. They spend more time servicing their debt to others than they do on planning their own futures. They have no vision or plan to their lives beyond next week. Worst of all, they have no knowledge of how to help themselves and improve their situations. After studying the Defining Moments, you can no longer be one of these people. You now have the ability to dust off the gift that is already inside you and move forward to improve your life, for the rest of your life.
In learning this process, you may need some help and guidance. It will be important to find a professional who has been through training and can educate and help you improve your life.
Source: Wealth & Wisdom Institute. Eliminating Losing Financial Strategies: The Goals For Financial Success