PROSPERITY
noun
pros·per·i·ty prä-ˈsper-ə-tē
: the condition of being successful or thriving
especially: economic well-being
Many think of prosperity in terms of wealth or money. I don’t. I think of it as a feeling of comfort and contentment. An emotional peace knowing that you are living the life you want with the people you want to live it with. Money is part of this, but certainly, for me, not the only part. I’ve known very wealthy people that were miserable. I’ve also known people with very little that were completely happy. As the old saying goes, “money can’t buy happiness or love”. It can buy the things that we think will make us happy, but it can’t buy comfort and contentment. That comes from who we are. Money is really nothing more than a tool we use to pay our bills, buy things, go places, and hopefully, help other people. We all obviously need money. Although I don’t define prosperity by a dollar amount, I’ve devoted the better part of my working life to helping people accumulate money so that they can enjoy the life they desire when their working days are done. However, I take it one step further. I also believe that a person can enjoy the pleasures and comforts of life while also saving and investing for the life they aspire to have when they’re retired. I call this philosophy Live Well-Retire Better™.
With that as the foundation, let’s talk about what it takes to successfully accumulate this tool called money so that we can Live Well-Retire Better™.
I have narrowed my wealth accumulation approach down to three very simple, yet not easy, habits or behaviors. These habits or behaviors can be adopted by anyone, at any age. However, the earlier they are adopted, the better the chance for success. My three wealth accumulation habits/behaviors are:
DON’T SPEND MONEY YOU HAVEN’T EARNED OR DON’T HAVE
This one seems obvious, but surprisingly, by the magic of debt, people buy things and go places that they can’t afford to buy or go. Impulse is a powerful, and sometimes damaging thing. In other articles, I’ve talked a lot about how our emotions may contribute to poor decision making. This extends beyond investments and relationships to our purchasing behavior. Whether it’s trying to keep up with our peers or the “live for today” mentality, we often make poor, impulsive decisions with our money driven by emotions. Let’s use technology and travel as examples. We can barely get a new smartphone activated, and the must have, next gen smartphone is launched with a better camera or a few gigs more memory, or a higher resolution screen. Airbnb and VRBO can house you just about anywhere in the world for a day or a month. Resist the temptation to make a quick, significant purchase or take that dream vacation until you have saved enough money to buy it or go. Enjoy your life, but don’t mortgage your future to do it. Additionally, delaying an impulse purchase until you have the money to pay for it may give you the time you need to rethink the urgency of that purchase or destination. My Live Well-Retire Better™ philosophy doesn’t excuse irresponsibility. It promotes making adult, unemotional decisions to enjoy life with an eye on the future.
AVOID EXCESSIVE DEBT
If you can’t control what you just read about, then count on this being a problem. Credit cards and other high interest, consumer debt destroy dreams. The ability to buy something or go somewhere you can’t afford with the swipe of a piece of plastic has caused a debt crisis with consumers. According to the Federal Reserve Bank of New York, consumer credit card debt exceeded $1 trillion for the first time in the second quarter of 2023. If you carry a balance on a consumer credit card, look at the first page of your monthly bill to see how long it will take to pay off the balance by only making the minimum monthly payment. Take back control of your life and your future by paying off those high interest credit cards. There is absolutely nothing wrong with using a credit card if you can pay the card balance in full every single month. Take advantage of points, cash back, airline miles or whatever the card is offering. But keep in mind that the credit card companies aren’t offering these perks out of the goodness of their hearts. They’re counting on us to overspend, carry a balance and make minimum monthly payments, forever, to collect double-digit interest payments. Don’t let them win. Pay them off. If you can’t do it alone, ask for help. Debt elimination is one of the foundational components of the Live Well-Retire Better™ financial planning process. There are also many reputable, non-profit consumer credit agencies that can help you as well.
INVEST EARLY AND CONSISTENTLY
The third habit or behavior that I believe will promote wealth accumulation is investing early and consistently. Studies have shown that time is one of the largest drivers of investment success. So, what is “early” you may ask? You can assume I mean “young”. However, if you don’t consider yourself “young” start investing anyway. There’s an old Chinese proverb that says:
“The best time to plant a tree was 20 years ago. The second-best time is today”
Work investing into your monthly budget. In fact, make it the first line item on your budget. Be aggressive with the amount you are investing, but make sure you have enough to pay your bills and live your life. Increase the amount you are investing every year or in the same percentage as your income increases. When you re-do your budget as you take on more expenses, like a mortgage, trim other spending rather than investing to make it work. Then don’t stop investing until your paychecks stop. Start with an emergency-fund, then your employer’s retirement plan, your IRA, and even a non-IRA if you can. Don’t let anything get you off course.
It's also very important to keep in mind that many families are one tragic event away from financial disaster, so consider life and other types of insurance. This is a key part of the Live Well-Retire Better™ philosophy.
Finally, ask for help to build and manage a tax-efficient, low-cost, investment portfolio. Find a financial professional to help and advise you through this process. Help is not free. When I meet with a prospective client, I expect to be asked how I get paid. If I’m not asked, I voluntarily provide it. Like everything we pay for, cost is one of many considerations when choosing an advisor. A trusted relationship with an experienced financial professional, if only to keep you on track to your goals, can be invaluable.
Figure out your definition of prosperity. Make it very personal. Then practice the above habits or behaviors to Live Well-Retire Better™.
Live Well-Retire Better™ is a non-traditional financial planning process that was developed based on my philosophy that you don’t have to choose between enjoying the pleasures of life while working and saving for a comfortable retirement. Although nothing is guaranteed, with commitment, discipline, and careful planning, you can enjoy the comforts of life now, AND when you retire.
If you’d like to talk about The Live Well-Retire Better™ method of financial planning, or have questions or concerns, please set up a call. There is never a charge or any obligation for an introductory conversation.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. LakePointe Advisors does not provide legal or tax advice.
All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
Advisory services offered through Fourth Dimension Wealth LLC, a Registered Investment Advisor. LakePointe Advisors LLC and Fourth Dimension Wealth LLC are separate entities.
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