How to turbocharge your wealth-building strategy. Like many of us, I grew up in a family that was part of the working middle class. Personal finance was seen as getting an education, finding a stable job, paying the bills and saving any extra money in a small savings account.
The education system failed to provide me with knowledge about savings options and investment strategies, other than a typical savings account and an employer-offered retirement plan. Like many others, I had to rely on my own efforts to learn about personal finances and succeed in life.
I have learned there are five essential concepts that, if executed with dedication and timeliness, can enhance your ability to accumulate wealth efficiently and rapidly. Although these principles may seem easy, they require focus and attention to detail for some time before you can feel proficient. Ready to learn more? Let’s walk through these concepts together and learn vital information to apply to our wealth building strategy.
Money Management In Four Steps For A Strategic Wealth-Building Strategy
The four pillars of a high-level cash flow journey according to M.C. Laubscher of Cashflow Ninja are: cash creation, cash capture, cashflow creation, and cash control.
The first stage, Cash Creation, involves creating money. This can be achieved by obtaining a degree, securing a W2 job, starting a business, and working towards bonuses, raises, and increased revenue. Cash creation is the foundation for the other steps, but you don’t want to get stuck here for too long.
The second stage is Cash Capture, where you create a buffer between your take-home income and your spending. Budgeting and saving as much as possible is likely the key to success for this stage. The difference between your income and spending can be used to fund investments, purchases of assets that appreciate in value, and your private banking strategy. This means you are living below your means.
After setting aside emergency funds and other forms of savings, having and working with a budget successfully, and constantly saving money, you can proceed to the Cashflow Creation stage, which is stage number three. This phase is different from earning money because it entails using your savings and established relationships to invest, create additional cash flow, receive interest, and generate income independently of your day job. Those in this stage usually seek investment opportunities such as insurance policies, stocks, REITs, bonds, and residential and commercial real estate syndication opportunities.
Cash Control comes next. In this stage, there is an ongoing effort to safeguard and refine your financial strategy. This phase involves creating a will, pursuing estate planning, maintaining life and disability insurance policies, and ensuring your finances are set up for the long run. Since financial education is not typically taught in schools, it is up to you to learn and improve your financial plan to protect your assets from creditors, taxes, and lawsuits while leaving a legacy for your loved ones.
At the end of the day, you are working through these stages so your money works FOR YOU and not the other way around.
Be Your Own Private Bank
The next idea is critical to your wealth-building strategy. The idea I’d like to share is typically referred to as “becoming your own bank” or “infinite banking strategy.” This strategy involves the utilization of a thoughtfully crafted life insurance policy so you can become your own lender, borrower, and beneficiary all at the same time.
If you look at the business model of large banks, you know that they receive deposits from people and offer a “safe” place to store the cash, but with minimal interest earnings. Subsequently, the bank lends that money out to others and earns a much higher amount of interest on the loan. Furthermore, in case of default, they benefit from collateral, collections, and other methods. Why would anyone want to save their hard-earned cash for minimal interest and then borrow other money at a higher interest rate? It doesn’t make sense!
But, you can flip things on it’s head by investigating a different approach and creating your own private banking system. If you have followed the four stages mentioned above, you have accumulated cash and have substantial savings that are ready to be invested in creating passive cash flow. With this cash, you can purchase a dividend whole life insurance policy from a mutual insurance company. When written correctly, this policy will enable you to fund it entirely and borrow a large portion of that money from inside the policy within the first year.
If you fund the policy quickly, you can qualify for dividends and earnings inside the policy. On the other hand, if you borrow against the policy at a low-interest rate, you will still earn interest on the full value, and you can use the borrowed money to invest in a real estate syndication. As a result, you have invested in two places at the same time with only one dollar, and you now have an insurance policy. There are, of course, many other details involved, I won’t go into them right now but am always happy to connect you with someone who can. Just keep in mind that this is a tax-advantaged option for creating a wealth-building machine.
Value Your Time
Valuing your time while constructing your wealth-building strategy is important. When starting out, your time is valuable and often traded for money. It is common to work 40-60 hours per week, utilizing your expertise and energy in exchange for a paycheck. However, this is not a sustainable way of life or a recipe for happiness, which is more important. For most people, the goal is to accumulate enough wealth through profitable investments to reduce the amount of time spent working, and instead, focus on activities you enjoy.
To achieve this, it’s essential to take control of your time. This may involve delegating tasks to an assistant, hiring out household services such as laundry, cleaning, or landscaping. It’s crucial to evaluate the activities you engage in, their value, enjoyment level, and the time and energy they require. If certain activities are not worth your time, consider outsourcing them. In doing so, you can use your time to learn and pursue new methods of wealth-generation.
To speed up your wealth-building process, you can also look around you. Like anything in life, it is important to surround yourself with people who motivate you and inspire you to do better. Look for individuals who are ahead of you by ten steps and who are doing what you want to do or living the lifestyle you desire. Then, connect with them and add value to them in some capacity and start building that relationship! It will be worth every minute of your time.
Jim Rohn’s quote, “You are the average of the five people you spend the most time with,” is well known. However, recent research suggests that your identity is even influenced by your friends’ friends and their social circles. Therefore, it is essential to seek out mentors, masterminds, and friendships with people you respect.
By surrounding yourself with valuable connections, you can free up time and energy spent on unproductive tasks. This will allow you to explore higher-level concepts and accelerate your journey towards financial independence with fewer mistakes along the way. It’s always better to learn from someone else’s mistakes, right?!
Break Parkinson’s Law
The best thing you can do for yourself is to repeatedly break Parkinson’s Law. If you’re not familiar with this law, it states that as your income increases, so does your spending. That is definitely NOT going to help you turbocharge your wealth building strategy!
Many people find that when they receive an influx of cash in any capacity, they can finally afford that “thing” they’ve always wanted, so they buy it. And they keep doing that until the entire extra influx of cash via a raise, bonus, commission check, new client, etc is gone. Then they realize they’ve saved nothing despite their hard work.
But you are different, right?! With the four pillars of your cash flow journey successfully implemented, your time you have bought back, and the private bank you have now become for yourself, you are sure to thrive in the Cash Capture stage and will make sure that your expenses are lower than your income.
Even better, you will continually improve your cash capture strategy, making sure you have more and more to invest. Each time you receive a raise, cash flow check, or bonus, be aware of the temptation to spend more and break Parkinson’s law again.
While you focus on the high-level strategies mentioned above to grow your wealth, we at Ohana Investment Partners, concentrate on building relationships with investors like you and presenting the best real estate syndication opportunities available to our investor partners. You are invited to join Ohana Investment Partners’ Investor Club today and gain access to our private community of like-minded investors. Our community is focused on wealth-building, and filled with investors taking a significant step toward achieving the high-level concepts reviewed above, so you will be in good company!
Want to find out more, hop on a call with Angie, Owner and Founder of Ohana Investment Partners, by clicking HERE.