“It’s the deal of a lifetime…
and you’re the CEO!” Gala Gorman
Imagine you are Noah and God is telling you to build the ark. One might guess that Noah was a bit skeptical. Could it really rain long enough for a small ship to survive the storm? According to the Bible, the answer is yes!
So if I’m proposing that you build your own ark – one of the financial kind – how much convincing does it take? Luckily, this ark doesn’t require you to build a seemingly useless structure in your backyard, nor will it take a 1,000-year flood to prove useful. This ark is something to be proud of and provide you with financial security every day of your life.
While any approach to creating financial security must match the values and needs of the individual, these are the top 10 wealth building strategies that I believe will ensure you can weather whatever storm life throws at you.
1. Use AR-KTM technique.
A. A stands for Accumulating Assets. This may seem like a simple concept, but in today’s challenging circumstances it’s far too easy to spend everything you earn and more.
B. R stands for Redemption Debt. Debts are not called liabilities for nothing. You must work towards reducing and eliminating debt when everyone else is focused on using every ounce of equity.
C. K stands for Commitment Compliance. Once you have committed yourself to using the ARK TechniqueTM, you must stick to it! This is how you build trust in yourself and others.
2. Prepare for the inevitable rainy day.
A. Understand the cycles of life. It’s a fact of life that you will experience challenging times – in a way, times like these are meant to adjust your course. With financial security, the challenges of life are much easier to master.
B. Maintain a positive AND realistic attitude. It may not seem like positive thinking to plan for a rainy day. I believe that planning and preparation are the most valuable tools you can use to deal with life’s problems.
C. Develop plans for your ARC. You need a plan. God gave Noah a “blueprint” to build upon. You need a financial plan. What will your ark look like when it’s finished?
3. Recognize where your wealth comes from.
A. CIS is the source. Some call it “God,” some “Spirit,” some “the Universe,” and still others have developed their own term to refer to it. The acronym GUS (God’s Universal Spirit) honors all traditions of wisdom.
B. Give back to those who have given you – spiritually and otherwise. You might consider this tithe. Tithing is your way of demonstrating your belief in an endless supply.
C. Subscribe to Universal Use Law. This universal law applies to every area of your life. Get rid of clutter and anything else that doesn’t serve a purpose. One man’s trash is another man’s treasure.
4. Develop sufficient liquid resources.
A. Cash is king! I cannot stress enough the value of having readily available funds that can be accessed without significant depreciation. This is the “hull” on which your ark is built.
B. Calculate your cash reserve needs. Do you know how much it would take you to meet your minimum financial commitments for a six month period?
C. Define “liquid”. Liquid resources are assets that can be converted into cash without penalty or market volatility. You need a six-month cash infusion plan that’s easy to implement in an emergency.
5. Understand real estate investments.
A. Own your home “free and clear”. Mortgage brokers encourage you to borrow every dollar you can get — especially with interest rates at historic lows. With this approach, you will make house payments forever!
B. Use conservative values for planning purposes. Real estate values can fluctuate dramatically due to factors beyond your control. How much would you realize if you had to sell?
C. Are you ready to run a business? Owning real estate (unless it is your personal residence) requires running a business, which you may not consider a valuable use of your time.
6. Understand stock market investing.
A. Assess your risk tolerance. Investment advisers typically discuss the concept of risk with their clients, but don’t face reality. Investing comes with a significant chance of a significant decrease in value.
B. Accept that the stock market is illogical. There are many “systems” in existence today that purport to make the market predictable. The truth is, there isn’t much logic behind market values.
C. Fund managers get paid even when they’re wrong. Most mutual funds underperform the market by 3%. This is partly because fund managers are paid well whether they perform well or not.
7. Know the value of your income stream.
A. Build a salable business. When you’re ready to retire, will the work you put into building your business have enduring value, with or without you there? With the right planning, your company is a valuable asset.
B. Create lasting value from your career/job. When you’re not working in your own business, you can make the most of your income stream from your paycheck and benefits. Benefit from employer-sponsored programs.
C. Supplement with Capital Gains. Your investment strategies can generate additional cash flow when needed. Depending on the phase of your financial planning, you have the option of increasing usable funds.
8. Limit your “Use” assets.
A. Depreciable assets are necessities or luxuries – maybe both. In most geographic locations, a vehicle is a necessity. Does your vehicle fulfill your transportation needs or fulfill a wish?
B. Know the hidden costs of expensive “toys”. We all have them—assets that are nothing more than adult toys. You need to know what it really costs to maintain these toys.
C. Money buys experiences. When people are asked what makes life more satisfying, the answers vary. Unanimously, people agree that they enjoy travelling, eating out and enjoying the great outdoors. It takes money to have fun!
9. Set goals.
A. Have a goal that you are moving towards. Without a comprehensive plan, you will struggle to adjust to life’s challenges – financial or otherwise.
B. Define your wealth accumulation strategy. Once you know where you want to land, you can determine what strategies should be implemented to achieve your goals.
C. Embark on the journey. Just start! Realize that you will have setbacks, but you will never get there unless you start rowing in the direction you set out to do it.
10. Protect what you have built.
A. Get insurance for foreseeable losses. Property insurance protects some of your wealth, but you should also consider the risk of losing your source of income. Life and disability insurance can provide additional protection.
B. Add layers of protection for unpredictable losses. There are many ways to protect assets from the unusual catastrophe – a lawsuit or other events. Asset protection tools can help you relax.
C. Create a succession plan. Whether you own your own business or want to provide for your family in the event you are unable to do so, any effective financial plan should take succession into account.
You may feel that a solid financial plan leaves no room for fun or enjoying life’s pleasures. On the contrary, your plan should serve your individual needs and put you on the path to financial freedom. If you have dreams of driving a luxury vehicle or taking a cruise around the world, your plan should take costs into account so you know you are creating a real and lasting financial future – not just a “fantasy”.
Albert Einstein (1879 – 1955) called compound interest the 8th wonder of the world. It can work for you or against you. When you invest, it works for you. If you borrow something, it works against you! There’s a reason God told Noah to take a male and a female of each species aboard the ark…to breed. That’s what compound interest does for you and your financial ark. Creating a wisdom-based financial plan can help you put the eighth wonder to work for you.