Save Now, Play Later
April 26th, 2010 // 4:00 am @ Andrew Rosenbaum
If you’re like most people, you may be having trouble sticking to your New Year’s resolution to save more money.
There are two common reasons why it’s hard to save, particularly in today’s economy:
1. We buy too many things to satisfy emotional needs, instead of buying only the things we really need.
We’re too willing to pay a premium for a brand that feeds our self-esteem. It’s a habit we could afford in the go-go years, but we’re finding it difficult to break now that we need to save.
The solution: Re-examine your motive for accumulating stuff.
Are you a victim of a mentality that believes “I buy, therefore I am”?
Is that the image you really want to project to your family and friends? Is that a lesson you want to teach your children?
A far better self-image is someone who is economically secure.
I define economic security as a feeling that your financial plan is on track even during volatile economic times.
Economic security gives you the confidence that your net worth will not crumble overnight.
You’ve heard the saying, “Pay yourself first.” It’s wise advice.
The first check you write each month should be to yourself in the form of savings.
If you don’t have the discipline to write it yourself, set up an automatic payment system that transfers some income each month into savings.
Of course, choosing the right savings vehicle is not always easy. That brings me to the second big obstacle to saving:
2. The roller coaster markets are still volatile, so we don’t know where to put the money we save.
The yields are small on many conservative investments, and they shrink even more after you pay the tax bill.
Fear, confusion, and inertia are discouraging people from setting money aside. If it remains in your bank account, it’s tempting to spend.
What if I told you that you could put away money each month into a financial product in which your cash value will build and that the value will be backed by a guarantee?
What’s more, any increase in cash value is currently tax deferred, and that if structured correctly you are able to withdraw some of the value without paying taxes at any age?
It sounds pretty good, right?
The product is permanent life insurance, and specifically known as whole life.
That means your family’s financial security is protected by a death benefit (also not subject to income tax under current law) if something were to happen to you.
So instead of buying a term life policy to protect your family and trying to save and invest money on your own to build financial security, why not combine both necessities into one streamlined product?
It’s the best and easiest way I know to achieve financial peace of mind.
Category : Economic Confidence &Financial Certainty &Permanent Insurance &Saving
Accumulating v. Utilizing Wealth
December 23rd, 2009 // 3:59 am @ Andrew Rosenbaum
Accumulated money means nothing if it’s not utilized properly. There’s a huge difference between accumulating money and putting it to good use.
Accumulating without utilizing is like buying a cruise to the Bahamas then never going.
The basic premise of the accumulation theory is that collecting money — gathering a “nest egg” — guarantees financial protection.
But no amount of money guarantees happiness or, for that matter, security. Many Wall Streeters are discovering this.
I believe in the utilization theory, which says money gains meaning by how it is earned and used.
What is true is that money is a tool and, like all tools, it is designed to do a job. It’s up to you to use that tool to enhance your happiness.
People who enjoy lasting wealth have a deep understanding of money — what it is and what it is not. Money isn’t as important as the asset that produces it.
With the utilization theory, the idea is to limit the risk that the asset will lose its power to provide financial security for you.
The more risk we take on, the more stress and pressure we experience, regardless of how much money we have or make. The more we use money to transfer risk, the more economic confidence we feel.
Purchasing a guaranteed contract that provides a reliable return, virtually risk-free, and ensures your family’s financial security if you die, is a wise use of money.
Category : Accumulation v. Utilization &Economic Confidence &Financial Certainty &Financial Risk &Permanent Insurance
