Bulletproof Wealth: Four Keys to Economic Self-Reliance

The most recent world event to have affected many Americans’ bottom line is the COVID-19 shutdown. Many people were unable to work, whether due to business closures or quarantine. Businesses dependent on physical patrons were hit hard, especially if they were unable to pivot into a digital presence. In the past, government shutdowns caused similar issues. Now we’re getting over the hill, yet the implication remains: what happens when you’re not allowed to work? More specifically, how can you increase your own economic self-reliance, even as the government goes on strike for lack of funds?

Regardless of your job, your business, even your investment strategy, “stuff” will happen. It’s unavoidable. However, you CAN avoid derailing your Prosperity when the unexpected happens! The real question is, how can you prepare for the unknown and continue to prosper in spite of it?

Bulletproof Wealth by Practicing These Four Keys

Economic Self-Reliance Key #1: Take Your Income Into Your Own Hands

Self-employed people are much more likely to become wealthy.

Doctors, lawyers, accountants, and other self-employed individuals are more likely to build wealth, as are all kinds of business owners. Simply put, a W-2 job is not necessarily the best path to wealth. If you have an entrepreneurial spirit, you increase your chances of building significant wealth. According to a study by financial author and expert Bert Whitehead, while only 20% of our population is self-employed, 75% of millionaires are self-employed.

There are several reasons for this correlation. First, when self-employed people develop the ability to find customers and make sales, they become immune to unemployment. Second, those who work for themselves create their own income, and can raise their own ceiling. Last but not least, being an entrepreneur develops a different mindset than that of an employee.

Anyone who owns a successful business has learned valuable skills, from the secrets of managing time, people, and money, to how to generate sales with marketing. Yes, these skills can help you land a better job. Yet, they can also eliminate the need for a job, or allow you to start a profitable business either full time or on the side.

Self-Reliance Key #2: Diversify Your Income

You don’t want all your eggs in one basket. Neither do you want to limit yourself to one goose.

Most everyone understands the concept of investment diversification and asset allocation. Don’t put all of your dollars into the stock market, into bonds, or into one type of real estate. But what, exactly, is income diversification? When it comes to income, diversification looks like having more geese laying those eggs.

While self-employment and business ownership may make you literally “fireproof” in terms of layoffs, business owners can still be very vulnerable when their source of income is too limited. For example, a real estate investor who only bought New Orleans properties would have been severely affected by Hurricane Katrina. Likewise, a book publisher who does not flex their business model to reflect trends such as Kindle or the ever-growing book communities on social media might fall behind.

However, when you are an entrepreneur who develops multiple streams of income, including passive income, your income becomes truly diversified and secure. If one income source slows down, you have others to still lift you up. Generating reliable and diversified income is an important step to building bulletproof wealth, but making money is only the first step to creating wealth.

Self-Reliance Key #3: Save Like a Millionaire

The average millionaire saves more than 15% of their income and could live comfortably on their savings for more than 12 years.

While the average American thinks millionaires are the folks who drive new luxury vehicles and live in big houses with views, this is a mistaken view of the wealthy. Indeed, when Thomas Stanley and William Danko started interviewing the wealthy, one observer (who leased a new luxury car and wore a $5,000 watch and designer suits) declared: “They don’t look like millionaires, they don’t dress like millionaires, they don’t eat like millionaires, they don’t act like millionaires…. Where are the millionaires who look like millionaires?”

Their research became the basis for The Millionaire Next Door, which found that most millionaires considered themselves frugal. The great majority of millionaires were self-made, drove later model cars, preferred roast beef sandwiches to caviar, and lived nonchalantly in middle-class neighborhoods.

Spending vs. Keeping

We’ve all heard that “it’s not about how much you make, it’s about how much you get to KEEP.” And it’s true. The hundreds of millionaires interviewed by Stanley and Danko reflected this theme. For them, money was the ticket to freedom and independence, not something to trade for consumer goodies and status symbols. The median household income for the millionaires interviewed for the book was only $131k. And they attributed their financial success not to the size of their income, but to their ability to save and invest a large portion of it.

But what if the money you save so diligently isn’t safe!?

In the last few years, we have seen first-hand the instabilities of the government, the stock market, the economy, and the real estate market. It has been said that the only constant is change, and much of that change will not be in your wallet’s favor. Which leads us to…

Self-Reliance Key #4: Don’t Leave Your Wealth to Chance

A fool and his money are soon separated — so don’t be foolish with your money!

One way to make assets vulnerable is to put them in someone else’s control. When your dollars are subject to market crashes, never-ending fees, and unnecessary or future taxes (especially at yet-to-be-determined rates), wealth-building becomes unpredictable at best.

Robert Allen once asked in a seminar, “Do you want to get rich quickly or slowly?” Most of the audience members shouted back, “Quickly!” Yet the answer Allen was looking for was actually “BOTH!”

As he explained, before any investor goes trying to double or triple their ROI, they need to learn how to “get rich slowly.” After all, that should be the simple part! But too many investors are so busy trying to “time the market” or find the magic stock-picking software that they never learn how to save consistently. Then, they make matters worse by trying to compensate for a lack of savings with even greater risks!

Save Money into Certain Assets

Once investors establish consistent, automatic savings habits into vehicles with certainty (like whole life insurance), they are ready to diversify into other investments. Sure, you can accelerate your wealth-building by finding investments with higher rates of return. And at some point, that’s ideal.

Yet very few wealthy people are willing to take the kind of risks that average Americans are talked into taking every day by 401(k) administrators and typical financial planners. We have come to equate “investing” with speculating, or worse, gambling with our assets. We purchase shares and cross our fingers that the price goes up. Meanwhile, Wall Street hedge funds bet against us and high-speed trading machines skim the profits for institutional investors.

The wealthy don’t gamble with their hard-earned dollars. As a matter of fact, Stanley and Danko found that millionaires held only 20% of their assets in the stock market, preferring to keep the balance in business assets, guaranteed investments, and real estate.

Are You Ready to Create Economic Self-Reliance?

The economy is an unpredictable beast, and it’s at the mercy of dozens of outside forces. In a world where you’re encouraged to rely on others for your wealth, seek economic self-reliance instead. Building bulletproof wealth that carries you through a difficult economy is important to your Prosperity. We can help you get off the stock market roller coaster and start automating your savings. Using whole life insurance to save and create opportunities, you can achieve economic self-reliance.

If we can help, we invite you to connect with us or email your questions directly to welcome@prosperitythinkers.com.