Tiny Financial Changes for Huge Benefits – Episode 588

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, welcome to the podcast. We’re going to be talking about the tiniest little changes that you can make with your finance that make the biggest outcomes long term. And they are surprising. So you’re going to want to listen to this episode. Kim, the reason why this is so important is you actually just flew back into town from an event where you had this aha. So paint the picture, what we’re talking about, and let’s work through this. Absolutely. Well, you do mean literally flew back. We drove in the driveway about an hour ago. So I am fresh from a whole community of financial advisors helping people all over the U.S. with tiny little habit changes that make a big difference.

[01:03] And it’s in the area of saving as a verb. And it’s interesting because Robert Kiyosaki has had a long standing quip that just came out on email again today. I’ve seen this probably at least three or four times a year from him. And that is that savers are losers. And that is an understanding quip. Like all things, it takes a sentence to get a fun little marketing tagline, an entire paragraph to tell the truth. And what he is referencing is when you store money in savings as a noun. What I am referring to is saving as a verb. And this is a subject that nobody likes to talk about. Nobody says they can’t do it. And yet it’s this space where the tiniest little changes of habit can utterly transform

[02:04] your family’s financial future. And I have a whole list of tiny changes. OK. I love it. I want to tie something in. I’m going to ask a question and I’m going to give my feedback. I’ll give my feedback first because I’m curious on yours. So if I take the seven principles of prosperity, the one principle that I tie savings to is control. That’s what it is for me. What is it for you? It’s cash flow. I think control is an accurate one. And what’s funny is, as you know, the principles get even better when you put two of them together. And so cash flow control is exactly how I have talked about the structure that we put in place to help clients with savings. And cash flow, of course, is both money in and money out.

[02:57] And we as human beings do not do a good job of controlling that at all. So you’re wise to bring it up. But it’s truly about the monthly habit of having your cash flow controlled. Okay, I like it. So I want to get into the tiny pieces of your aha moments. And this is going to be behavior changes and then action changes. And then we’ll talk about the long term. So just some quick examples that at the surface seem very small, but again, over a long term can have a massive difference. Two specific things come to mind. The first is, for a lot of people that are in the upper incomes, you know, 180, I think is kind of a good guideline, anything above that, when you get towards the end of the year, and we’re recording this in October, you have probably

[03:52] done one of two things, which is filled up your 401k so you no longer can contribute to that. And or you have gotten over the social security threshold so you’re no longer having taxes taken out for portions of social security, depending on where you are in your income. Those extra dollars, if you do not have a structure to capture them, get spent like they will end up in your checking account and they will get spent and a year from now, you will have no idea what they even got spent on. And so if you have a structure to capture them, they can literally make a substantial we’re talking over a million dollar difference. Because let’s just say the total is 20 grand, you know, 10 grand of 401k extra

[04:42] money and 10 grand of social security extra money, 20,000 times even 20 years at just a simple little 5% interest rate, a pretty decent number over time. And you can do it without impacting your lifestyle at all. Okay. So that sounds more like W-2 people, for the most part, kind of a blanket statement. What about our self-employed or people that are business owners, meaning it’s either active or passive income? What’s the strategy? Yes. So these are even more fun because people that are business owners or have a fluctuating income because they’re on all commission or whatever, maybe it’s all real estate income, but it moves around a little bit, tend to have a base rate that they live their lives with.

[05:31] Let’s say it’s 10 grand a month. Okay. Just every month I know I can live on 10 grand and I make 10 grand some months and I make five grand a month and I make 20 grand some month. Well, if we can smooth out those bumps, which again, our structure enables you to do completely on an automatic basis, then whenever there’s higher months of income, you get a choice, but it’s a conscious choice. So instead of the higher months of income, just naturally falling into your checking account where it absolutely will get spent and you might not even be conscious of your choice to spend it, we’ll keep it in the structure where you make a conscious choice to spend it or save it. The choice is yours. So it might literally look like once a year, or maybe it’s three times

[06:20] a year, you take a look at the structure and you say, oh, I have an extra 50 K or 10 K or a hundred K or whatever the number is. What do I want to do with it? What is a conscious decision that’s very purposeful around my money? Do I want to add that to lifestyle for a special vacation? Do I want to get a new car? Do I want to buy my next real estate deal, create maybe even more cash flows so that I get even more choices in the future, add to my life insurance foundation so I have a stronger base. You are in a position of choice and control to bring up the principle prosperity that you mentioned earlier, all because of the structure that makes this happen automatically. Okay. So you said something within the lines that I had a question, but it was

[07:10] resolved, which is this, when you said there’s a choice and with choices, there’s called a second order effect, which is decision fatigue. So this isn’t something that has to be done every day or multiple times a day or multiple times a week. This is less frequent. What does that help unpack? And like, what does that look like? Because business owners are making enough decisions as there are. We want to make less. Typically what we recommend are three calibration sessions a year. Now it’s absolutely going to depend on your business and it can be as numerically often or as little often as you want, but at three a year, you can run on kind of a February, July, October cadence of, let’s just look at the account.

[07:59] Is there extra money in there? Let’s make a purposeful choice about it. February done, July done, October, maybe we skip it. And that therein reduces that decision fatigue and everything else is automatic. Okay. So the nuts and bolts of this are what’s going to prevent someone from doing it or it’s going to prevent someone from being overwhelmed and being stuck. So I would say, and I’m putting you on the spot here, you mentioned a cadence and a session to be able to figure out what that looks like. Is that something that one of our listeners would be able to schedule a time with you or someone on the team that they could at least have a quick check in and say, Hey, let’s figure something. Is that something that they can do?

[08:54] Absolutely. So specifically inside our prosperity pledge membership, those are scheduled ahead of time designed on purpose to meet that calibration quest in that February, July, October cadence and included in the membership. Now, others that use the structure, but may not want the membership, we have a different approach for, nevertheless, they’re in complete control and you can opt in or out of the membership at any time and let it serve you in the best way that suits your family’s situation. Okay. And then since we’re in October right now, depending on when you listen to this, is there anything in particular that needs to happen before the end of the year, because we’re coming up last quarter, like it’s

[09:43] the grind and then November happens. And then people fall off the wagon because it’s holidays. Right. So I think October, November are always a really good time, especially for self-employed individuals to take a look at their tax environment and just do a quick run through of what did my income and my expenses been for the year so that I’m not surprised because in theory, a lot of that money should be sent to the IRS before the end of the year. A lot of people wait till April or who knows when to get money headed to the government for their taxes. But there’s not anything that we can do about that. That needs to be handled with their accountant and ideally a tax strategist. Nevertheless, there’s value in the cadence of the February, July, October

[10:31] space, June, July kind of depending. And it’s mostly because we do have a variety of other things that we cover in each of those meetings, but it’s just a point to get them all covered within the course of the year. There’s nothing magical about what we cover in October versus what we cover in July or February. Okay. So it’s hello at prosperity thinkers.com. That’s the email address for podcast listeners. As Ken mentioned, there’s different touch points, calibrations, we’ll call it for people in a variety of programs. But the first thing you can do is just send an email, but taking the beginning, my, my reason for choosing control was because of a conversation I had a couple of days ago with a wealthy friend associate that you

[11:20] want to call it and he’s done very well, he sold a business for a good amount of money. And he is the highest percentage of all of his money allocated is cash. He said, I think there’s going to be huge opportunities now. And so for any of our listeners that don’t have a system, you will wish that you did when the opportunity comes. And I think that’s the glimpse that I caught from you as well, that you’re just making it easier for people because you see the opportunities, the changes that are happening. And if they don’t prepare now, they’re not going to be ready. Well said. It’s being in a position of control, having the automated structures and just making slight changes that cause the difference.

[12:19] Perfect. Hey Ken, thank you for sharing this today. And listeners, make sure you reach out. Hello at ProsperityThinkers.com. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.