Going Deeper Into The Principle Of Control – Episode 312

This transcript was auto-generated and may contain errors.

[00:01] Welcome to the Prosperity Podcast. Today on the Prosperity Podcast, we’re going to be talking about the principle of control. And this principle is going to give you a different insight of how you may be thinking of control. And we’re hoping that after spending 10 or so minutes with us, you’re going to walk away with a lot more information and wisdom to take control of your finances and become more prosperous in your thinking. How does that sound for a promise? That sounds like a pretty big promise. And you know what? I bet we’re up for it. Let’s do it. Okay. So first, we would love to know why is control a principle of prosperity? How you define it? And then let’s just dive all the way in. Yeah.

[00:46] So as I’ve shared in the podcast, when I sat down to write the seven principles, they really just came to me. And the control one, you’re so right, it absolutely impacts everything. If I had to pick one, it’s probably the one that I would pick. We talk about cash flow all the time. So number four is flow. Number five is control. But the whole idea of even having the ability for cash flow is because you control the money. So it’s really what a lot of the other principles are predicated on. And so it’s something that is so foreign to typical financial planning. So let’s look at the strategies that typical financial planning proposes and think about the millennials. So you just get your brand new job.

[01:38] And what’s one of the first things that you are encouraged to do? And it’s only in a 401k plan or a 403b plan. You don’t control that asset. And then you also as a starting worker, if you will, typically don’t have a savings account or emergency opportunity fund. So now your life is out of control financially, because if something goes haywire, your car breaks down or you need to switch jobs and need to move or anything else, that emergency opportunity fund is not there because you did not build assets that you control. So that’s a perspective that’s interesting from a millennial standpoint. It is absolutely. There’s one thing that we need to clarify first before we start diving into it. And this may be better for the new listeners, but Kim is very intentional in the language

[02:32] that she’s using. And by that, you’re using the word typical. And oftentimes people use the word traditional. Can you explain the difference between those two before we dive in? Absolutely. So the reason that I use the word typical financial planning is that financial planning, as we know it today, has only been in existence for 40 or 50 years. And when you use the word traditional, that implies something with a lot of history that’s been around for a lot longer than 40 or 50 years. Specifically, the strategies that we work with, the principles that I’m sharing are traditional. They have been around for 200 some years, three or four or 500, depending on what you use as their starting point. And so when people are just conversing out in the marketplace, because our human

[03:19] mind doesn’t go back that far and some people are not even that old, they may use the term traditional financial planning to imply the stuff that is out there in the marketplace every day. And I’m putting my foot down and saying, no, it’s not traditional. The work that we do is traditional and we call it prosperity economics. And it has been around for literally three and four times the length that the more typical financial planning has been around. And so that distinction is important for people to know. And thank you very much for bringing it up and helping me clarify it. Wonderful. So we were talking about the millennial generation and many of them, they are following the typical advice and they’re not going through and saving as they should.

[04:07] And they’re not doing all of those, you know, really in line with the principles of prosperity. So where do we go to help them gain back control and help others? So any of our podcasts, our books on Amazon, which are available, Kindle and physical book and audio book, and just keep learning. Self-education is the newest, hottest industry these days. I heard recently that people are spending something like three thousand dollars a minute on self-education and so keep learning. And what’s funny about the principle of control is I want to take the opposite side. So let’s say you’re an accredited investor and you have over a million dollars in net worth. You know, maybe you have three or four million and you have a high income, two,

[04:52] three, four hundred thousand a year, a million a year, whatever your numbers are, control is still the most important principle for you. And I find that many, many people in their 50s and 60s, in particular when they hit 59 and a half, which is the magical age for 401Ks and 403Bs to become available, are shocked at the lack of control that they have over these typical government oriented 401K and 403B plans, also of which have only been around 20, 30, 40 years, depending on what you pick as their starting point and are very typical and in short term and literally have zero control in the clients side of the table and 100% control in the government side of the table. Yeah. So I would love for us to dive into a few things because, you know,

[05:50] a lot of people when they’re starting a job or a career, what they’re doing is they’re abdicating their responsibility of their financial knowledge and financial well-being and they’re putting it into that 401K in hopes that in 10, 20, 30, 40 years from now, they’ll have access to it. And with something like that, they give up the control. So on the flip side, I think it’d do well for us to have conversations about things that we can control, maybe some of those financial assets and then how we should look at and start to appreciate those. So when you are looking at any place to put money, you want to take the seven principles of prosperity and run that place through the seven principles as an opportunity filter.

[06:39] And so as we make these principles available and Spencer, I know you can just put a link to them in the show notes or what have you. It is a opportunity to take things through them as an opportunity and use it as a filter to help you determine if whatever transaction you are considering is going to be prosperous for you or is it just going to be financial for you? What we can do is help you take that ability, that good human habit of saving money and have it be more efficient and have it be more effective. And sometimes even to take the actual product that you have and put them back in your control. Now, we can’t always do this, but just a simple example, if you have a home equity account that you’ve built up, so it’s not a literal account,

[07:39] but you’ve built up home equity, there are obviously cash out mortgages that you could do. Now you want to do that carefully, but that would be a way to take an asset from the typical financial planning side of the ledger and move it over to the prosperity economics ledger. Again, I reiterate you’d want to do that very, very carefully because you’re increasing debt and yet it would be a way to free up that asset. Maybe a better example is you could take a 401k plan at a former employer. So this isn’t going to work if it’s where you’re currently employed, but you could take a 401k that’s sitting at a former employer and roll that over into a self-directed IRA or you could take an old traditional IRA, traditional is the right word there, and shift

[08:23] that into a self-directed IRA where you can have more control over it. Still got the IRA umbrella on it and yet at the same time it is something that you can have a little bit more control over when you put it to a self-directed IRA. Okay. So for a person to be able to navigate and assemble those pieces, is there a lot of complexity or do you think that’s something that most people can handle? Yeah, that’s a tough question. I’m going to say there’s a little complexity. Not a lot, but a little. And so that’s why we do our work. That’s what we’re here to help with. And I’m not a mortgage broker, so I wouldn’t get involved in that transaction. And yet if somebody is looking for some self-directed IRA help, this is

[09:07] absolutely something that we can help with. And you can get so much more freedom with self-directed IRAs. You do not have to be an accredited investor to do a self-directed IRA. Some of the investments inside them require accreditation, but the actual act of a self-directed IRA is available to anybody. And we have previous podcasts on self-directed IRAs and their pros and cons and whatnot. So when we work with people, we actually help them take each of their assets through the seven principles of prosperity. I may not do it in a formal way or even an obvious way, and yet it is something always that we’re working on. And this fifth principle of control is the very first thing that people should

[09:55] be thinking about. And any recommendation that they are given from any other financial advisory person or media that they’re listening to or watching, they should ask themselves, what control am I getting if I take this transaction and implement it? Or what control am I losing if I take this transaction and implement it? And one last thing as we’re starting to wrap up here that I would share with people is to get clear on the difference between the product that you’re buying and the strategy that you’re using. So products are things that we buy and they’re available to everybody. Nobody has any special product. I mean, you hear from time to time, oh, we created or we invented this new product. Yeah, probably

[10:45] not. The products that are out there are pretty much the products that are out there. It’s often the strategies that we use, the things that we do with the products that we buy that makes the difference. So a quick example in the area of control, let’s say that you have just your typical mutual fund account. This is not an IRA. It’s just a regular mutual fund account. It’s after tax money. And you own this account. And so you already have it as an asset. That’s the product. The strategy that you’re using, whether you know it or not, is probably to reinvest dividends, interest, and capital gains. That’s just the normal box that gets checked on the application. Nobody really questions it. And it’s a strategy. It’s

[11:30] something that you’re doing, even if you didn’t think about it or you weren’t conscious that you were doing it. That’s the strategy that you’re doing or using, if you will. You can change that strategy. You can go to the financial institution and say, don’t reinvest my dividends and capital gains and interest. Pay them to me in cash instead. Now, of course, if you don’t have a lot of money in this account, that’s not really going to do you any good. But if you have a decent amount of money in there, that element of control, because you had the control, you had the ability to change the strategy, can make a really big difference long term. It’s not going to make a big different short term, but it can make a really big difference

[12:13] long term assuming we were going to keep that account by reducing some taxes that you would be paying on that account by freeing that money up, which is, of course, number four. Now it’s part of your cash flow and you can do other things with it. You can then get the multiplier effect going because you can take those dollars and make them do other things, et cetera, et cetera. So that’s an example of implementing control from a strategy standpoint, what you’re doing with your money versus a product standpoint, which is essentially what you’re buying with your money. Absolutely. Now that clearly makes sense why control is the one that you focus on and why that’s the one every single person, whenever

[12:51] they’re putting their money into something, they should say, does this match what I’m trying to accomplish? Very well said. Yeah, that’s a really good question right there. Look at what you’re trying to accomplish and then see if it matches. And if it doesn’t, and you want some help, that is a good time to reach out to us. Well, wonderful. And for you listeners, if you would like to take control of your financial life, one of the first things that you need to do is to one, start to gain the right amount of education. And guess what? You’re on the podcast, you’re listening, you’ve done it. Second is to get the right people and the right information in front of you. And one of the things that I have done, and this is

[13:34] personally as I love to read the books that Kim has put out, listen to the podcast, and you can ask personal questions, send an email to hello at partners for prosperity.com and Kim will be able to answer those questions for you. You’re in fact, like you’ve been so quick and thorough at answering those questions for listeners all across the world. So it’s been wonderful. Thank you, Kim. I’m happy to do it. I will admit I’m a fan of email. I think it’s a great way to get results and it enables me to be specific in answering people’s questions. And I’m happy to do it. Wonderful. Well, listeners, thank you for taking control of your finances, spending time with us today. If you like what you hear, make sure you hit the share button on

[14:19] your device and let other people know. And the next step is to always reach out with those questions you may have. Hello at partnersforprosperity.com. We’ll put that in the show notes. Thank you for being with us on the podcast today. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.