Recently, while studying for a new financial certification, I read that increasing income does not achieve financial goals; it stated that financial goals are achieved through saving money, and the compounded earnings of those savings.
Hmmm, this is a college level text book, so it should be right, but I don’t agree. This thinking does, however, reflect traditional financial planning, and what is still being taught and practiced by many.
Of course, compounded earnings from savings is certainly a wonderful thing! No one could rightly argue with that, especially if those earnings are accumulating tax free or tax deferred. But let’s face it; we have a large population of baby boomers whose retirement accounts have significantly decreased in value over the past decade, throwing a kink into this traditional wealth management system.
Add to that the fact that many boomers have lost jobs or are underemployed, and still may even owe more on their real estate than what it’s worth. Growing money slowly is not the best solution for these folks, as there just isn’t enough time for the money to grow before “retirement” age, even if there is an investment account.
So, what’s the solution for these folks to reach their financial goals? Increasing income, especially generating income that is sustainable during retirement.
Let’s look at a couple of examples, to demonstrate this philosophy, which is part of the Financial Woman New Retirement Paradigm.
Do we love that Sara Blakely is the youngest billionaire on the Forbes annual billionaire list? Did she get there by scrimping and saving some money to earn a 10% return in the stock market (during a good decade)? Of course not, she got there by figuring out that she could cut off the bottom of her panty hose and look thinner in her dress. When she saw how great she looked, she realized that other women would want this innovative slimming undergarment also. And she was ever so right, speaking firsthand!
Ok, she is atypical. She’s a billionaire. Let’s look at another one of my favorite trailblazers, Ali Brown. Ali made the Inc 500 list in 2009 with reported sales of $3.8 million that year by selling programs online and coaching services to mostly women entrepreneurs. I have heard Ali tell the story of being almost broke just a few years prior.
My point is this; we know of countless millionaires who did not get there by the average returns generated from a traditional investment account. They reached their financial success by not settling for average, or even less than average earnings. They asked how they could increase their cash flow, and they actually took action to increase income.
Please don’t think that I am saying that it’s not important to invest well once you have an investment account. It is, or else you could lose everything you’ve earned from that increased income! But what is the step before investing wisely to get accumulated savings? It’s to increase cash flow through smarter spending, and more importantly, strategically increasing income.
If you like this thought train, then you’ll love my upcoming course where we will explore ways to increase cash flow, and develop a powerful money mindset that will allow you to step out of the box and into a bigger life just like these women and many others have done! I’ll kick this program off with a content packed totally free one hour webinar, 7 Keys to Track and Grow Your Money While Living Rich, that’s certain to get you started in the right direction. Be sure to sign up here to attend the webinar.
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