BOLD MOVES TO CREATING

Chapter 1

To get there from here, you must know where “there” is. To make sure we are on the same page, let’s review Webster’s definitions of “create” and “wealth.”

create: (1) to cause to come into being, as something unique, (2) to evolve from one’s imagination as a work of art or inven-tion, (3) To perform (a role) in the production of a play or motion picture, (4) to make by investing with, (5) to arrange or bring out by intention or design wealth: (1) a great quantity or store of money, property or other riches, (2) plentiful amount: abundance.

Just as Webster’s definitions of “create” and “wealth” have different meanings, people take different routes in the creation of wealth. Some people want it right away; this is why so many states have a lottery. Everyone wants to win, but there are only a few winners. Some people gamble at casinos and may win in the short run, but in the long run, only the casino owners are the winners. They wouldn’t be in business if most of their clients won all the time. Some people achieve wealth by being professional athletes. If you calculate how many high school athletes become professional athletes, the percentage is very small. If you also calculate the number of professional athletes who are still in the business after four years, the number is even smaller. Some people acquire their wealth by inheritance. Others earn it the old-fashioned way, by working all their lives to build a business. Regardless of how they get there, they need discipline and the understanding of money management to stay there. Regardless of who you are, you can spend money faster than the time it takes to make it. Creating wealth isn’t just about making money; creating wealth is about managing and maintaining it so that you can have peace of mind and enjoy it for a lifetime.

Your journey should start with the end in mind; “What are the Bold Moves to financial independence?” I’ll answer this with a story. I met a police officer who was considering retiring at age 62. After gathering all his information and completing my anal-ysis, the results were that this officer was eligible for retirement, but wasn’t financially able to retire. I could see the disappoint-ment in his face, and his response was, “Where were you when I started working at age 22?” I could hear the pain in his voice. Step into his shoes for a moment. If you were age 62 and couldn’t retire, what would you do differently? I showed him how to reduce his living expenses and created additional income during retirement by doing something he liked. For him, this was the right adjustment that made his retirement enjoyable.

Travel with me on a journey of the life of someone who has accumulated wealth and was pleased with the results, and then compare your financial literacy to where you are on the path.

The common timeline for students is that most of them graduate from high school by the age of 18. Wouldn’t it be great to have a timeline that would lead towards financial indepen-dence on or before age 65?

Take a few moments to look at the charts located on the next two pages.

The chart shows that wealth-creating individuals form habits that most people don’t follow. Most kids go to school; however, the children of wealthy parents are expected to develop habits such as learning how to save money. They are expected to grad-uate from high school in the top of their class, and then go to college. College is an opportunity to develop your skills, to have a career that will provide for the well-being of you and your family.

Children who don’t complete high school have severely limited their career choices, resulting in low paying jobs. They start working at an early age. Due to lack of resources, they try to establish credit to buy the things that they need. Instead of buying houses, they rent apartments. On the other hand, chil-dren of wealth-creating parents are expected to go to college and continue building their savings. As their savings accumulate, they start to learn how to invest in the stock market.

Between the ages of 22 and 40, kids who don’t go to college get married; they then have children and finally start their retire-ment planning. While children who go to college are doing the same thing, a major difference is that upon graduation, these children get higher-paying jobs and can buy homes at an earlier age. They purchase life insurance to protect their families. They also buy disability insurance to protect their income if they are injured in an accident. These children reap the benefits of a college education and save for their children’s college education. In many instances, they also prepare wills and trusts for their families in case of their premature death.

Between ages 40 to 55, individuals who didn’t go to college try to make up the income gap by starting a business. In many cases, their business fails, due to either poor planning or lack of financial resources to make it through the first two years. Sometimes they buy investments based on tips received from individuals who aren’t experts. Most of these investments don’t live up to expectations because they were bought on hunches instead of choices made after research and careful consideration.

At the same ages, individuals who are entrepreneurial start their own businesses. Some of these successful entrepreneurs hire their children when they graduate from college and help them purchase cars and homes. If their children have not mastered investing, they spend time teaching them how to develop this skill.

At ages 50 and older, the non-wealthy individuals approach retirement and realize that they are not prepared to retire. In some cases, they may be eligible to retire, but financially, they can’t stop working. In many cases, because they are eligible, they do retire only to discover that they must go back to work to maintain their quality of life or to help their children or parents. On the other hand, individuals with wealth can maintain their quality of life during retirement, provide college funding for their grandchildren, and take care of parents if necessary. To ensure their wealth is transferred to the next generation, they prepare wills and trusts to maximize the funds retained within the family. To reduce the size of their taxable estate, wealthy clients establish trusts for their family members and teach the grandchildren how to invest…