Making Financial Choices

Why You Should be Building Your Wealth.

It begins by deciding what lifestyle You Want Now And in the Future.

What lifestyle do you want now and in the future? While it sounds like a simple question, it isn't for most.

After many years in business and wealth management, I've asked people countless questions about their money.

• How much do you earn?
• How much do you spend?
• How much have you saved?
• What do you owe?
• How much investment risk are you willing to take?
• When do you want to retire or as I believe, reach financial freedom?

Those are important questions, but I believe there is a question that should come before all of them: How do you want to live your life?

Until you can begin answering that question, how can anyone tell you what the "best" financial decisions are for you?

That's why Chapter 1 of our Amazon bestselling book Master Your Cash Flow: Let Them Eat Cake And Build Wealth Too! begins with making better financial choices by determining how you wish to live your life.

Your money should serve what you wish to do with your life. Your life shouldn't be all about just saving and growing wealth.

Whose Life Are You Living?

When I was a young professional, you could certainly compare yourself with your friends, neighbors and coworkers. Today? You can compare yourself with several billion people before breakfast.

Open your phone and you see:

• Someone your age just bought a house.
• Someone else is traveling through Italy.
• Another person claims to have made a fortune in crypto.
• Someone is retiring at 32.
• Another just started a company worth millions.

Here's something I've learned: Comparison is a terrible financial planner.

• The fact that somebody else wants a $2 million house doesn't mean you should.
• The fact that your friend drives a BMW doesn't mean you need one.
• The fact that someone on social media tells you that retiring at 35 is the ultimate measure of success doesn't mean it should be your goal.
• Maybe you love your career and want to work for as long as you can.

There is nothing wrong with that.

• Maybe you'd rather live in a modest apartment and travel three months every year.
• Want four children and a house with a big backyard.
• Don't want children.
• Have a dream to build a company.
• Become a teacher.
• Live in Paris.
• Maybe you'd rather live somewhere where housing costs half as much and you can work remotely.

There is no universally correct life. Therefore, there cannot be one universally correct financial plan or approach to building wealth for financial freedom.

Making The Best Financial Choices For You.

This is one of the concepts I've emphasized throughout throughout my career.

Suppose you're 28 and have $10,000 available. Your choices could be:

• Investing it
• Paying down debt
• Down payment for an apartment or a house.
• Keeping some of it for emergency cash, starting a business or traveling around Europe for three months.

The traditional financial answer might be: "Which choice produces the greatest financial return?"

I think that's the wrong question.

The better question is: “Which choice best helps me achieve the life I want while understanding what I'm giving up to make it?” That's very different.

Suppose that three-month trip through Europe is something you've dreamed about for years.

Could investing the $10,000 potentially produce more money over the next 40 years? Of course.

Does that automatically mean taking the trip is financially irresponsible? No, but understand the trade-off. That's the key.

You're not simply spending $10,000. You're giving up what that $10,000 might become if invested.

Once you understand that, make your choice. Maybe you decide the experience is worth it. Great, go to Europe. Enjoy every minute! And don't spend the entire trip feeling guilty because some financial expert told you that you should have put the money into an index fund.

You made an informed choice based upon the life you want. That's financial planning.

We Don't Believe You Should Wait Until 65 to Start Living

Sometimes financial planning is presented as punishment.

• Don't eat out.
• Don't buy the car.
• Don't take the vacation.
• Don't buy the shoes.
• Don't order the latte.
• Save and invest everything.
• And if you're very disciplined for 40 years, someday you'll have permission to enjoy yourself.

We have a problem with that. What if someday never comes? We've lived long enough to know that life doesn't always follow our financial projections. Careers change. Relationships change. Opportunities come and go.

And sometimes the things you're physically able to do at 30 aren't the things you'll want or be able to do at 70.

That doesn't mean spending everything today, that's equally foolish. The challenge is balance.

Enjoy some of your money today. Save some for tomorrow. Invest some so it can create more choices in the future.

We don't want you to be 35 and broke because you spent every dollar "living for today." But we also don't want you to arrive at 70 with $10 million and realize you postponed your life for 45 years.

Financial freedom should include today as well as tomorrow.

Every Dollar Represents a Choice

This is why cash flow matters so much. When money comes into your life, you decide where it goes. Sometimes consciously; often unconsciously.

• Housing.
• Food.
• Transportation.
• Entertainment.
• Credit cards and loans.
• Travel. Clothing.
• Hopefully savings or investments.

Every dollar you direct toward one category is a dollar you cannot direct somewhere else. That's not good or bad. It's simply reality.

Some economists call that an opportunity cost. We call it making a choice.

Let's say you earn enough to either lease a $900-a-month car or drive something less expensive and invest the $500 monthly difference. Which is correct? We don't know for you.

And anyone who gives you an answer without knowing what you want from your life doesn't know either. Maybe cars are your passion. Maybe every morning when you walk into the garage and see that car, it makes you smile.

It’s essential to understand what you're choosing. That $500 a month has another possible life. It could become an emergency fund. An eventual apartment or house down payment. Capital for your future business.

The ability to take a year off at 45. Or maybe the ability to stop working years earlier.

Once you see both choices clearly, you can decide which one matters more.

That's what financial education should teach you, not simply what you're allowed and not allowed to buy, but the consequences of your decision.

Your Greatest Asset Isn't Your Salary

If you're 25 or 35, you may look at someone who is older and has accumulated several million dollars and think: "Of course financial freedom is easy for them. Look how much money they have."

Fair enough. But you possess an asset that wealthy people in their seventies would pay almost anything to acquire. Time.

You may have 40, 50, perhaps 60 years ahead of you to earn, save, invest and allow compounding to work. That's enormously powerful.

A relatively small amount consistently invested when you're young can have decades to grow. But time provides another advantage that doesn't appear on your brokerage statement.

Time gives you room to make mistakes. You can choose the wrong job and change careers.

• Start a company that does not make it.
• Make an investment mistake.
• Discover that the life you thought you wanted at 25 isn't the life you want at 35.

You have time to adjust. Use that advantage. Take the time learn more about financial education and planning.

Your Definition of Wealth May Change

Here's something else I can almost guarantee: What you want today will change.

• At 25, perhaps success means a great apartment in Manhattan and enough money to travel.
• At 35, it might mean a spouse, children and a house.
• At 45, you may want to leave corporate life and start a company.
• At 55, your definition of wealth may become having enough control over your time that you never again have to attend a meeting you don't want to attend.

Be open to change.

A financial plan today isn’t a commitment for life. It can be flexible and change. Your financial plan should evolve because your life evolves.

I've changed many times. My goals have changed. My businesses changed. My definition of success changed.

And after selling my wealth-management firm, I found myself with the opportunity to spend more time writing, traveling, studying classical piano, researching my family's genealogy, reading and cooking.

Those things don't necessarily make someone wealthy on a balance sheet. But they are part of what makes life rich. That's an important distinction.

Money is measurable. Wealth is personal.

Financial Freedom Doesn't Necessarily Mean Never Working Again

What do we mean by "financial freedom"?

Social media sometimes presents financial freedom as lying on a beach at 35 while passive income magically arrives in your bank account. If that's your dream, fine.

• To me, financial freedom is about choices.
• Working because you want to rather than having to.
• Being able to leave a job you don’t like.
• Take the risk of starting the company you've been thinking about.
• Helping your friends and family.
• Being able to say no when you want to say no. This last one may be more valuable than many people realize.

Money doesn't guarantee happiness. But properly managed money can buy you options in life. And options give you greater control over your life.

That is why cash flow matters.

Sometimes it is difficult to think of life 20 or 30 years from now. So, start looking at what you would like life to look five years from now. Then you may start to be able to look longer as time goes by.

You May Make Some Bad Choices Along The Way

I certainly have. I've made business and financial decisions I'm proud of but I've also made some I would love to have back.

But financial success isn't about making every decision perfectly. Nobody does.

It's about learning, adjusting and making enough good choices over enough time that you continue moving toward the life you want.

Don't allow one bad financial decision to convince you that you've ruined your future. Learn from it and move forward.

Focus on making decisions that are aligned with helping you live the life you want now and in the future. Accumulate money but build wealth too.

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