A lot of times we think of Financial Success as coming from a long period of high rate of return.
The problem with this is, life doesn't happen the way we planned. Many problems and opportunities arrive that we are not properly prepared for.
a few examples are:
- Loss of a job
- Opportunity to start your own business
- Market correction at the wrong time
Long term success comes from leaving room for error.
If we have room for error, what are the chances that a specific event or several events will derail us from our dreams?
I personally would not have this financial practice if I did not have room for error. I used cash that I had on hand to get by, while I built a sustainable practice that has created the lifestyle my wife and I want. Can you think of a time where you wanted or needed money to get by or build something in your life?
Here are 3 Financial Moves to take to help achieve those goals.
Move 1- Have 12 months of your GROSS INCOME (pre-tax) accessible
I don't mean have 12 months sitting in your savings account.
Yes, you should have 3-6 months (depending on your income and lifestyle) set aside for an emergency fund.
You should also have another 6-9 months in an account where you get return on your money, BUT is accessible with minimal taxation and no fees.
Imagine have 100k, 200k, or more in an account that you can access easily. What would that allow you to do that you wouldn't otherwise do?
Move 2- Don't put all your money into one bucket
Most people I speak to have 2 buckets of money. One is their savings account and the other is their traditional 401k
What flexibility do you have with taxes if most of your money is in an account that will be taxed at ordinary income rates if you pull it out? If taxes go up, then you may owe more in taxes. If taxes go down, then you made the right decision. Can you predict or better yet, are you willing to bet that taxes will go up?
Have your money in different accounts that are taxed differently. Give examples next to the three types
- Tax Deferred
- Tax Free
Move 3- Leverage Good Debt
Paying off bad debt is good. Paying off good debt can be bad.
There's a thought out there that paying off all debt is the best decision. That may be right. But it may not give you the flexibility you want.
Next time you have a decision to make around overpaying on your debt, ask yourself this question:
"Where else could I put my money and what do I expect that money to do for me compared to the interest on the debt owed?"
Think long term. Think realistically. Get success.
Ryan Burklo is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 333 N. Indian Hill Blvd., Claremont, CA 91711. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly-owned subsidiary of Guardian. Quantified Financial Partners is not an affiliate or subsidiary of PAS or Guardian. This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The views and opinions expressed herein may not be those of Guardian Life Insurance Company of America (Guardian) or any of its subsidiaries or affiliates. Guardian does not verify and does not guarantee the accuracy or completeness of the information or opinions presented herein. AR Insurance License #15319412CA Insurance License #0K24924 #2022-136565 Exp 04/2024