3 Ideas That Changed The Way I Think About Money

In this blog post, I am going to talk about three money epiphanies that I had early on that changed the way I viewed money, people, and communication.

Epiphany #1: The Importance of Clarity

It was fascinating to me that many people lacked clarity regarding their financial goals. When I worked at a bank as a teenager, people often asked where they should invest without knowing what they truly wanted out of life. Like the famous quote from Alice in Wonderland, "If you don't know where you want to go, any road will get you there," most people did not have a clear sense of direction. This lack of clarity impacted their financial decisions and overall life plans.

• Understanding what you truly want in life is crucial.
• Ask yourself defining questions such as, "If money wasn't an issue, what would you be doing?"
• Recognize that wealth is more than just money; it's a sum total of your time, relationships, talents, and resources.

An example I like sharing is Warren Buffett, who, despite his wealth, holds no appeal to many of us to trade places due to the value we place on our own time over material wealth. This realization prompts us to create new metrics to guide our decisions.

Epiphany #2: The Importance of Cash Flow

The concept of "retirement" never resonated with me. Instead, I see it as future cash flow planning. Many people defer or postpone their money into unknowns like tax policies or the stock market without understanding cash flow planning. Cash flow should be the primary focus of financial planning.

1. Recognize that future cash flow & not just saving is essential for true financial independence.
2. Instead of focusing solely on rates of return, consider how your investments affect your cash flow strategy.

Deconstructing retirement into cash flow planning can drastically change how you manage and invest your money, potentially leading to better financial decisions.

Epiphany #3: Life Insurance as an "And Asset"

Life insurance is often seen as a necessary commitment if you love your family. However, understanding life insurance as an "and asset" can be transformative. Many advisors like Dave Ramsey criticize life insurance, yet when it's set up correctly, it can be a strategic savings vehicle.

• Life insurance can serve as a savings vehicle with dual benefits: growth and protection.
• It allows control over your funds while also offering future and present benefits.

When I understood that life insurance was not an investment but rather a tool that could leverage my capital, it became clear that it was an incredible asset to include in my financial strategy.

Conclusion

In summary:

1. Clarity: Understand what you truly want and base your financial planning on this understanding.
2. Cash Flow: Focus on cash flow planning rather than just retirement or rates of return.
3. Life Insurance: View life insurance as a powerful savings vehicle rather than just an expense.

Thank you for reading!