Cash, Control & Legacy: The Real Formula Behind Lasting Prosperity – Episode 666

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, welcome to the podcast. Today, we have a special compilation episode where we’re talking about the foundational principles of prosperity. So if you’re caught between playing it safe and create an opportunity, this compilation episode is for you. By compilation, we’ve grabbed some of the best insights from Kim and we’re piecing those together to provide one of those action-packed episodes. So if you’re navigating for financial, for yourself, for your family, this is the episode to get those principles and to understand them clearly. This is what Kim has said in several episodes, the best stuff. I’m gonna share one lesson in here and it was the other myth,

[00:50] the other lesson myth, which was false security by having too much cash, it gives us the false security and on the other side of that is that it can cost us opportunities of growth, be it personal growth, financial growth. Do you agree with that or disagree? And I’d love some context. Yeah, it is an interesting statement and it is made often and I absolutely know that people can’t have all their money in cash and get anywhere unless there’s just so much of it that it doesn’t matter. Yet it’s really, cash does enable us to take advantage of opportunities and so there are times in our lives when we might be in a very high position of cash because we’re seeking the next opportunity and so I think we need to be okay with that

[01:46] and people find their investment quest is chomping at the bed. It’s the burning the hole in their pocket, that proverbial statement about cash. And they wanna make their investment decisions quickly and that’s not wise either. There’s nothing wrong with sitting on some cash to make careful choices as it relates to that next marketing program you’re gonna do with your business, the next investment you’re gonna put your IRA dollars in or what have you. So it’s an interesting space. I know people that sit with 30, 40%, even 50% of their overall asset base in let’s just call it liquid dollars. Maybe it’s not actual cash, maybe it’s treasury bonds or something like that and they’re completely fine with that

[02:32] because they know it doesn’t rollercoaster ride. They know they’re positioned for an opportunity should it arise and they’re good with that allocation. So it’s as all things financial are, difficult to make some generic statements about it that apply to everybody but be purposeful in your own utilization of cash and your own thinking about cash and your cash positions and align them with your own values and your time of life and what’s important to you right now. What I mean by that is it’s a really solid mix of certainty and uncertainty. So cash value of whole life is a very certain asset. Some people would use the word secure asset but cash value of whole life is from a mutual company. So think Guardian, New York Life, Northwestern Mutual,

[03:25] Penn Mutual, Lafayette, Mutual Trust, Foresters, there’s a few others that has a guaranteed growth rate that’s very conservative and it has a dividend history that’s also very conservative typically paid every year. So this is your asset and then it has a thing called a death benefit which is what would pay in cash to your family if death occurred. So you have kind of two accounts in one, you have the protection component of the death benefit and then you have this space of cash value. Now, backing up to the larger lens of where your assets are, if you have an asset that is certain, C-E-R-T-A-I-N, absolutely going to be there for sure, that enables you to pursue uncertain assets at a much higher rate, caliber, capability,

[04:17] opportunity environment that you wouldn’t necessarily pursue if you didn’t also have the certain asset. So cash value of whole life, so whole life is the product, that’s an asset, then you have a death benefit or a face amount, those terms are interchangeable, that is an amount of cash that would pay if you die. Whole life, W-H-O-L-E. Backing up from that, you have term insurance, that’s what most people are familiar with, life insurance. It’s good for a term of time, which is great. It could be a one-year term, it could be a 30-year term, it could be 15 or 20. So, Kim, first, let’s set the stage. I’d say most of our listeners know what type of life insurance policy, but let’s give some clarity

[04:59] and then talk about the renewals, what happens. It’s interesting to me, as I’ve helped people for well over 30 years in this space, to see both the positives and the negatives that that triggers. So on the positive side, when you have somebody, and I’m speaking of the bulk of our listeners, they’ve learned their life insurance well, right? They studied whatever they did, they bought whatever they bought, and they’ve either continued to study, including listening to this podcast, reading our newsletters, reading the books when I come out with them, et cetera. They’re clear, they’re confident when that, quote, red flag of a, oh, it’s annual policy time, comes up. They pay their premiums, they pay their paid-up additions,

[05:47] they make their contribution, and they go right on down the road, either without thinking about it or possibly with being very grateful about it or what have you. There is another set, some that might be listening to this podcast, many people out in the marketplace, that when they get a whole life premium bill, they immediately think, why are we putting this much money in here? I should cancel this, this is not a good investment, this is not doing its job. That even happens to those of us that feel like we do understand whole life because maybe I am in a position where my cash flow is not very good, and so I feel like, oh, I don’t have the money for the premium, or maybe I’m in a position where all my investments are doing awesome

[06:34] and I don’t really see the value in this whole life thing that’s kind of boring and bumping along. It can still happen, regardless of what is going on, and there’s positive and negatives all over the place. The thing that I have realized after so many years of helping myself through this, because I got policy premium bills during times of good investment and questioned, should I really contribute money to this policy? I got policy premium bills during times of poor cash flow and questioned, do I really have the money to move around to make this payment, or is there a way to make it smaller or less or whatever? And so obviously then I’ve seen literally thousands of other people that have dealt with that same situation.

[07:26] And here’s what I can tell you hands down, and that is that our family would not have the financial confidence and capability that we do had we not, for all those decades, paid our life insurance premiums. I’m not even talking about the pay to petition extra fancy part that everybody thinks is so critical. I’m just talking about the base premium for the term insurance that protected our income when it was high and our children were young, and for the whole life insurance, which is building an asset. Now let’s address both sides of it. It’s building an asset. When I’m in investment mode and my investments are good, what does my whole life let me do? It lets me be very confident that even if my investments fail,

[08:20] I’ll be okay, but there’s something more important. And that is I want to let my investments keep doing good, yet I know I’m going to have opportunities that present themselves where I will want cash. Well, I don’t want to stop one investment to create another investment, so I’ve got to create cash somewhere along the way. And that is what paying the life insurance premium does. However, I don’t see the need to take the wealth away from my kids because it won’t give them the disadvantage or advantage. He simply spoke about what he’s teaching them. So here’s the question, as the pendulum shifts, so many parents, they’ll do the thing where they say, I never want my kids to suffer. I never want my kids to have to go through

[09:16] the hard things that I did, but the hard things are the things that made us stronger. So how do you help families navigate that so they don’t screw up the next generation? It’s such an important question and it’s imperative that we pay attention to how we did learn as we were growing up. And I don’t mean how, like did we watch videos or read or listen to audio, not that kind of how do you learn, but the lessons that we learned growing up, how did we learn those lessons? Were they because of a healthy struggle or were they because of a loss or were they because of a win? And frankly, the answer is they were from all of it, yet I love what you’ve brought up because the concept of a healthy struggle

[10:11] has absolutely in many cases of parents been removed and it’s not good. Our children need and our grandchildren, whatever generation you’re in, need, must have the ability to have losses, learnings, winnings, good things, bad things. It’s that thinking that we talk about all the time on our podcast. It’s why our company’s called Prosperity Thinkers. We need to know how to think about these things. I mean, we all saw what happened to the trophy generation, right? The kids that went through that era, I don’t know how this ever got started, but the era of everybody on both teams all the way down to the person that sat on the bench and gets a trophy and the detriment that it caused them because they didn’t learn how to lose.

[11:09] And when we don’t learn how to lose, we don’t get the learnings from the loss and then we keep losing in all aspects of life. And so this concept of a healthy struggle is so, so important. And I have a question that I love to propose that I encourage families all over this country to work with, no matter the age of their children because frankly, there are a lot of families that have adult children in their early 20s that are still either literally or at least financially living under their parents’ roofs. And the question is, would you like more freedom and responsibility? Because we as adults know that with responsibility comes freedom, but as a younger child, we have to learn that trade-off.

[12:05] And so that is a fabulous question to start the financial discussion that the family council needs to guide around money. And that is, would you like more freedom and responsibility? Oh, I love that. That is so good. We can sit around the table with a bunch of high schoolers as you just prepared some documents and training for high school age kids. And they’d say, oh, polymarketing, you gotta do this and follow this bot or this AI or this thing. And a person with wisdom, like in a family council would say, I can learn from this. Let me give you some perspective. So we’re coming to you with some perspective on the family councils. How is it that you’re counseling the next generation, the younger generation

[12:54] and shaping the generations behind them? Well, I wanna tell a story first of a time when I was young and somebody else’s family council had a big impact on me. Aware that there was a need for money for raw land, which is obviously not cash flowing asset. It’s just kind of sitting there, very speculative. And there was awareness amongst a couple people of this opportunity and also of a family member that was young that had capability. She had a trust fund. And everybody thought, oh, well, that’s the solution. Well, she agreed and was all in until her grandfather reminded her that her trust fund had very specific requirements for anything that that money would be involved in. And it precluded gambling

[13:51] and used the word literally as well as some other things that wouldn’t normally be called gambling would often fall under the guise of investing that we all know is not. And so this is the wisdom that a family council can bring forth. And it can be actual blood family. It can be a neighbor person that is helping out. It can be a board of directors. I remember when I was new building my business, it was recommended to me that I create my own little board of directors and present to them my marketing plans and my growth plans and what I was doing and my systems, et cetera. Super, super valuable. That can be the form of a family council. And it’s just that wisdom of experience in life that is so capable and so available.

[14:49] And people that are experienced have time and want to share and love to have a space to tell their stories that can benefit the younger generations and the younger. I mean, it’s not uncommon in today’s world with people living so much longer that you have four generations in a household. How awesome it is that your grandchild can help you program your phone and how awesome it is that you can share wisdom with your great grandchild about money or whatever the case may be. And what is necessary for this to take place is time. Unstructured time. Now, it can happen quickly without a doubt. If somebody’s got a problem, they gotta get on the phone and solve it. Obviously, the value can be shared in that space.

[15:48] But what is more valuable is when there is unstructured time and the generations are just allowed to converse and share stories and create relationships that can stand the test of time to be able to share the wisdom from one generation to the next to the next in both directions. That’s great. I’m gonna push back on the audience on one thing, which is this. And I’m only pushing back because I’ve heard it. And people in the audience, and I don’t know who you are, but I know there’s one, they say, if it’s so important and so good and so natural, why would I have to schedule it? If it’s not happening now, that’s why you have to schedule it. And again, it’s the baby steps. It’s what you mentioned.

[16:39] So incredibly good. Kim, thank you for giving us a couple silver bullets that we can fire off to get our family councils going. And thanks for sharing some of your wisdom with us today. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.