If you’re not a millionaire and you don’t have at least 2 years of money to cover expenses in case of an economic meltdown, here are 7 points you’re likely missing:
- 7 streams of income:
This allows you to make money while you sleep, go on vacation, and during a quarantine. As an example, if your core business was shut down or you were furloughed during Covid-19, you would’ve still had rental payments or investment interest coming in allowing you peace, security, and to keep on living your life. - Hyperbolic discounting:
Choosing a smaller, sooner reward rather than a larger, later reward has the obvious, implied negative long-term effect.
If you recall the “Marshmallow experiment” children ate the 1 marshmallow quick rather than waiting until the experimenter came back who would have given them 2. Many people spend what they have now, rather than investing to receive a greater reward later. The smart and most honest financial advisers in the world understand it’s not about picking huge returns, but about controlling consumption. - Recession (Virus)-proof:
Even a radical change in the environment shouldn’t kill your performance, because you’ve been planning for chaos.
A whole lot of people were not prepared to make less as a result of Covid-19 as they had built a lifestyle based on what they were making pre-quarantine. Rather, you should always be prepared for a recession and therefore virus-proof your finances. - Partnering:
Great partnerships allow for versatility, more creativity, and better leverage during turbulent times. - Calculated risks:
The uber-wealthy often share that the key to their success was “Risk.” However, that is “Calculated risk.” I sold my son’s beat-up college car at the beginning of the pandemic to a really nice guy who had put his whole life savings into an ice cream shop. It went out of business the second that retail got shut down. On the other hand, I know someone who put his whole life savings into adding a vertical business in his chiropractic clinic that actually was the difference in saving his clinic during quarantine. - Holding on to Bad debt:
Bad debt is defined as debt that has no ROI. It’s just interest in things you’ve purchased or services you’ve used that erode your net-worth every second of every minute of every day while it exists. Eliminating bad debt is your best, first investment into virus-proofing and true-wealth building. - Wealth-building is a boring marathon and not an exciting spring:
It’s the right asset classes, good agreements with financial managers, no bad-debt, and other key items named above over the long-haul that create stability, freedom, and ultimately affluence.
Personally, I want to acknowledge, it is God who gives me the power to gain wealth. He’s connected the dots and put experts in my path to guide me economically since before graduation. Perhaps He’s put me in your path as well.
Stay-tuned as we’re going to do a free series on generating wealth called “Escaping the Money Pit.” Let us know if you’re interested in watching.
Thanks a million
Dr. Ben
