If you’ve been reading our blog for a while, you know that we’re constantly preaching about controlling your cash flow. And you may be wondering, why do I need to control my cash flow and why is that even important? Well, if that sounds like you stick around to the end of this blog because today we’re going to cover why controlling your cash flow is so important and how to regain control of your money.
So, you graduate from college, you get your first real job, and you start saving for retirement in the company 401k, 403b, or other company-type retirement plans. You’re moving yourself forward, or so you think, because you’re saving for retirement. It seems to be the responsible thing to do. Unfortunately, that literally separates us from our money when we need it most, obligates our cash flow towards that retirement, and holds us back. But how does it hold us back?
Let’s say from the time you start working to the time you retire, you’ve accumulated over $1,000,000. Well, think about this. When you started saving in your twenties, a dollar bought you a dollar of goods and services. But when you retire, it’s not the same dollar. That dollar is worth much less, probably closer to $0.69. So now your million dollars doesn’t have $1,000,000 of buying power, it only has $690,000 of buying power. But it gets worse because now when you take money out of that account, you’re taking it out on the million and you’re taxed on the million. So let’s say you’re in a 25% tax bracket. Poof, there goes another $250,000 of the million dollars. Now you’re down to $440,000. And when you do the math, you might have a net rate of return, net of taxes, and purchasing power of about 1.5 to 2%. Now, what you don’t realize is that in order to get a 6 or 7% rate of return in your retirement account, you had to put your money at risk every single day for over 40 years.
So let’s summarize or recap exactly what happened. You made the responsible decision to save for retirement in a government-qualified retirement plan. But what you didn’t realize is:
- Your money was exposed to the risk of Wall Street.
- Inflation ate away at the buying power of your money.
- The government is going to take a big chunk of the money when you take it out in retirement.
So you’ve separated yourself from your money, from your cash flow. And under the idea that you’re going to move yourself forward. But there are so many forces pulling you back that you don’t see that it’s almost impossible to get ahead financially.
Now, let’s just take a step back. We’re not saying you shouldn’t be saving for retirement. In fact, you should be saving for retirement. But what we’re suggesting is that you save in a place where you have complete liquidity use and control of that money everywhere along the way so that you could reach your financial goals, not just in retirement, but everywhere along the way, because we have to live along the way. And we want you to do that without being dependent on banks and credit cards for access to money or the government rules to access your money or Wall Street to grow your money efficiently.
When it comes to your monthly cash flow, every decision you make has a ripple effect. So you chose to save for retirement in a qualified plan, but you don’t have access to that money. So what happens when you want to go on vacation, send your kids to private school, do a home improvement, or buy a new car? You’re forced once again to go borrow. And what does that do? It further pinches your cash flow. That’s the ripple effect. And with every ripple you make in your monthly cash flow, it gets harder and harder to save in a place where you have liquidity, use, and control of your money.
So let’s start with answering the question: Why is controlling your cash flow so important? And to answer that, let’s take a look at all of the ways that the government, Wall Street, and banks systematically get their hands in our checkbook every single month. Oftentimes, they’re in there so much so that we’re not saving for ourselves, for our future, for our families. It’s really simple when you think about it. Financial institutions, large corporations, the government – they have rules. And those rules are really simple:
- They want to get our money.
- They want to get our money on a systematic basis. Think about all the monthly subscriptions, the auto pays, etc. that you have where you freely let people in or institutions into your checking account.
- They want to keep our money as long as possible.
- When it comes time to give us our money back, pay it back to us over as long a period as possible.
Those four rules are cardinal to their financial success, and that’s what we say: If it’s important enough for them to implement those rules, then it should be that much more important or us to follow those rules to benefit ourselves.
Think about the impact it would have on your life and your family if you were to implement those four rules for yourself instead of having them serve the government, banks, Wall Street, everyone else. They could be serving you and you could finally be in control of your cash flow. And that’s why it doesn’t matter how much money you make. It doesn’t matter if you make over $1,000,000 a year or if you make $50,000 a year. If you’re not in control of your cash flow, you’re not in control of your life. It’s really simple.
The government, financial institutions, Wall Street, and banks, they want to, they need to, separate us from our money. And they do it by convincing us that it’s actually moving us forward. And in the process, they get to control our cash flow, they get to control our money, and ultimately they control our lives. Because one day you wake up and you’ve got retirement deposits, you’ve got car payments, credit card payments, mortgages, home equity loans, you name it. And the next thing you know, your cash flow is pinched and you feel out of control. A lot of times people come to us and they think, “If only I earned more money, I could finally reach all my financial goals. I could finally get some cash flow relief.” But that’s not true unless you start making your money and your cash flow more efficient. The problems are going to continue to compound as your income grows. It’s sort of like you have a bucket filled with holes and in order to fill that bucket with water, you have to first plug the holes. And that’s where we can help you regain control of your money. It’s money that’s literally hiding in plain sight. It’s in your cash flow. You think it’s moving you ahead, and it’s actually holding you back.
If you’re finally ready to regain control of your cash flow and stop being at the mercy of government banks and Wall Street, be sure to visit our website at tier1capital.com. There’s a free web course that goes through our exact process, step by step. Or if you’re ready to get started, click the Schedule a free Strategy Session button to get on our calendar today.
And remember, it’s not how much money you make, it’s how much money you keep that really matters.