What are your "Big Rocks" and how are you planning for them?

Gregory Kalush - Tuesday, July 11, 2017

What are your "Big Rocks" and how are you planning for them?

It's never too early to focus on the important things in life - and figure out how to afford them!

You probably remember the story of the college professor who brought in a beaker and filled it with big rocks, then asked his class if the beaker was full. Of course, they said "yes," -- but then he proceeded to add smaller pebbles, then sand, then water. Each time, he asked his class if the beaker was full. The moral of the story was twofold: it illustrates that you must prioritize and orient your life around the"big things," but also shows there are many"other things" that can distract you from your priorities if you let them.

Identify Your Big Rocks

The same priority setting process is important when managing your personal finances with an eye toward creating wealth for your family. I began my journey into financial planning and personal wealth creation by doing precisely what this story foretold, I started with a clear understanding of the "big rocks" - things that would require many years to prepare for, and I started EARLY! Examples of some of these things for me were: a down payment on a house, saving for my children's college educations, retirement, etc. Things that would have distracted me, if I had let them were: fancy cars, partying or vacationing lifestyle, and other "things" that gave an outward appearance of financial success, but that did not contribute to wealth creation. These things are like the "sand" in the story - on their own, they don't seem to matter all that much, but they can sure chew through your attempts at creating a nest egg for your family!

It might surprise you to know that I oriented these "big rocks" into buckets and began saving for them even before I had a wife, a family - or was even engaged to be married! Why did I do this? It's simple! Saving to achieve a specific target is made up of two fundamental components: 1) time; 2) the amount saved. If I had waited until I had a family, a mortgage, and a comfortable lifestyle, then I might not have had the resources to begin putting away money for the "big rocks" and I would have lost the benefit of time. But by starting very early, I did not have to put away as much money each month because I had the power of compounding working with me, and I also never allowed my lifestyle spending to catch up to my earnings - thus beginning a lifelong process of wealth creation!

The same prioritization is required for business owners. Often, they reinvest most, if not all their financial resources into their businesses, which is understandable given their level of commitment to the success of the business. The issue is that they become very "single threaded" in their investment profile, and if anything happens to their business, they lose both their financial resource and their time to recover. A good plan will diversify this risk, and help build wealth methodically.

Don't Get Distracted By the Sand

Wealth creation appears to be a lost art in America. Since about 1985 the percentage of "take home pay" that is saved by American families has been on a steady decline. Apparently the "appearance of wealth" is more important than the actual creation of wealth. Only about 20% of American families financially plan for their future, and as a result 80% of American families will leave the workforce with little or nothing to fall back on in retirement. The Social Security system is rapidly defunding, and each year it is reported that it will go bust a few years earlier than previously predicted. It is now estimated to be broke by 2032, a mere 15 years from now.

Young Americans must be establishing their personal financial wealth plans even more diligently than their parents if they hope to retire one day, but sadly this is not the case. Personal consumer debt, led by credit card debt, increases each year, and personal savings declines each year across our nation. Sadly, the average net worth of a "retirement age" American (age 65) is only about $27,000 once home equity is removed from the equation. That represents about 3 months of living expenses for the typical American family.

It's Never Too Late to Refocus on Wealth Creation

Yikes, if this hasn't gotten your attention, I am not sure anything will! Every one of the tragic facts mentioned above is avoidable, and you can start the process of wealth creation from the moment you decide to do so. It really doesn't matter where you are, only that you are serious about your ability to create wealth, and diligent about achieving that goal. The process is actually pretty straightforward, and easily understood, you do not have to be a financial genius, but it does require that you choose the priorities in your life, and orient your lifestyle in a balanced way so you have room to save for these "big rocks."

I have been helping people establish these plans for more than 15 years, and if they start early (in their 20's) the average age to their first $1 million dollars of net worth is typically 42-44 years old. These results are not because these young couples make $200,000+ a year, typically they make less than $100,000 combined, but by deciding what is important in their lives, establishing a plan to ensure success in funding those priorities, and orienting their lifestyle around those priorities, they are able to achieve their goals while living life in a balanced way!

So, if you find yourself anxious every time you think about your personal finances, then why not call for help and establish a path to financial freedom? Isn't this what you have always desired?

Gregory Kalush works in cooperation with Springboard Consulting to provide risk management and wealth management guidance to clients. Greg has been teaching and mentoring people about personal finances and helping them to properly plan for and achieve their financial goals for more than 15 years. He has honed the wealth planner process, approach and tools with the singular purpose of giving people the skills, tools and encouragement needed to achieve their financial goals and walk in their destiny. Professionally, Greg's career has spanned all levels of a corporation, from Chief Executive Office (CEO) and Chairman of the Board, to Chief Financial Officer (CFO) and Vice President of Finance, and Corporate Treasurer of publically traded companies. Greg's career has always been centered around his expertise in finance and operations, and as such he has served in leadership roles in these disciplines at International Business Machines (IBM), Digital Switch Corporation (DSC) and most recently at Interphase Corporation.

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