What America’s Richest 1% Do Differently – Episode 592

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, welcome to the podcast. We’re going to be talking about what America’s richest 1% do differently. Kim, this is something that you guys should call prosperity thinkers organization has been helping with. And there’s often a cause and effect, meaning people are feeling either certainty in one area or uncertainty. You guys have a pulse on the market, you’re addressing it. Let’s first start out. How come the 1% and how come helping that group? Well because they live a different life, not monetarily, yes monetarily obviously, but that’s not what we’re talking about. They live a different life in their heads and it causes them to do different things

[00:56] with their bodies, the food that they eat, the people that they hang out with, the money that they invest in, etc. We can learn from them and thankfully it’s very easy to do so. So I’ll be the first to say this is not necessarily our clientele, although it does kind of depend on how you define it because a lot of people that do work with us are in the upper 1% of income, but I think when you hear the language that you started with, it’s typically 1% of net worth that most people think about, which is actually issue number one. What do they do differently? They measure cash flow. They’re way more interested in cash flow than they are net worth. Net worth is just a number, not really relevant.

[01:43] People could use it to keep score, but I don’t think most people do. That cash flow affects your life every single day. Absolutely. Are you finding that the wealthy people understand that or is that something you have to educate? No, in most cases they understand and or if they don’t understand it with their dollars, in other words, if they’re not getting the cash flow that they want, they understand it with their brains. They know that’s what they should be looking for. They’re seeking opportunities to, and so this is issue number two, increase their human capacity to provide value, which is basically investing in themselves. Issue number two that the 1% do differently is they invest in themselves.

[02:34] They increase their capacity to provide value and this is so fun and can literally be started at like age two and it’s something that we’re working on inside of our prosperity parents work. We’re working on it with ourselves all the time. We’re working out with every single client that will listen to this kind of language, which is the idea of investing in yourself to give yourself the leg up on the value that you provide out in the marketplace. OK, so you’re helping them understand that value in the marketplace. You’re helping them work through those pieces. What are call it the common misconceptions that outsiders don’t see that you see? So meaning like this is typically how it works is a person says, oh, this is my

[03:29] unique problem here and you having enough conversations, you’re like, no, it’s actually not the unique problem. This is what they all have. Yeah, I don’t think that there is much uniqueness in the problem set and that’s maybe frustrating and of course, each individual is a person and they are unique. Yet, especially when it comes to money, there are basically a handful of areas that people are utilizing money in a way that’s not efficient. So this is our main message has been for years, you’ve got to have efficiency going on with your dollars. And most people think that’s either one big thing, like I did one thing and it shifted everything or I did one investment and I got all this amazing stuff.

[04:23] Or they think that it’s just kind of right time, right place space. And it’s neither of those. It is small, tiny habits. You and I have talked about tiny habits and BJ Fogg on our podcast before is small incremental steps that are taken over and over and over and over. Most of them very boring, yet incredibly efficient and effective. And it comes back to this space of investing yourself focusing on cash flow and doing things that are absolutely going to work with your money. We’ll all do business things that are maybe not going to work. We’ll all do things in our life that are maybe not going to work. We’ll try relationship strategies that are maybe not going to work. But as it relates with our money, our hard earned money, it is imperative that we

[05:16] do the most basic, boring, efficient things on an ongoing consistent basis for as long as we possibly can. And that is what gets the results. Okay. So I’m going to ask a related question, not push back. So you’re stating that it’s ongoing smaller good habits, we’ll call it tiny habits. But the wealth that’s created, if it’s a first generation and in many other cases, it happens through a transaction like it happens all at once in most cases. So we have chicken, egg, and obviously there’s like the preparation, but then the after. How do you help navigate that? I imagine you’ve had clients, associates that maybe did okay, they had a transaction and their life was completely changed. And if they didn’t have stuff in place, they probably lost it all.

[06:16] And then you have some people that did all the tiny habits and they never had the transaction and got ahead. So give us some insight. Yeah, well, it’s a little bit of the tortoise in the hair. And there’s absolutely businesses and opportunities that enable some big liquidity event whereby you do create a space that you are doing something consistently over and over for a period of time, not necessarily monetarily related, more business related. And then that business at some point sells or gets bought out or whatever the term is that creates that liquidity event. And as you stated, if you are prepared for that, then you keep that money. If you’re not, then you lose it. I mean, that’s just something that we see over and over.

[07:01] But I think for your basic person that owns a smaller business that may or may not have that opportunity in the future is an employee at a smaller organization or a larger. There’s just some really basic things that they can do that will create the kind of wealth that they’re looking for with certainty. And that is those tiny habits of saving money first, of not connecting their income to their checking account, of paying their life insurance premiums on an ongoing basis and not trying to get something for nothing, of utilizing 30-year mortgages and not prepaying any of those payments, of using retirement plans only up to the match level, MATCH, not MAX, and that’s pretty much it. I mean, there’s a few other nuances, yet those basic things can get someone

[07:58] into the $3 million category, $4 million category of the net worth, which can create that ubiquitous $150K a year income that the statistics show us is what it takes to live a pretty nice life in most parts of America. There’s exceptions, of course. Don’t know that you can do that in New York City, but for the most part, that’s sort of the average upper end income and cash flow that people are seeking and all we’re doing is making sure that it happens with certainty. Okay. So I’m going to trail off into another area that’s related, but again, you’ve been involved with strategic coach and we’ll set the floor at this that for a person to be in strategic coach means that they already have a desire to do something greater.

[08:55] They’re surrounding themselves with a network of people that are wanting to perform at the highest levels. And so you mentioned business owners are setting up these tiny habits, doing these disciplines. Let’s talk about the people that you see are playing at the highest level. What are they doing different than what you just said, or is it the same and people are just chasing something that is really what you keep on saying? Well, I think you get both. So in many cases, it is the same. They’re just having opportunities that are greater most often because number one, they’re looking for them. And number two, they’re giving first. They’re providing those opportunities for others. And then additionally, you do have some people that it’s not the same, you

[09:46] know, they’re going after massive opportunities and they may or may not get those, but because again, you’re not ever going to get them if you don’t go after them, so because they are in a position, they’re in industries that create that kind of opportunity, they’re in a space of having the connections that create that kind of opportunity. And so they’re seeking others like that. And that collaboration is what gets people exponential results. So I like to talk a lot about one plus one equals 11, and that can absolutely happen on let’s call it a local level, but when you’re working either nationwide or internationally and you’re able to collaborate with somebody else that’s really with their A game and bringing batteries

[10:37] included and seeking those larger opportunities to help, then that collaboration can absolutely bring a one plus one equals 11 impact, that exponential impact that is very possible in the work environment when you are serving, but there’s an interesting aspect to this. And that is the alignment, if you will, or the congruency with who that person is, how they are being in relationship to what they are doing out in the marketplace. I don’t know if you’ve ever heard the quote, and this is a negative quote, so I’m going to state it negatively. I can’t hear what you’re saying because of who you are being. Well, stated positively, I totally get you because of who you are being, not necessarily because of what you’re saying.

[11:40] Now, usually the what you are saying when somebody’s acting in alignment and congruent with their values and their give first mentality that they’ve got out in the marketplace, then their business, their teams are going to come right along behind that. Support that effort, get those exponential results. Yeah, that’s great. Let’s do this. Let’s end off with not going to be a negative, but I want to end off with this, what are three things that the wealthiest that you know, don’t do. And then we’re going to take that and flip the inverse. Yeah. They don’t put their income in their checking account. They don’t prepay their mortgages. And they don’t let the tax tail wag the financial dog. Okay. So the inverse is they have a discipline with their money and a system that works.

[12:39] The second would be that, how do we put the second on that one? The mortgage thing, they put any dollars that they thought they were going to prepay it with into an account that they control, not something called home equity that the bank controls. Most often it’s the life insurance space because if it’s prepaid mortgage money, it’s monthly and that’s not really going to work very well with all the good investments that you need a hundred grand or a million for. And so the life insurance works nicely because it accepts monthly money. Okay. The piece I was going to, I’ll add in, I like that monthly money is they understand principled leverage. I like that. Often you use truth concepts, Todd Langford’s calculator, truth

[13:28] concepts.com, which is really helpful. The third one, which is not having the taxes and whatever that may be dictate their life. So the inverse, what are you going to say for the inverse of that one? Well, it’s accepting the opportunities for the tax benefits that we can get. Obviously we want to take full advantage of those, but there are so many people that, for example, will not sell a piece of real estate, even though it’s time to sell, because they don’t want to pay capital gains taxes. It’s extremely short-sighted and it’s letting the tax tail wag the financial dog. There are people that will put money in qualified plans like retirement plans at work with no match, no MATCH, just because they want to get the tax

[14:16] deduction, even though that’s submitting themselves to being fully taxed on those dollars later, which could be at a higher tax bracket. So those are a couple examples of people that let the tax tail wag the financial dog and the opposite thing to do in not letting it wag the financial dog. I like it. It’s good. And the reason I think it’s good to end on that is because there are some people that are motivated by a carrot and there are some people that are motivated by the stick and it just depends on who they are. And I think that goes with both of us. We were coming up on the end of the year. And so January 1st, there’ll be a lot of carrots out there, people getting healthy and going to the gym.

[15:01] And right after Thanksgiving, there was a lot of sticks being poked. So there you go. We’ve got the two. Kim, thanks for spending time with us on this episode of the podcast today. Thank you, Spencer. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.