When it comes to creating stability both in your business and your life, its very important to have a financial plan. In this presentation Mike is going to discuss the 6 steps to creating wealth. He also shares what goes into designing a truly holistic plan geared around your business, dreams, current and future financial resources.
Hello, everybody. Welcome back. This is Masha here with you. Brent Summit. Thank you for Drew. Many us whether this is your 1st 1 that you're looking into or you've been with us to this whole week. We have some incredible speakers to finish up the week, and we have another week coming with absolutely incredible information. Um, and right now, I'm so excited to present to you once again, Mike River Mike is a two times best selling the business author, speaker, Coach Mike, skills and capabilities of Patricia building relationships, growing different businesses and ready a book with his younger daughter on secrets of raising financially seven kids has helps to make him the father and transformational business and wealth coach that he is today. He offers a bonus of having a real estate, business, insurance and financial planning background, as well as being an investment advisor representative with Global View Capital Advisors. Welcome, Mike.
Thank you. Great to be back. You with the guys. I look forward to sharing great information with the and closing out the first week when I closing up. But second, closing up the first week with some, but I think it was gonna be a very timely points awesome. And I would like to begin with the six steps to creating well in today's again. The purpose of today is to educate our listeners on the six steps to putting together a financial plan. We will sit down with the client other different things he put together to make sure that we were able to design the plan around one's goals the dreams, the current budget, et cetera, and or if a person's doing it themselves, making sure they have the proper foundation to build off so that when they're putting their own plan together, when they're kind of building up the financial house they're doing with the silent financial foundation. So going back to the six steps to creating wealth step number one properly budgeting and understanding cash flow Number two. Having proper insurance protection. Number three having sufficient emergency reserves, eliminating debt. And finally it comes to savings for the long term is kind of interesting because people think of a financial planner and a visor as work with the planning site. But really, if you noticed these here are a lot what goes into the plan and that doesn't get into the cities but long term worship. It's making sure the foundation is solid first and then as your cap everything off You look at the state and legacy planning, which once again is really important when I get to this point out share why right now with what's going on out there having there's a couple of things that's very important that you look at. So starting with the first step, creating a proper budget and understanding cash flow, which, in essence, is the amount of money you have coming in to your business or in tear family each month versus the amount of money or expenses you have going up.
So, Mike, if I understand correctly, I heard that you had You can say you should be able to save 10% of your monthly income on a regular basis. Is that correct?
Well, yeah, it's a great rule of thumb, however. One of my pet peeves with that raises a fire Italiano. Masha is very important that you say 10% of all you make that's great if you already have 10% set aside, but I've been a lot of people when I sit down with them or when I talk to them. They have $3000 coming in and they may have $3000 or or $3100 going out. So if I tell that person you should save 10% they're gonna say, Yeah, right. When I have 10% I will. And because of that, they often don't get that far because they get stuck trying to get there. Right? So there's a phrase that I like called percent bikes. So instead of trying to get 10% right away, stare with 1%. So, as example, if we have $3000 coming in and you have $3100 going out, figure out how to restructure your expenses so you can get down to 3000. Right then the goal is that positive cash flow at the end them up right, So now wouldn't percent to 3000 is $30. So how can you now restructure to get the $30 then go for 2% and in 3% and on and on until you get the 10% and I find that people start with 1% and work up the 10%. It's amazing how fast a lot of attention, how fast would restructure expenses, perhaps make a little bit more money and very quickly people you to get to where now they're living in 90% off what comes in and they're saving or investing 10% of that. So, yes, that's a very good rule of thumb. And most people, I hope, are able to get there quickly. But if a person is not there yet and look at taking percent bites first
Awesome. That sounds great. Very doable, Thank you percent. Yes,
I think a lot of people I talked to are able to now the second step. And for those who've been going back to budget for quick those of you who think budget is a dirty word spending plan have a spending plan, a place where you sit down and look at your expenses, and one of the expenses of the larger expenses for a lot of people can be insurance, right? So, having proper insurance protection now, there are different types of insurance because property and casualty you have insurance on your car, your house except Tre. There's health disability like assurance, a long term care when I referred to as proper insurance protection. What I'm referring to is, it's important that you aren't paying too much. As exactly years ago, I had a limousine company. I bought a brand new limousine and the limousine costs $80,000. And, of course, that's what I insured it at at the time. Well, like any new car, when you drive it off the lot, it starts to depreciate quickly. So after about two years of pointing this car, it was now worth $40,000. Yet I was still paying. Sorry about that. Has still paid. Next, still paying insurance. I'm 80 $80,000. Yet the Blue Book was 40,000 right? So seeing out my insurance guy and doing our annual review, he questioned by paying the full amount. So long story short, we reduced the insurance down. The 40,000 which cut about $500 off of my insurance because of being business insurance, was higher anyway and allowed me to not pay too much. The flipside is paint, too. A little insurance when I mean by that is another example person. I knew that was a very successful entrepreneur, he eventually sold his business. It was getting ready to retire, and unfortunately, his 16 year old daughter slid in the rain and hit somebody with a car and killed the person. And now he wasn't a horrific situation for her and obviously everybody involved. But because he had a proper insurance protection, they came after his personal. It's personal savings, and Premix ruined him financially. Had he had an umbrella policy, which is about $200 so a year policy on his insurance or in private insurance package, it would have sidestepped allowed that financial loss So, unfortunately, still would have had the personal loss. But they released Financial would have been okay. So it's important to make sure that a person is always looking at their insurance plan and ideally, having it revealed the least once, ideally, once a year. It's amazing. I'm hereby talk to you. They sit down with the assurance Bruce and every couple years if that people pay their monthly payment or their annual payment, and they don't really think about it much after that. And as life changes, so does the insurance that you should be holding. And that's why sometimes people pay too much and over too little another one. That's very important in especially in today's world. Is life insurance having now? Not every situation is life insurance necessary, but there are certain times when it can be a major. Um, life's a lifesaver. As an example, a friend of mine and I were at a conference a while back and he asked the presenter We both knew pretty well should he buy life insurance and presented looked at him as a Do you love your wife, Tom? And he said, Of course, Brian, Of course I love my wife, but should I get insurance? Do you love your wife again? Yes, I do. I was thinking insurance, and on the way home we talked about it in unfortunately time and it'll be life insurance. And a month later, two months later, I think it was. He had Anoma by accident, and then Fortune was killed. Luckily, he had insurance and cup in place, so his family was protected. Granted, his family still lost their father, their huh, his wife's husband. And that wasn't obviously good, but at least by Nancy, they were okay. So again, Matt, that I want to keep beating insurance up, but there's a time and place for insurance. If they haven't said that, I want somebody in a while. I suggest that you have someone look at your property casualty, perhaps life or health and disability, or even long term care. There's a lot of different types of insurance that you want to look at and make sure you're not paying too much, but also make sure that you aren't protected, too.
Thank you so much, Mike. I mean, I I understand that these are very hard topics for people to hear. Um, in general, people try to avoid the surface, but they're so important and now, more so than ever with what we have going on, it feels like this is the time to really talk about these issues and talk about this, you know, in the full reality of it. And how much do you love your family and how much? How much do you? How much do you need to know? How much do you need to make sure that you're not overpayment? You're being protected, So thank you for raising these these things up for people to talk about, to give people the opportunity to talk about it.
Definitely. And yet you write. It's never really a fun topic, but I think it's an important topic, especially in looking at protecting one's financial foundation. Absolutely. And another few reasons. Baekje Insurance is important as it gives a solid financial plan. Protective family business of loved ones can be used to leave. Inheritance or legacy certainly can be used to pay up that, such as a mortgage in the loss of a loved one this week in taxes, bench withdraws that can be made as well as an ultimately adds to financial security and peace of mind. And now, the third and probably of the 31 of the more important areas is having sufficient emergency reserves. I'm a firm believer that if you and fight invite Murphy, tow a party or invite Murphy over, he won't show up. Murphy, Lexus Surprise people those of you who know Murphy's law so again being properly protected, and part of that is having emergency reserves. There are different rules of thumb, but I personally suggest between 3 to 6 months of your living expenses. So if a person has, let's say, $3000 a month going out or $2000 a month going out, you should have at least three months. So if you have $2000 a month going out, you have 6000 other way up to ideally six months. Oh, reserves in place so that heaven forbid one should lose their job or something happened. So you get that flat tire that you have reserves set aside to cover those unfortunate situations again, taking the stress and financial urgency off of one's family. The forest step to creating well, is eliminating death.
No, with that Mike, I heard that, um, some people would want to miss it naturally. Spend all of their remains after bills and everything to pay up that. Is that a good idea?
Yes, I know their secret. Was that them with that? My own personal philosophy is that should Yes, if you have that and you have disposable income or extra money at the end of the month, you should definitely apply. It was paying off debt, but going back to the cash blow or the emergency reserves scenario. I think it's important that you also developed a habit of saving money. So let's say as example, we have an extra $100 but by $50 towards paying off debt by $50 towards savings and by doing both your continuing to bring your debt down right. But at the same time, you have your savings grow, which creates stability. When's lifestyle that goes back to a lot of intention. If a person is proactively saving as well as paying up death, that that's gonna go down fast and they're going to continually to have their savings increase. So it's very important. I think that a person does both at the same time. And another scenario is it goes back to what is your financial dependent number? Independence number, which really is having enough money coming in on the monkey basis, Ideally, pass it through. Could be retirement savings. It could be multiple ways of having money coming in income. Certainly. Why what's working? We're having enough money coming in to pay for your monthly expenses, and by eliminating debt, it keeps him of the expenses low. So by the time one is already retired, be through so security and other forms of could be a pension, other forms of, um, ongoing passive income as it is no longer having to be earned that day. It's from past work, past investments, except that create that income, that it's enough to cover your desire. Living expenses. Really, that is what you truly being financed independent into having $1,000,000 or $10 million. It's having enough money coming in again passively through your investments. Interest on your vestments, et cetera, to cover your desired standard of living
makes sense. Awesome
thanks, which now brings us to the fifth and a once a fine of a close the final step of sings for the long term. And when it comes to savings for the long term, there's a phrase that Ellen, I'm saying, referred to as the eighth Wonder of the world and its compound interest and the reason why it's very important to start saving when you're young, like in a book that Sabrina and I wrote Secret to reason fans. Just Abby. Kids re teach kids how, when they're very young, this just start preparing for the long term. They put money away for a short term, mid term and long term savings retirement as an example, and over time through compound interest, a month that you saved the day continues to grow upon itself. In fact, we teach kids well, often. Ask them if I were to give you a penny and double it every day for 30 days or give you a check for a $1,000,000 which would you take it? It's funny. Most kids would say
I'm $1,000,000 out of a
$1,000,000 today. Who wants a penny? Right? You can stop what? Every day for 30 days. It's not very romantic, but a 1,000,000,000 bucks that a lot of kids get, say about fortune is eyes a few that figure this Probably It's a trick question and they say, OK, we'll take the country Well, she looked for a second the 1st 15 days. Those who took the pen, your thinking room, maybe I share took the $1,000,000 even up until you get to like day 20. Year day 26 Day 27. You're still thinking, man, I should take the $1,000,000. But now what happens? Because compounding right by the time it gets the day 30. It's now worth $5,000,368.709. That wasn't 12 sets, right? So again, now granted real life. We don't get the double our money every day. Be nice if we could but doesn't happen that way. But there is a rule called the Rule 72. And what that does is it tells you that you take the return on your investment interest as example that you might get the office, see the year for a different investments of what might have, and you take the return on investment. Then you divide it in the 72 that tells you how many days is gonna take the double. So what happened every day? No, but if you take as example $10,000 for a 29 year old and they earned 4% a year on average off of that, by the time you're 65 will have doubled twice. So foreign 72 is 18 years, right? So 29 47 is now 20,065 40,000. So, of course, just not real exciting. But it's also only 4%. However, what have you got? 6% on it. Six and a 72 is 12 years. So now it's going to double four times, right? What if he got a percent? Now it's going to double five times. So, as you can see through the power of compound interest is very important that you if you just take the money and put it in a savings account as an example, or put it in your pillow and it doesn't have the ability to earn interest or to get a return on the money saved, it's gonna take forever toe board to grow right. But through proper savings or investing, you're able to bring your return that allowed to continue to double. And now let's as example for person had 12%. And again these air just example numbers. Whether one could do there, that's a different conversation. But hypothetically, if you could after with six times seven times a doubly now they're going to have $640,000 versus the 40,000 so you can see the return that you get on your vestment is very important. Question. I ask a lot of younger people in even midterm Peep, which kind of goes back to debt reduction scenario, is if a person is earning 4% like saying to bake, and right now I don't know many banks. L'll give you 4% but hypothetically, if you could, and you're only earning 4% yet you're paying 12% interest on a credit card or in a carload or other debt that people have. It's no wonder why people are struggling so hard to get caught up and to save for the future. So my philosophy is pay down debt as much and as fast as you can be careful not to get into too much. Bet that if you can avoid it, there's a good tenant. Is bad Dad and his times foreign, obviously. But continue to grow your savings at the same time of building out the other pieces of your plant. And if you do that through the love 72 you're going to be able to see a great retirement. Now. The six and certainly not least step is estate and legacy planning, and this is one of those things that I think a lot of people miss because they say, Well, if I have a lot of money, sure, all planned in hiring a state attorney, our plan for my estate goes. Think of a state is having a lot of money, but there's certain things, as example, with a lot of medical laws that came out having a durable power of attorney. Right now, especially, this is something that this is probably the biggest takeaways. If you don't get anything out of this conversation that we have today, when the biggest things is, if you have 18 year old kids or a spouse, make sure that you have a durable power of health attorney on them for health care. Because, as example, if you have an 18 year child and the child ends up in the hospital, by law, that doctor are limited on how much information they could tell you. Same thing with the spouse and with all the stuff that's on the news right now. This is Maur important than ever to make sure that we consult an attorney, that we make sure that the legal side of our financial plan again having a will if you don't have a will and you're especially if you have kids or assets and if you have 18 year old Children or older, or even if you are married, having that durable power of attorney for health care so that doctors have the flexibility to tell you the answers that you are going toe. Hopefully never need to ask, but when you do, you're certainly going to want those answers. And it's something as simple as a piece of paper convicted. How much a doctor can tell you. So I know I do a lot at you over a short amount of time, and I'm glad this is being videotaped because you could go back and watch it again. But I also want to kind of threw out to the next steps I would recommend for you is if you're interested, we offer no obligation, no cost analysis of a current financial situation. We're always here to help you. Our goal is to make sure that families are individuals, that businesses had the financial foundation in place to ensure that you're able to live the life you deserve and with proper planning. There's no reason why people, especially if you start when you're younger. There's no reason why you can't design a really good financial future, and if you're not as young, that's all right. There's no reason that you can't go back to tweak a few things to still build that financial creature that you want to desert. Even if you do have a plan because they're getting a second opinion again. If you have any questions by contact, information is down here. I really enjoyed sharing this time with you. And I'm always here for you if you should have questions moving forward.
Awesome. Thank you so very much. Mike, that was wonderful. And such a boring information right now and always. Um, I hear you also have a gift for us, though. Keeps us a little bit about that.
Yes, that is for sure. It is going to be one of the things that point together financial plan for somebody. We want to look at the, um, wanted look, I might take up the screen, share real quick so that you and I can Can I go back? It's, uh, daily program called Attends Secret to creating wealth. And I'll give you a link. And from that link, you're able to download an e book. That kind of goes through the process of putting together plan. A lot of things I shared with you today that allows you to go through with yourself and it also every day anew. Every two days, another lesson will come to you in your email. So over, of course, off 10 15 days, you're able to put together your own financial plan. And again, if you could do it yourself. Great. Do it if you want help. We're always here for you. But my recommendation is start now.
Awesome. Thank you so very much. My all the information as well as the gift, will be a double under touch for Miss Bullets. All of the other videos Mike enclosing. Do you have anything else to add to our speakers today?
No, I think that's it. I mean, my most favorite phrases when there's two of the number one is, if you feel the plan, your plan to fail, So make sure you plan today and number two is You don't have to be great to start, but you have to start to be great. So we've given you over the course of this last week and going into next week a lot of really cool things to bring into your business and to start doing if they haven't already started doing them, and I promise you if you take all the things we share with your again this week and next week and put them into your business, Katy, bar the door. Success is just a matter of time.
Awesome. Thank you so much, Mike. Thank you for joining us again.
You're welcome. I look forward to next time.